Bitcoin holds near $86,000 after US payrolls rise just 29,000

What happened

US nonfarm payrolls rose by 29,000 in September, well below the 90,000 economists surveyed by Reuters had expected, and unemployment rose to 4.2% from 4.1%. The Reuters report said August's gain was revised down to 133,000 from the 162,000 first reported, and CoinGape reported that revisions removed 60,000 jobs from July and August estimates.

September's average hourly earnings increased 0.1%, bringing annual wage growth to 3.0%, and hiring was modest rather than broad, with healthcare adding 17,000 positions, construction 11,000 and manufacturing 9,000. Bitcoin had already moved above $85,000 before the release as traders cut bets on another immediate Fed rate hike, and short sellers closed positions during the move.

BTC traded near $86,000 around the payroll release after recovering from about $83,000, putting the $87,000 to $87,500 resistance area back in focus. The $82,000 level remains an important support area if the post payroll recovery fades. Markets had cut the probability of another October hike to around 25% before the numbers, and the miss gives traders another input before the Fed's Oct. 27 to Oct. 28 meeting.

Why it matters

A weaker labor market could give the Fed another reason to wait after it raised its benchmark rate by 25 basis points in September. Vice Chair Philip Jefferson said on Oct. 1 that future policy changes should depend on incoming economic data, the outlook and the balance of risks. A pause would leave borrowing costs unchanged rather than provide the stimulus of a rate cut.

The immediate question for Bitcoin is whether lower rate expectations pull Treasury yields down enough to ease macro pressure. The 10 year Treasury yield rose above 5.34% on Oct. 1 and later eased toward 5.25%. Bitcoin moved above $87,000 in September but later fell toward $83,000 as bond yields rose and the dollar strengthened.

Coinbase stock fell 3.32% to $183.00 on Friday, October 2, after an early rally approached $200, and shares were down $6.29 at 1:33 p.m. EDT. Lower yields could improve appetite for companies exposed to speculative trading and digital assets, but the stock still reversed its early gains.

What the data shows

• Payrolls rose 29,000 against a 90,000 consensus, and unemployment moved to 4.2% from 4.1%.
• The 10 year Treasury yield climbed above 5.34% on Oct. 1 before easing toward 5.25%.
• Bitcoin traded near $85,709 and Ethereum around $2,704 as the crypto market rose 1% over 24 hours.
• Coinbase fell to $183.00, with $182 seen as potential support, $185 as the first recovery barrier and $189.29 as the previous close.
• A market post cited by CoinGape put October rate hike odds at 17%, against a near 75% chance days earlier.

What is still unclear

• It is not clear whether bond yields will keep falling or rebound as traders turn back to inflation and the possibility of another Fed move later this year.
• It is not clear whether spot Bitcoin ETF demand recovers, because recent on chain data showed new spot demand had weakened despite strong trend readings.
• It is not clear whether Coinbase holds $182, the area where the session lows formed.

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