The cryptocurrency market reeled as Bitcoin 2.57% 1D plunged to near seven-month lows, dipping below $86,000 following the release of stronger-than-expected U.S. jobs data.
This fresh wave of inflationary signals has dampened hopes for a significant Federal Reserve interest rate cut in December.
The recent jobs report showed an addition of 119,000 positions in September, well above economists' estimates.
This robust employment figure has increased concerns that inflation pressures persist, tempering expectations for an imminent easing in monetary policy.
According to the CME Group FedWatch Tool, the odds of a 25 basis point rate cut next month have declined to just 35.4%, signaling a more cautious stance by market participants.
Inflation Signals Shake Markets
Bitcoin’s price fell over 7% in the 24 hours following the jobs report, marking a 32% retracement from its all-time high recorded in October.
The entire crypto sector reflected this nervousness, dropping more than 6% in the same period.
The Crypto Fear & Greed Index settled at 11, indicating extreme fear among investors.
The CME FedWatch Tool, known for gauging Federal Reserve rate move probabilities, shows declining confidence in a swift policy easing.
Traders are recalibrating risk amid thin liquidity and amplified profit-taking, which further exacerbates price volatility.
Market watchers note that anticipation of a rate cut may be partially priced in, and that any short-term bounce would require fresh investor inflows and stronger demand within the crypto networks to sustain recovery.
Market Correction Seen as Healthy
The pullback is interpreted by some as a natural correction following Bitcoin’s dramatic rally last month.
On-chain data indicates spot and futures markets are gradually stabilizing, hinting that the capitulation phase may be nearing conclusion.
The Federal Reserve continues to face uncertainty ahead with mixed economic signals affecting rate expectations.
Persistent inflation measured by employment gains has forced markets to reconsider their forecasts for the pace and scale of monetary easing.