Bitcoin Draws Dip Buyers Around $86,000 as Weak US Jobs Data Cuts Odds of October Fed Rate Hike to 22%

US labor-market data cooled sharply, driving down expectations for an additional Federal Reserve rate hike in October, while Bitcoin attracted dip buying in the $86,000 range, QCP Capital said.

In a market report on Oct. 5, the crypto market maker said the macro outlook had completely shifted in just three weeks from an expected October rate hike to fading hike odds and a Fed pause.

QCP said US nonfarm payrolls increased by 29,000 in September, far below the market forecast of 84,000. The unemployment rate rose to 4.2%, while annual wage growth slowed to 3.0%, the lowest since May 2021. Average job creation over the past three months also dropped to 50,700, about one-third of the level a year earlier.

That pushed the probability of an October rate hike down to 22%. Even so, the yield on the 10-year US Treasury stayed near 5.25% despite signs of economic slowing. QCP attributed the elevated yield to Treasury supply and demands for extra compensation to hold longer-dated bonds.

Bitcoin recovered to $86,700 after its rally stalled at $87,100 on Oct. 2. That suggests buyers are still stepping in on dips, QCP said. To confirm further upside, Bitcoin needs to establish itself above $87,200.

Weekend liquidations across the crypto market were relatively limited at $62.7 million, with short positions accounting for 68% of the total. Ether traded around $2,725 and remained within a $2,650 to $2,800 range.

QCP cited the Federal Open Market Committee minutes due on Oct. 7 as this week's key catalyst. TOKEN2049 in Singapore on Oct. 8-9 and the US consumer price index report due on Oct. 14 could also add to market volatility.