Here’s why Bitcoin and altcoins could rise after weak NFP data

Cryptocurrencies and stocks remained on edge after the US released weak nonfarm payrolls data, signaling the Fed could potentially turn dovish.

Bitcoin (BTC) has fallen from around $72,500 to $70,000, while Ethereum (ETH) is currently down more than 3% in the last 24 hours to $2,500. While the total market value of all cryptocurrencies dropped to $2.45 trillion, the crypto fear and greed index rose from the greed zone of 65 to 57.

American stock market futures reacted positively; Dow Jones, S&P 500 and Nasdaq 100 indexes gained 230, 33 and 130 points, respectively.

According to the Bureau of Labor Statistics, the United States economy added just 12,000 jobs in October; this is a significant decrease from the 223,000 added in September. This figure was well below the average estimate of 106,000 and the ADP private sector payrolls of 115,000.

The bureau attributed the low job growth to recent hurricanes in the U.S. and strikes at major employers such as Boeing. Manufacturing payrolls fell by 46,000, while government payrolls increased by 40,000.

On a positive note, the unemployment rate remained unchanged at 4.1% and wage growth remained strong. Average hourly earnings increased 0.4% monthly and 4.0% annually.

BREAKING NEWS: The US economy added 12,000 jobs in October, below expectations of 106,000.

The unemployment rate was 4.1%, in line with expectations of 4.1%.

This marks the lowest number of jobs added in the US since July 2021.

All signs continue to point to a weaker labor market.

— Kobeissi Letter (@KobeissiLetter) November 1, 2024

Why is NFP data important for Bitcoin and other cryptocurrencies?

Theoretically, this data could be positive for Bitcoin, altcoins, and the stock market for two reasons. First, the statement came shortly before the American election, potentially swaying voters in favor of Donald Trump.

Trump expressed his support for the crypto industry and suggested appointing an industry-friendly individual to head the Securities and Exchange Commission. The SEC, under current chairman Gary Gensler, has faced criticism for regulating through enforcement. The agency recently issued a Well’s Notice to Immutable X (IMX), a gaming-focused layer-2 network.

Weak nonfarm payrolls data could encourage the Fed to continue cutting interest rates more aggressively as inflation heads toward 2%; This situation is also reflected in the decline in US bond yields after the report.

The Fed has begun lowering interest rates and analysts expect this trend to continue. The CME FedWatch tool shows that the market predicts interest rates will fall to 3.50% in 2025 from the current 5.0%.

Risky assets like Bitcoin and stocks tend to perform well when the Fed lowers interest rates; This is a trend also seen in recent Bitcoin ETF inflows, as some capital shifts from money market funds to riskier assets.