Bitcoin could get more room to recover after U.S. nonfarm payrolls rose by just 29,000 in September, well below forecasts, adding to expectations that the Federal Reserve may hold interest rates steady at its October meeting.
Summary
- US nonfarm payrolls rose by just 29,000 in September, well below forecasts, while unemployment edged up to 4.2%.
- The weak jobs report strengthened expectations that the Federal Reserve could pause rate hikes in October, with Treasury yields remaining a key factor for Bitcoin.
- Bitcoin was trading near $86,000 around the payroll release after recovering from roughly $83,000, putting the $87,000 to $87,500 resistance area back in focus.
- Spot Bitcoin ETF demand could help support the recovery, though recent on chain data showed new spot demand had weakened despite strong trend readings.
- A break above $87,500 could bring higher targets back into focus, while $82,000 remains an important support area if the post payroll recovery fades.
According to Reuters, payrolls rose by 29,000 last month after August’s gain was revised down to 133,000 from the 162,000 initially reported. Economists surveyed by the news agency had expected 90,000 new jobs. The unemployment rate edged up to 4.2% from 4.1%.
The weak headline arrived at a sensitive point for Bitcoin. BTC had already climbed past $85,000 before the release as traders cut expectations for another immediate Fed rate hike, while short sellers closed positions during the move.
Bitcoin was trading toward $86,000 in the hours leading up to the jobs report, leaving the market within reach of the $87,000 to $87,500 area that has repeatedly limited gains over the past two weeks.
A weaker labor market could give the Fed another reason to wait after raising its benchmark rate by 25 basis points in September. For Bitcoin, the immediate question is whether lower rate expectations can pull Treasury yields down enough to ease some of the macro pressure that has repeatedly interrupted its recent rallies.
Weak payrolls strengthen the case for an October Fed pause
Expectations for an October pause had already been building before the payroll release.
Federal Reserve 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 following September’s rate increase.
As crypto.news previously reported, markets had reduced the probability of another October hike to around 25% before the latest employment numbers, with attention increasingly moving toward December.
September’s payroll miss gives traders another piece of data to consider before the Fed’s Oct. 27 to Oct. 28 meeting.
Bitcoin has been sensitive to changes in those expectations because Treasury yields have remained elevated. The 10 year Treasury yield climbed above 5.34% on Oct. 1 before easing toward 5.25% as investors reassessed the likelihood of another immediate rate hike.
High yields have been one of the main obstacles for BTC during its recent recovery. Bitcoin moved above $87,000 in September but later fell toward $83,000 as bond yields rose and the dollar strengthened.
A sustained fall in yields following the employment report could remove some of that pressure. The effect would be less clear if bond yields rebound as traders turn their attention back to inflation and the possibility of another Fed move later this year.
Bitcoin price still needs to clear $87,500
The payroll miss comes as Bitcoin approaches a price area that analysts were already watching before the report.
Bitcoin’s October price outlook identified $87,500 as the main upside level that BTC would need to reclaim for the current recovery to gain more ground.
Bitget Wallet research lead Lacie Zhang told crypto.news that a break above $87,500 could raise the likelihood of a short squeeze and open a path toward $95,000. Her October range placed Bitcoin between $78,000 and $95,000, depending on institutional demand, inflation and interest rate conditions.
The downside levels remain relevant if the initial reaction to payrolls fades.
Zhang identified $82,000 as an important support level, with a liquidation area between roughly $82,000 and $82,500. A sustained move below $80,000 would invalidate her seasonal bullish setup.
Bitcoin’s move into the jobs report has already involved short covering. BTC reclaimed $85,000 before the employment numbers were published, meaning part of the rally came from traders closing bearish positions.
Short sellers have to buy back exposure when they close positions, creating buying pressure that can push the price higher without necessarily bringing in investors willing to hold Bitcoin for a longer period.
The next test is whether spot demand remains after that forced buying fades.
Bitcoin ETF demand could support the rally
U.S. spot Bitcoin ETFs provide another source of demand as BTC tries to break through its recent highs.
The funds recorded roughly $2.39 billion in net inflows during the week ended Sept. 25, with all five trading sessions finishing in positive territory. Daily inflows reached $999 million on Sept. 21 before slowing later in the week.
Institutional demand remained present even as Bitcoin struggled to hold its September move above $87,000.
The relationship between ETF demand and price is not automatic. Strong fund subscriptions can be absorbed by sellers, while a rally driven mainly by short covering can lose momentum once bearish positions have been closed.
Recent on chain data point to a similar split.
CryptoQuant’s Bitcoin Bull Score reached 90 out of 100 following the September breakout, while its apparent demand measure contracted by roughly 170,000 BTC over the preceding 30 days.
Bitcoin traded near $83,300 on Sept. 30 after reaching around $87,400 during the earlier rally.
The difference between strong trend readings and weaker new spot demand leaves ETF flows particularly relevant following the jobs report. Continued fund inflows while Bitcoin holds above $85,000 would provide a different source of buying from the short covering that helped drive the latest move.
Treasury yields could decide whether Bitcoin holds the payroll boost
Bitcoin’s reaction to the payroll report will depend partly on what happens in the Treasury market.
The 10 year yield had already become a recurring pressure point before Friday’s employment figures. It reached around 5.2% on Sept. 24 while Bitcoin retreated from above $87,000 toward $84,000, then moved above 5.3% as BTC struggled to regain its highs.
Lower yields after the weak payroll report would fit with traders expecting the Fed to wait longer before raising rates again.
Bitcoin does not necessarily rise every time employment data weaken, however. A substantial deterioration in the labor market can hurt demand for risk assets even when bond yields fall, while renewed inflation concerns could keep longer term borrowing costs elevated despite softer employment.
September’s payroll number may face another complication. Reuters reported that economists viewed seasonal adjustment effects, including the timing of Labor Day, as a possible reason for some of the weakness. Initial jobless claims have remained low, providing little evidence so far of widespread layoffs.
For BTC, the bond market’s response therefore provides another test of how investors are interpreting the report.
A continued retreat in the 10 year yield alongside Bitcoin holding above $85,000 would keep attention on the $87,000 to $87,500 resistance area. A return toward recent yield highs could again put pressure on the cryptocurrency even if expectations for an October Fed hike remain low.
What to watch for Bitcoin next
Bitcoin’s first test is the $87,000 to $87,500 area, where the September rally previously stalled. A sustained move through $87,500 would put the $95,000 scenario identified by Zhang back into focus.
On the downside, $82,000 remains the main level highlighted by analysts entering October, with $80,000 sitting below it as another threshold if the post payroll move reverses.
Treasury yields remain another key part of the setup. Bitcoin has repeatedly struggled when the 10 year yield moved above 5%, making the direction of bond markets after the payroll report relevant to whether the latest recovery can hold.
ETF flows will provide a separate reading on demand. Continued positive flows would show that institutional buying remains active after the employment release, while weakening flows combined with falling open interest could indicate that much of the latest price move came from traders closing short positions.
The next major U.S. macro test comes with September CPI on Oct. 14. Inflation remains above the Fed’s target, leaving policymakers with another major data release before deciding whether September’s rate hike should be followed by another move.
Bitcoin’s immediate range remains defined by $82,000 on the downside and $87,500 on the upside as traders assess whether the payroll miss can turn lower expectations for an October rate hike into sustained demand for BTC.
