After Bitcoin's initial unemployment benefit data in the United States exceeded expectations, it fell back below $80,000. The data indicates that layoffs remain at historically low levels, which also raises new questions in the market regarding the Federal Reserve's next interest rate decision.
Bitcoin briefly reached $80,500, but then fell below $80,000. Although there was still an increase within the past 24 hours, the buying momentum failed to sustain the rebound.
The number of Americans applying for unemployment benefits for the first time dropped to 189,000, below the market forecast of 196,000, marking the lowest level since 1969, indicating that employers are still reluctant to lay off workers.
Labor market data that is stronger than expected could complicate the market's expectations for further interest rate cuts by the Federal Reserve and may put pressure on risk assets such as Bitcoin.
U.S. spot Bitcoin ETF recorded a net inflow of $74.6 million on November 4, ending three consecutive trading days of capital outflows. However, the flow of funds among major funds remains divergent.
According to a report by American News on November 5th, as of the week ending October 31st, the number of people applying for unemployment benefits for the first time decreased by 6,000 to 189,000, which is lower than the market expectation of 196,000. The data from the previous week was revised upward to 195,000.
The latest data is on par with the low point in mid-July, and the reading in mid-July was itself the lowest since 1969. This indicates that despite economic uncertainties, American employers are still reluctant to lay off employees.
Meanwhile, data from CoinGecko shows that at the time of writing this article, Bitcoin was trading at $79,356, up 1.3% in the past 24 hours. Previously, Bitcoin had risen above $80,500, but then it lost momentum and fell below the psychological barrier of $80,000.
This decline occurred during the rebound process following the selling pressure related to the U.S. mid-term elections. Previously, Bitcoin had briefly fallen to $75,600 before buying interest returned.
The unexpectedly low number of unemployment benefits applications indicates that, despite companies remaining cautious about expanding recruitment, the U.S. labor market remains strong.
According to the Associated Press, the number of people claiming unemployment benefits at the beginning of each week over the past eight weeks has remained below 200,000, with the four-week moving average dropping to 194,750.
However, the employment landscape remains divided. Reuters reports that the number of people continuing to receive unemployment benefits, which is a measure of those still receiving unemployment relief, has increased by 23,000 to 1.718 million.
The difference between these two sets of data indicates that employers are laying off employees relatively less, but it takes those who have already become unemployed longer to find new jobs.
For financial markets, stronger initial job data may complicate market expectations for further interest rate cuts by the Federal Reserve.
A robust labor market leaves more room for policymakers to maintain higher borrowing costs when assessing inflation, which may reduce the urgency for further easing measures.
If traders start to anticipate fewer interest rate cuts in the coming months, this outcome could suppress risky assets, including cryptocurrencies.
At its October meeting, the Federal Reserve maintained the benchmark interest rate unchanged at 3.75% to 4%. Investors are currently awaiting more employment data in order to find clues for its next decision.
Bitcoin's recent decline occurred after a volatile trading week, during which institutional capital flows and the U.S. mid-term elections contributed to significant price fluctuations.
US spot Bitcoin exchange-traded funds recorded a net inflow of $74.6 million on November 4, ending three consecutive trading days of net outflows.
Fidelity's FBTC attracted $236.7 million in capital inflows, whereas BlackRock's IBIT recorded $201.2 million in capital outflows, indicating that despite the overall positive figures, institutional demand remains uneven.
This rebound was also supported by a wave of short sellers closing their positions; approximately $378 million worth of bearish cryptocurrency positions were closed within an hour.
However, Bitcoin failed to hold above $80,000, once again making the current support level the focus of attention.
The range of $79,000 to $79,500 remains the area that needs attention recently; if it continues to fall below this range, it may expose the level of $78,000.
On the upside, buyers need to regain $80,000 and further break through the range of $80,500 to $80,800 in order to restore momentum.
The next important economic data from the United States is the employment report for October, which is scheduled to be released on November 6th. Economists surveyed by FactSet expect employers to create about 65,000 new jobs, and the unemployment rate is expected to remain at 4.2%.
