US Payroll Revisions Signal Deep Labor Market Weakness
The US Labor Department recently revised downward payroll data by 911,000 jobs for the 12 months ending March 2025, the largest such adjustment in history. This revision averages to an overstatement of approximately 76,000 jobs per month, surpassing the 2009 revisions during the global financial crisis. The Kobeissi newsletter reports that the bulk of these job losses were concentrated in consumer-driven sectors, including Leisure and Hospitality (−176,000 jobs) and Trade, Transportation, and Utilities (−226,000 jobs). Overall, private hiring was overstated by 880,000 jobs, a scale of weakness not witnessed outside of the Great Depression and the COVID-19 pandemic.
These revisions build on an ongoing trend. The US previously cut 258,000 jobs from May and June 2023 data, and an additional 27,000 jobs were removed in the latest revision. Alongside a modest gain of 22,000 jobs in August, this data collectively reinforces expectations of a Federal Reserve interest rate cut at its upcoming policy meeting.
Implications for Federal Reserve Policy and Market Sentiment
The downward revision in employment figures underscores labor market fragility, despite inflation remaining elevated above 3% and GDP growth near 3%. This unusual combination has increased market speculation that the Federal Reserve will prioritize labor market support over inflation control by cutting rates. If the Fed proceeds with a 25 basis point cut next week, it will be the first rate reduction in history under such conditions, signifying a dovish yet cautious policy stance.
Gold’s Rally Sets the Stage for Bitcoin’s Potential Upsurge
Gold, traditionally viewed as a safe haven, has appreciated 40% year-to-date, with gold mining stocks nearly doubling returns and outperforming the S&P 500 by nearly tenfold. This performance reflects investor anticipation of Fed easing amid labor market weakness. Bitcoin, which has demonstrated sensitivity to liquidity expansions, may experience a similar rally.
Bitwise strategist André Dragosch noted on social media that despite the Fed not yet cutting rates, macro liquidity is expanding, as indicated by major USD stablecoins. This liquidity expansion is considered bullish for Bitcoin.
Forecasts Suggest a Strong Bitcoin Rally in Q4
Analytics platform Tephra Digital projects that if Bitcoin’s historical correlations with lagged M2 money supply and gold persist, the cryptocurrency’s price could reach between $167,000 and $185,000 by the end of the year. Bitcoin’s current positioning and its responsiveness to liquidity cycles position it well to capitalize on the Fed’s anticipated policy shift.
While these forecasts are promising, investors should remain cautious, as market conditions can evolve rapidly. This article does not constitute investment advice; all trading involves risk, and thorough research is recommended before making financial decisions.
FinOracleAI — Market View
The historic downward revision of US payroll data significantly increases the likelihood of a Federal Reserve rate cut despite persistent inflation, creating a liquidity-friendly environment. This dovish shift is bullish for Bitcoin, given its historical sensitivity to liquidity expansions and parallels with gold’s recent rally. However, risks remain from inflation dynamics and geopolitical uncertainties that could influence Fed policy. Market participants should monitor upcoming Fed communications and labor market reports closely to validate this bullish thesis.
Impact: positive
