Bitcoin rose along with major stock indexes on Friday after solid U.S. employment data showed the domestic economy is doing well. However, the report also created uncertainty regarding future rate cuts.
The world's largest cryptocurrency by market capitalization was up 1% in the past 24 hours to $68,450 as of 10:55 a.m. ET, according to The Block's price page.
Stocks rebounded in early U.S. trading on Friday as traders assessed the March jobs report. This follows Thursday's close, which was Wall Street's worst trading session in months.
The S&P 500 rose 0.6%, and the Dow Jones Industrial Average rose 107 points, or 0.3%. The Nasdaq Composite Index, which has a high proportion of high-tech stocks, rose 0.8%.
March employment statistics were better than expected
U.S. employers added 303,000 jobs in March, more than expected and showing the labor market remains strong despite rising interest rates.
The numbers, released Friday by the U.S. Department of Labor, were significantly higher than the 200,000 job gain that economists had expected. Strong employment numbers and solid economic activity may allow the Fed to keep interest rates on hold for even longer.
According to CME's FedWatch tool, interest rate traders are 94.7% confident the Fed will keep rates unchanged in May. The market currently predicts that the probability of a rate cut at the Federal Open Market Committee meeting in June is 50.8%.
Low unemployment rates and strong job growth can put upward pressure on wages and prices, potentially contributing to inflation. In such a scenario, the Fed may be more likely to consider keeping interest rates stable rather than lowering them to prevent the economy from overheating.
Imminent interest rate cuts cast doubts
The current macroeconomic situation may encourage risk-off sentiment, putting downward pressure on risk assets such as Bitcoin.
Richmond Fed President Thomas Barkin said Thursday the U.S. central bank should keep interest rates on hold until the inflation picture becomes clearer. Barkin, speaking at the Virgina Home Builders Association, said it would be wise for the Fed to take its time before lowering interest rates given rising inflation in early 2024.
“Nobody wants to see a resurgence in inflation. Given the strong labor market, there is time for the clouds to clear before we start the process of lowering rates,” he added.
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