US Employment Data Exceeds Expectations... Interest Rate Cut Faces Uncertainty [Bitcoin Now]

Return to the $94,000 Range
Stronger U.S. Employment Data and Burden from Trump’s Tariff Policy
Lower Likelihood of Fed Rate Cut This Year

Jerome Powell, Chairman of the U.S. Federal Reserve (Fed) Photo by Yonhap News

In the second week of January 2025, the price of Bitcoin, the leading virtual asset, returned to the $94,000 range. After reclaiming the $100,000 mark around the 7th, it immediately turned downward the very next day, on the 8th. This was due to stronger-than-expected U.S. employment data, which significantly lowered the likelihood of an interest rate cut by the U.S. this year.

According to the global virtual asset market tracking site CoinMarketCap, as of 12:04 PM on the 12th, Bitcoin was trading at $94,602.81, up 0.24% from the previous session. Compared to a week ago, it fell 3.63%, and compared to a month ago, it dropped 5.10%. However, it still shows a 105.47% increase compared to a year ago.

Bitcoin started at around $98,000 on the 6th and surged past $100,000 around the 7th. The positive momentum continued for a day with trading in the $102,000 range, but then reversed downward starting on the 8th. On the 10th, it even dipped to $91,000, creating a tense moment.

The recent Bitcoin weakness is attributed to lowered expectations for a U.S. interest rate cut. The recently released employment data was much stronger than expected, weakening Federal Reserve Chair Jerome Powell’s justification for lowering the benchmark interest rate.

The U.S. Department of Labor announced on the 10th that nonfarm payrolls increased by 256,000 in December compared to the previous month. This figure far exceeded both November’s 227,000 and experts’ forecast of 155,000. The unemployment rate was recorded at 4.1%, slightly lower than the expected 4.2%. Concerns about prolonged high interest rates grew, pushing the 10-year U.S. Treasury yield to 4.79% immediately after the employment data release, the highest level in 13 months since early November 2023.

Additionally, there are concerns about inflation rising due to tariff policies announced by President-elect Donald Trump. There are even predictions that the U.S. Fed will find it difficult to raise interest rates at least in the first half of this year. Krishna Guha, Vice Chairman of Evercore ISI, a major Wall Street investment advisory firm, noted in a memo to clients on the 8th (local time) that "the Fed may not cut rates this year." However, since President-elect Trump has expressed that "current interest rates are too high," a clash seems inevitable.

The Bitcoin market, which had been hopeful for increased global liquidity from interest rate cuts, has also been impacted. The global trend of interest rate cuts has been viewed as positive news for the Bitcoin market. Forbes pointed out that "strong U.S. employment data lowered expectations for Fed rate cuts and caused stock market volatility, which in turn increased Bitcoin volatility."

According to the virtual asset data provider Alternative, the Fear & Greed Index, which measures investor sentiment as of that day, stood at 62 points (Greed). This is a similar rating to last week’s 72 points (Greed), but the numerical difference is significant. Alternative’s Fear & Greed Index ranges from 0, indicating extreme fear and pessimism about investing, to 100, indicating strong optimism.