Bitcoin breaks out, but weak US jobs data breaks bulls again: Time to risk on or off?
News Summary
Bitcoin briefly surged to $113,384 this week but reversed sharply after the release of weaker-than-expected US August Nonfarm Payrolls (NFP) data. The report showed only 22,000 jobs added, significantly below the 75,000 forecast, with the unemployment rate rising to 4.3% and wage growth slowing to 3.7%. This soft labor market data strengthens the case for Federal Reserve rate cuts, with market odds now at 88.2%, typically providing a tailwind for risk assets like cryptocurrencies. On-chain data indicated market preparation, with over $2 billion in stablecoin inflows to exchanges and Bitcoin open interest nearing all-time highs at $80 billion, suggesting ample liquidity and building leveraged positions. Despite the post-NFP pullback, Bitcoin's short-term bullish structure remains intact as long as it holds above $109,500. However, a decisive weekly close above $112,500 is needed to confirm a lasting market bottom.
Background
The Federal Reserve's monetary policy, especially interest rate decisions, directly impacts the valuation of risk assets, including Bitcoin. Balancing inflation pressures with economic growth data is central to the Fed's policy formulation. The US Nonfarm Payrolls (NFP) report is a critical indicator of labor market health, and its performance is often interpreted by the market as a signal for the Federal Reserve's future interest rate path. Slowing job growth and moderating wage increases are typically seen as signs of easing inflationary pressures, increasing the likelihood of Fed rate cuts. In 2025, against the backdrop of the Trump administration's economic policies, the market remains highly attentive to the Fed's independence and potential pressures for rate adjustments. Furthermore, the cryptocurrency market, particularly Bitcoin, has in recent years emerged as a significant hedging or speculative asset class influenced by global macroeconomic factors.
In-Depth AI Insights
Does the current weak jobs data truly guarantee a definitive tailwind from Federal Reserve rate cuts? The Fed's decisions are not based solely on a single data point. While August's NFP data was weak, the Fed, under the Trump administration, still needs to carefully assess the overall inflation trend and broader economic resilience. Market expectations of an 88.2% chance of a rate cut might be overly optimistic. If subsequent inflation data does not show sustained significant declines, or if global supply chains face renewed shocks, the Fed could still maintain a tighter stance for longer to avoid new inflationary risks. Investors should be wary of overreacting to single positive signals and focus on the overall statements from Fed officials, rather than just short-term data. Do the “dry powder” and high open interest indicated by Bitcoin's on-chain data pose a potential risk? Yes, while large stablecoin inflows and near-all-time-high open interest are interpreted as “dry powder” and leverage accumulation in bullish scenarios, they also carry significant risk. Such concentrated liquidity and leveraged exposure make the market highly susceptible to cascading liquidations and rapid price declines if a negative catalyst emerges. Excessive leverage is not a healthy bull market structure; instead, it can become a target for market manipulation or “stop-hunting.” Investors should monitor funding rates and basis to assess market overheating and be wary of potential liquidity drains and sharp pullbacks. Does Bitcoin's repeated failure at key resistance levels suggest higher overhead selling pressure? Bitcoin's repeated setbacks in the $112,500 to $113,650 range indicate significant selling pressure in this area. This could stem from earlier investors who are now breaking even, or institutional investors taking profits at these levels. While the short-term technical structure appears constructive, the market will struggle to establish a lasting uptrend without a decisive breakthrough and sustained hold above this critical resistance. This suggests that even with positive macro expectations, the market still faces structural resistance internally that requires stronger buying power to overcome; otherwise, it could lead to prolonged consolidation or even a correction.