Bitcoin faces new macro-level pressures as the latest U.S. employment report showed a stronger-than-expected labor market and raised government bond yields while reducing the likelihood of near-term Federal Reserve rate cuts.
The U.S. added 130,000 new jobs in January, nearly double the expectations. The unemployment rate simultaneously fell to 4.3 percent, indicating that the strength of the labor market continues.
Strong employment numbers are generally a good thing for the entire economy, but they complicate the outlook for risky assets like Bitcoin.
Strong employment figures delay interest rate cut expectations.
The markets had been anticipating possible interest rate cuts in the coming months due to slowing growth. However, a strong labor market reduces the urgency for monetary easing.
As a result, investors revised their expectations for Federal Reserve policy.
The bond markets reacted immediately. The U.S. 10-year Treasury yield rose toward the level of 4.2 percent, an increase of several basis points following the report. The two-year yield also rose, indicating that the likelihood of a short-term rate cut had decreased.
Higher interest rates tighten financial conditions. They raise borrowing costs across the economy and increase the yield level on risky assets.
Why higher yields pressure Bitcoin.
Bitcoin is highly sensitive to liquidity conditions. When Treasury yields rise, capital often shifts to safer, yield-producing investments like government bonds.
At the same time, a stronger dollar often follows rising interest rates. A strong dollar reduces international liquidity and makes speculative assets less attractive.
This combination creates headwinds for the crypto market.
Although Bitcoin remained temporarily close to the $70,000 level earlier in the week, job data increases the risk of renewed volatility. Without a clear sign of monetary easing from the Federal Reserve, liquidity may remain constrained.
"This report is a headwind for Bitcoin in the short term. Such a clear outperformance reduces the likelihood of a rate cut in March and reinforces the Federal Reserve's pause at the level of 3.50%-3.75%. A recovery in risky assets requires cheap money, but that has now been pushed further into the future. The dollar is expected to strengthen and interest rates to rise, which will pressure Bitcoin into a range in the near term," David Hernandez, Crypto Investment Specialist, 21shares, noted to BeInCrypto.
Market structure reinforces macro-level stress.
The recent dip showed how sensitive Bitcoin has become to changes in the macroeconomy. Large ETF investments, institutional hedging, and leveraged positions can accelerate movements as financial conditions tighten.
A stronger labor market does not mean that Bitcoin will necessarily decline. However, it undermines one of the key drivers for bulls: expectations of monetary easing.
"In the short term, Bitcoin appears cautious. A key level is $65,000. If this strong report is merely temporary, and not a sign of economic overheating, the Federal Reserve may still cut rates later this year. At that point, Bitcoin's limited supply becomes important again. Strong data today may delay a price rally but does not detract from the long-term bullish scenario," Hernandez said.
The latest U.S. labor market report supports a higher rate level in the long term.
For Bitcoin, this is not immediately destructive. However, it complicates the ongoing price increase.
Unless liquidity improves or rates decrease, macroeconomic developments are now cautious and do not particularly support the crypto market.
