The strong United States September jobs report signals a possible slowdown in interest rate cuts but remains bullish for Bitcoin (BTC) as investors warm to riskier assets, Zach Pandl, Grayscale’s head of research, told Cointelegraph.
“Conversation about Fed rate cuts and debate about larger government deficits continue alongside solid economic growth, which should be net-positive for investors’ risk appetite and may reintroduce inflation risk in the medium term,” Pandl said.
“Grayscale Research expects Bitcoin to benefit in this risk-positive environment,” he explained.
The US economy gained approximately 254,000 jobs in September, far exceeding economists’ expectations of around 140,000 new jobs, according to the US Bureau of Labor Statistics (BLS).
Spot BTC prices reached an intraday high of more than $62,300 on Oct. 4 following the stronger-than-expected jobs data.
Futures traders expect a standard 0.25% rate reduction following the Fed’s November policy meeting, according to CME Group.
On Sept. 18, the Federal Reserve cut the federal funds rate by 0.5% after a slowdown in inflation and sluggish economic performance in August.
In August, the BLS reported job additions of less than 160,000 and annualized inflation rates of less than 3%.
Current futures market pricing reflects expectations of no more than a quarter of a percent interest rate cut at the Fed’s next meeting in November, with rates currently targeted at around 4.75%.
The bullish jobs report and rate cut expectations contribute to the idea of an “Uptober,” or a fourth-quarter rally for Bitcoin.
Another possible driver is the continued decline in BTC held on centralized exchanges.
Data from CryptoQuant indicates that there are over 2.8 million BTC on centralized exchanges, the lowest number since November 2018, which is 500,000 less than the amount seen in March.
Crypto markets have largely recovered from a sharp pullback on Aug. 5 that saw BTC prices plunge by around 18% in a single day.
Grayscale is the largest crypto asset manager, with over $20 billion in assets under management across its funds, according to the company.
