Bitcoin Price Staggers After Strong US Jobs Data: What Next?

Bitcoin price remained in a consolidation mode in the past few days as investors react to the latest American jobs numbers. It was trading at $16,800, where it has been in the past few days. This price is slightly above the December low of $16,460. 

US jobs data

The Bureau of Labor Statistics (BLS) published the latest jobs numbers on Friday. These numbers revealed that the American economy was still firing on all cylinders as the labor market tightened. It added 235k jobs in December, higher than the median estimate of 200k. 

Another important metric showed that the country’s unemployment rate dropped to 3.5% in December from the previous 3.7%. It remains close to its lowest level in half a century. 

The only disappointing number was on wages, which declined slightly. These numbers came at a time when many giant American corporations are announcing mass layoffs. Earlier this week, Salesforce announced that it would slash over 10% of its workforce. Amazon, the giant e-commerce and cloud company, said that it would lay-off over 18,000 people. Other companies like Meta Platforms and Coinbase have announced a series of layoffs. 

US jobs numbers are important for Bitcoin prices because of their impact on inflation and the Fed. The Philips Curve says that inflation rises when the unemployment rate is rising. On the other hand, the Federal Reserve tends to tighten when inflation is rising because of its dual mandate. 

Therefore, these numbers mean that the Fed has the impetus it needs to continue hiking interest rates. Economists expect that the Fed will hike interest rates by 50 basis points in February followed by two or three 0.25% rate hikes in the next months. 

Bitcoin price tends to react negatively to Fed hikes. The 450 basis point hike in 2022 explains why Bitcoin dropped by more than 60% during the year.

Bitcoin price prediction

The BTC/USD exchange rate remained in a consolidation phase as investors watched the US jobs numbers. It was trading at $16,800, which was along the 25-day and 50-day moving averages. The volume of BTC traded has continued falling. It has also formed a head and shoulders pattern. Therefore, there is a likelihood that the coin will soon have a bearish breakout as sellers target the next key support at $16,000.