Bitcoin fell below $77,000 after softer July labor data failed to lower the odds of a September Fed rate hike. Oil above $90, rising Treasury yields, and a sticky inflation reading kept the pressure on, reversing a recent stretch of Bitcoin ETF inflows.
Bitcoin fell below $77,000, trading around $76,985, after July JOLTS data failed to dislodge expectations for another Federal Reserve rate increase. The report landed into a market already confronting $90 oil, rising Treasury yields, and a Fed that has shifted from discussing cuts to weighing another hike.
The Bureau of Labor Statistics reported July job openings held at 7.3 million, with 5.1 million hires and 3.1 million quits, both little changed from June. June openings were revised down by 177,000 to 7.2 million. Yet CME FedWatch put the odds of a September rate hike at 66%, up from about 60% after Fed Chair Kevin Warsh's Aug. 28 Jackson Hole speech. Warsh had argued that employment remained consistent with full employment, attributing the low turnover partly to post-pandemic worker and employer rematching — his stated concern was inflation, not jobs.
Oil and yields reinforce the hike case
That inflation concern found support elsewhere in the data. The ISM manufacturing index eased to 54.6 in August from 55.6, while new orders fell to 53.7 from 56.7. But ISM's Prices Index held at 71.1 for a second month, with respondents citing pricier fuel and oil-based commodities.
Crude then added to the pressure. West Texas Intermediate surged 5.2% to settle at $90.22, while Brent gained 4.6% to $94.65 as the Iran crisis continued to unsettle energy markets. Treasury yields climbed alongside oil: the two-year rose to 4.39% from 4.34%, and the 10-year climbed to 4.79% from 4.75%.
Higher yields raise the return on dollar assets and the hurdle for holding assets without contractual yield. That backdrop has started showing up in ETF flows — US spot Bitcoin ETFs recorded $236.46 million of net outflows on Sept. 1, reversing $216.7 million of inflows the day before.
A shock that cuts both ways
An externally driven energy shock can strengthen the case for a rate hike while also weakening the economy, since higher crude raises transport and production costs and squeezes household purchasing power. The Fed can cool domestic demand through higher borrowing costs, but Wellington Altus chief market strategist James E. Thorne said it cannot increase oil supply or resolve the geopolitical conditions pushing crude higher.
That tension leaves the Fed weighing two incomplete signals ahead of its Sept. 15-16 meeting. August payroll data lands Sept. 4, followed by producer prices on Sept. 10 and consumer prices on Sept. 11. A materially weak payroll report would test the view that the labor market remains at full employment; firm hiring alongside persistent price pressure would instead reinforce the current setup and keep short-term yields elevated.
Bitcoin enters that sequence back near the level reached during the initial post-Jackson Hole selloff, without the ETF support it carried into the prior week.
Source: CryptoSlate
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