U.S. employment deterioration... Bitcoin back to $110,000

Crypto Now

Escaping weakness as hopes for rate cuts grow

Record-high gold prices also influential

The leading cryptocurrency Bitcoin surpassed $110,000 again earlier this month. Attention is focused on whether it can overcome the so-called 'September nightmare.'

According to CoinMarketCap on the 7th, Bitcoin returned to the $110,000 range on the 2nd. Bitcoin had repeatedly hit record highs in mid-last month and surged to the $120,000 range, but was then strongly corrected and fell back to the $100,000 range by the end of last month.

Analysts say that Bitcoin, classified as a risk asset, is rebounding as hopes grow that U.S. policy rates will be cut due to weakening employment indicators. Employment data firm Automatic Data Processing (ADP) announced on the 4th that U.S. private employment in August increased by only 54,000 compared with the previous month. The increase was halved compared with July (106,000). On the same day, the U.S. Department of Labor reported initial jobless claims for the last week of August at 237,000, exceeding market expectations (230,000).

These changes have strengthened views in financial markets that the U.S. central bank (Fed) will cut policy rates this month. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the current fed funds futures market reflects a 99.4% probability that the U.S. policy rate will be cut by 0.25 percentage points this month.

In the cryptocurrency market, attention is on whether Bitcoin will this time pass through September — which has generally been weak — more smoothly. Bitcoin recorded negative returns in September for six consecutive years from 2017 to 2022. Yang Hyun-kyung, a researcher at iM Securities, analyzed, "If the U.S. policy rate is cut this month, Bitcoin's price could shift into an uptrend."

The fact that gold prices, which have shown a coupling (synchronization) with Bitcoin, have recently repeatedly hit record highs is also cited as a positive factor. Bitcoin's price surged in 2020 when the gold price exceeded $2,000 per ounce. It also rose alongside gold last year when the gold price broke through the $3,500 level.