Strong U.S. Jobs Data Proves ‘Poison’ for Bitcoin, Retreats After Eyeing $70,000

▲ United States, Bitcoin (BTC), U.S. Dollar (USD) / ChatGPT-generated image

As the U.S. labor market showed a stronger-than-expected rebound, dampening expectations for an early interest rate cut by the Federal Reserve (Fed), Bitcoin (BTC) came under downward pressure and turned lower.

According to cryptocurrency-focused media outlet CoinGape on February 26 (local time), initial jobless claims in the United States came in below market expectations, underscoring the strength of the labor market. The U.S. Department of Labor announced that new jobless claims for the past week totaled 201,000. This figure was lower than the 218,000 expected by market experts, indicating that the U.S. economy continues to maintain solid employment conditions despite high interest rates.

The strength of the labor market was interpreted as a signal that inflationary pressures may persist, dampening investor sentiment in the digital asset market. Immediately following the release of the employment data, U.S. Treasury yields rose, triggering capital outflows from risk assets such as Bitcoin. Market participants judged that the likelihood of the Fed keeping its benchmark interest rate higher for longer had increased and began reducing risk exposure in their portfolios.

Shortly after the data release, Bitcoin fell below the $68,000 level, at one point dropping into the $67,000 range. The strong employment data provided justification for the Fed to maintain its tightening stance for a longer period, prompting selling from investors who had been betting on expanded liquidity. Market watchers are concerned that as the timing of rate cuts is pushed back, higher capital costs will weigh on demand for high-risk assets such as cryptocurrencies.

A cautious stance has also prevailed among institutional investors in the short term. Although net inflows into spot Bitcoin ETFs had been active recently, additional buying has slowed as macroeconomic uncertainty resurfaced. Experts noted that since labor market data play a key role in shaping the Fed’s policy path and determining the trajectory of inflation, increased price volatility following economic data releases is likely to continue for the time being.

The rebound in the U.S. labor market is expected to act as a headwind to the recent technical recovery in the digital asset market. As the likelihood grows that the powerful catalyst of rate cuts will be delayed, Bitcoin is likely to undergo a period of consolidation within a range while seeking to secure support levels. The market is expected to look to upcoming inflation data and remarks from Fed officials for clues regarding interest rate policy in the second half of the year.

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