Why Is US Employment Data Raising Concerns About Bitcoin?

Bitcoin is facing new macroeconomic pressures after the latest US employment report showed a stronger-than-expected labor market, pushing bond yields higher and reducing the Federal Reserve’s (Fed) short-term interest rate cut prospects. The US economy added 130,000 jobs in January, nearly double economists’ forecasts. At the same time, the unemployment rate dropped to 4.3%, indicating a robust recovery in the labor market. Although a high employment rate is a positive sign for the overall economy, it complicates the outlook for risky assets like Bitcoin.

Favorable Employment Data Delays Rate Cut Expectations The market had anticipated a potential rate cut in the coming months due to concerns over slowing growth. However, the stable labor market has lessened the urgency for monetary easing. As a result, investors have adjusted their expectations for Federal Reserve policy. The bond market responded immediately, with the 10-year US Treasury yield soaring to 4.2%, rising a few basis points after the report was released. The 2-year Treasury yield also increased, reflecting a decreased likelihood of a short-term rate cut.

Higher yields tighten financial conditions. They increase borrowing costs across the economy and raise the discount rate used to value risky assets. Why Higher Yields Are Putting Pressure on Bitcoin Bitcoin is highly sensitive to liquidity conditions. When Treasury yields rise, capital tends to shift into safer, higher-yielding assets like government bonds. At the same time, a stronger dollar often accompanies rising yields. A stronger dollar reduces global liquidity and makes speculative assets less attractive.

This combination creates obstacles for the cryptocurrency market. Although Bitcoin stabilized near $70,000 earlier this week, the employment data increases the risk of volatility returning. Without clear signals that the Federal Reserve will ease policy, liquidity remains constrained. “For Bitcoin, this report is a short-term obstacle. Such positive results reduce the likelihood of a rate cut in March and reinforce the Fed’s decision to hold interest rates steady at 3.50%-3.75%. The catalyst from cheaper money, which risk assets need for sustainable recovery, has been further delayed. The dollar is expected to strengthen, and bond yields will rise further, both of which exert pressure causing BTC to fluctuate within a certain range in the short term,” said David Hernandez, Cryptocurrency Investment Expert at 21shares, in an interview with BeInCrypto.

Market Structure Increasing Macro Tensions The recent crash has shown how sensitive Bitcoin is to macroeconomic changes. Large capital flows from ETFs, institutional risk hedging, and leverage positions can accelerate volatility when financial conditions tighten. A stronger labor market does not guarantee Bitcoin will decline. However, it reduces one of the key catalysts for Bitcoin’s price increase: expectations of looser monetary policy. “In the short term, Bitcoin appears to be in a defensive stance. The key support/resistance level to watch is $65,000. However, if this positive report is only temporary and not a sign that the economy is overheating again, the Federal Reserve could still cut rates by the end of the year. When that happens, Bitcoin’s limited supply becomes crucial. Today’s positive data may delay a rally, but it does not invalidate the long-term bullish case,” Hernandez explained.

Summary The latest US employment report further reinforces the trend of prolonged high interest rates. For Bitcoin, this does not cause an immediate disaster. But it makes maintaining upward momentum more challenging. Unless liquidity improves or yields decline, the current macroeconomic environment leans more toward caution than supporting the cryptocurrency market.