Bitcoin is hovering at $93,000 as jobs report heightens inflation concerns

The U.S. economy added more jobs in December than economists expected, which could already be raising inflation concerns in recent days.

U.S. employers added 256,000 jobs in December, the Bureau of Labor Statistics (BLS) reported Friday. Economists expected the figure, which measures job creation, to show that 160,000 jobs were added last month, Trading Economics said.

Bitcoin prices fell after Friday’s publication, falling 2.2% to $92,700 from $94,900 in about 10 minutes. Over the past week, Bitcoin’s price has been volatile, trading highs between $102,300 and $91,000, while macroeconomic signals paint a picture of a strong economy.

The BLS said Friday that the unemployment rate fell to 4.1% in December, down slightly from 4.2% in November. Typically, a fall in unemployment can contribute to inflation through higher wage growth.

“Good news is bad news,” says Tom Dunleavy, partner at MV Capital Declutter. “Strong employment means further inflation pressure, and therefore a smaller chance of interest rate cuts.”

The Federal Reserve signaled last month that it would cut interest rates at a slower pace this year as it was cautious about the impact of shifts in immigration and trade policies on rising consumer prices, according to minutes released from the December Fed meeting earlier this week.

Friday’s labor market gauge follows the figures on economic activity – especially in the services sector and vacancies – which led to inflation jitters among investors at the beginning of this week.

Meanwhile, higher bond yields have put pressure on risky assets like stocks and crypto. That’s because higher bond yields lead to lower Bitcoin and stock allocations in investor portfolios.

Ten-year government bond yields rose to 4.78% on Thursday, reaching their highest level since October 2023, according to TradingView. FalconX head of research David told us Declutter that rising rates “reflect a more complex inflation story than many expected.”

“Adding to market uncertainty is the clouded view of how economic policies could change under the administration,” he said, referring to the newly-elected president’s potential tariff policies.

Traders were less confident on Friday that the Fed would cut rates in coming months, favoring June, CME FedWatch said. A month ago, traders at its January meeting anticipated a 20% chance that the Fed would ease financial conditions, but those chances had shrunk to 2.7% by Friday.

While Friday’s labor report initially pushed Bitcoin’s price lower, the cryptocurrency has risen 1.5% over the past day at the time of writing to around $93,900. Meanwhile, the price of Ethereum and Solana were little changed at $3,200 and $186 respectively.

As inflation concerns have come into focus, Bitcoin’s correlation with the S&P 500 and Nasdaq has increased, Lawant said, marking “a notable pivot in market dynamics.”

“Investors turned their attention away from traditional macro factors such as monetary policy and focused on sector-specific concerns, with election results emerging as the dominant price driver,” he said.

Edited by Stacy Elliott.