The newest non-farm payroll figures for November have surprised analysts by exceeding expectations, yet they also reveal a troubling uptick in unemployment. This combination could influence the Federal Reserve’s strategy when they convene next.
Impact on Bitcoin
Analysts now believe that the Fed might contemplate slashing interest rates, a move that could spark renewed interest in Bitcoin (BTC) among investors.
In November, the U.S. economy created 227,000 jobs, outperforming predictions that estimated an increase of 220,000. However, the unemployment rate rose to 4.2%. Zach Pandl, head of research at Grayscale Investments, remarked that this jobs report strengthens the case for the Federal Reserve to consider a rate cut at its next meeting. He pointed out that, under regular circumstances, a reduction in interest rates typically weakens the dollar, potentially benefiting alternative currencies, including Bitcoin. Despite a setback that saw Bitcoin fall from over $100,000 just a day prior, Pandl remains optimistic that the cryptocurrency’s upward momentum could carry into the next year.
Anticipation Surrounding Federal Reserve Decisions
The CME FedWatch tool indicated on December 2 that there is a 74.5% chance the Federal Reserve will implement a 0.25% interest rate cut during its meetings on December 17-18. Speculation about a potential cut gained traction after Federal Reserve Governor Christopher Waller remarked on the restrictive nature of current monetary policy, hinting at further reductions throughout the coming year until the policy rate aligns closer to neutral.
In response to Fed Chair Jerome Powell’s recent comments, which suggested that economic conditions do not yet necessitate an urgent rate decrease, Bitcoin’s price dipped nearly 3% in November.
Future Projections
Jamie Coutts, the main crypto analyst at Real Vision, recently predicted a significant increase in the M2 Money Supply—approximately $20 trillion—by 2025. He believes this surge in liquidity could channel an influx of $2 trillion into Bitcoin markets. Coutts also highlighted historical patterns showing that when M2 rises, Bitcoin typically captures about 10% of this new money supply.
As the dynamics of the economy evolve, the focus now shifts to how the Federal Reserve will navigate these changes in their upcoming meetings. Will they cut rates, and if so, what ripple effects will that have on broader financial markets and cryptocurrencies?
Source: Cointelegraph
