Bitcoin fell below $77,000 as softer US labor data failed to shift expectations for a potential Federal Reserve rate increase. The largest cryptocurrency traded around $76,985 as of the report's publication after July job openings held at 7.3 million and hiring remained subdued.
According to CME FedWatch data, the probability of a September rate increase stood at 66%, up from approximately 60% following Fed Chair Kevin Warsh's Jackson Hole speech on August 28. The Bureau of Labor Statistics reported 5.1 million hires and 3.1 million quits in July, with both measures little changed from the previous month.
Oil and Inflation Keep Rate Hike Expectations Alive
The weak labor turnover failed to overturn an inflation-driven repricing already reinforced by higher energy prices and Treasury yields. West Texas Intermediate crude surged 5.2% to settle at $90.22, while Brent gained 4.6% to $94.65 as geopolitical tensions continued to affect energy markets.
The ISM manufacturing index eased to 54.6 in August, while the ISM Prices Index held at 71.1 for a second consecutive month. Respondents cited fuel and oil-based products among commodities becoming more expensive. Treasury yields moved higher alongside oil, with the two-year yield rising to 4.39% and the benchmark 10-year climbing to 4.79%.
Institutional Support Shifts
US spot Bitcoin ETFs recorded $236.46 million of net outflows on September 1, reversing $216.7 million of inflows the previous day. Bitcoin had traded above $81,000 before Warsh's remarks pushed rate expectations higher, sending the cryptocurrency below $77,000. Its subsequent rebound has struggled to regain momentum as the September policy outlook hardened.
The Fed's Dilemma
The crude rally complicates the outlook because the same shock strengthening the inflation case can also weaken the economy. Higher crude prices raise transport and production costs, reduce household purchasing power, and squeeze corporate margins. Some market analysts argued that raising rates in response to an externally driven energy shock could compound economic damage, as the Fed can weaken domestic demand through higher borrowing costs but cannot increase oil supply.
The next employment report is scheduled for September 4, followed by producer prices on September 10 and consumer prices on September 11. The Fed announces its policy decision on September 16.
