Bitcoin’s Brief Rally Stalls Amid Disappointing US Employment Data
This week, Bitcoin (BTC) gained nearly 4.75%, climbing from $109,250 to a peak of $113,384 ahead of the US August Nonfarm Payrolls (NFP) report. However, the cryptocurrency reversed course following the release of significantly weaker-than-anticipated employment figures.
US Labor Market Softness and Its Implications
The August jobs report revealed an addition of only 22,000 jobs, substantially below the projected 75,000 and July’s 73,000. The unemployment rate edged up to 4.3%, slightly above July’s 4.2%, while wage growth decelerated to 3.7% year-over-year from 3.9%. Such data indicates a cooling labor market.
For risk assets like Bitcoin, this soft labor market strengthens expectations for Federal Reserve interest rate cuts. Currently, the market prices an 88.2% probability of a rate reduction, reflecting anticipated easing of inflationary pressures and potential liquidity injections. Historically, lower rates and a weaker US dollar have provided tailwinds for cryptocurrencies.
Onchain Activity Signals Market Positioning
Data from CryptoQuant shows stablecoin inflows into exchanges surged past $2 billion prior to the NFP release, suggesting traders accumulated ‘dry powder’ in anticipation of volatility. This pattern often precedes increased buying activity in Bitcoin and Ethereum when catalysts emerge.
Meanwhile, Bitcoin’s open interest has climbed above $80 billion, approaching all-time highs despite price consolidation near $110,000. This indicates growing leveraged positions rather than widespread unwinding, underscoring heightened market engagement.
Technical Outlook and Market Structure
Following the initial surge post-NFP, Bitcoin dropped approximately 1.5% after the New York session opened, falling below $111,000 after testing resistance between $112,500 and $113,650. The pullback coincided with over $63 million in liquidations within four hours, likely reflecting stop losses and market makers adjusting crowded positions.
Short-term charts remain constructive, with Bitcoin maintaining higher highs and higher lows—a hallmark of an uptrend. Unless the price closes decisively below $109,500, the bullish structure endures, and the recent dip appears more like a liquidity sweep than a reversal.
On the weekly timeframe, caution prevails. With two days remaining before the weekly close, confirmation of a solid market bottom requires a close above $112,500. Such a close would reinforce the view that Bitcoin has established a base around $107,500.
Conclusion
Bitcoin’s price action following the weak US jobs report reflects a market in transition. While macroeconomic factors and onchain signals suggest a potential bullish setup, confirmation hinges on upcoming weekly price levels. Traders should monitor the $112,500 resistance closely to assess the durability of this emerging bottom.
Note: This article does not constitute investment advice. Investors should perform their own due diligence before making trading decisions.
FinOracleAI — Market View
Bitcoin’s initial rally in response to weak US payroll data was quickly tempered by profit-taking and liquidations, underscoring near-term volatility risks. However, robust stablecoin inflows and elevated open interest indicate strong market positioning for a potential upside breakout. The key risk remains failure to sustain prices above $112,500, which would question the emerging bullish base. Investors should watch weekly close levels and macroeconomic developments closely for clearer directional cues.
Impact: neutral
