Bitcoin market slump and weekly U.S jobless claims not data hitting latest market expectations
Bitcoin did react to last weeks U.S. jobless claims that did come in slightly above market expectations. These jobless claims suggest are likely to come in hot as last weeks Fed statement was cautioning about rate cuts. The jobless claims numbers aren’t great and still are dropping. The overall market was bullish, but Bitcoin was mirroring the small drop in U.S. jobless claims today.
Jobless claims by the U.S. Dept. of Labor stated that in the final week of the January 24th, there was a Jobless claim total of 209,000 (a 1,000 jobless claim drop from last weeks revised numbers). This number exceeds the expectations of the economists of 205,000. This is likely because the economy is strong in the U.S., and because of the Federal reserve’s claim of extra caution in new rate cuts.
The jobless claims numbers last week were revised up by 10,000 from 200,000 to 210,000. This could be a strong data point to undermine the Federal’s claim of stabilization on the jobless front. The Fed has started 2024’s rate cuts on a very dovish approach.
Jerome Powell, the Chair of the Federal Reserve, stated in the post-meeting press conference, reported that interest rate cuts will be contingent on how the labor market reacts. Market participants currently believe that the Federal Reserve will keep interest rates constant through to the June FOMC Meeting. By then, the Federal Reserve Chair is expected to be in place.
Bitcoin Pressured on Pricing Still
Bitcoin did not react when the jobless claims numbers were released. TradingView shows that Bitcoin is not trading above the $88,000 psychological price. The flagship cryptocurrency has seen a decline of about 1.50% from the intraday high of about $89,000.
Bitcoin was slightly above $90,000 before the FOMC meeting, but it was not above 90,000 for long once the Federal Reserve stated that there was no need to be cautious about the monetary policy. The Federal Reserve will pull back on policy while the *$90,000 Bitcoin will be pulled back to sub 90,000, even while the S&P 500, Gold, and Silver pull back on policy while they are above their 90,000 policy.
Bitcoin was noted to be weak because of short-term capital flows and pseudo-reverse liquidity, not because the markets believe there is no more growth or monetary policy initiatives. It has also not benefited from the weak dollar, which usually leads to a risk appetite. Even the millennials love it.
Focus on PPI Data Next
Market participants are waiting for the PPI report for December due tomorrow. In the last release, PPI reflected the inflation rate at 3% whereby 2.7% was expected. Thus concerns around continuing inflation pressure grew.
Powell stated PCE, the Fed’s preferred inflation measure, is around 3%, and inflation is still above pausing levels, so tariffs are on the inflation side for the Fed’s policy to not be finalized. Powell expects tariffs to be finalized by mid-2026.
Since the inflation rate is still high, and the data coming out from the labor market shows stability, the Fed is expected to hold its stance and is thus avoiding the expected economic data to be released in the coming several weeks.
