- Strong US job data continues to reduce hopes for quick Fed rate cuts, putting fresh pressure on bitcoin prices.
- Rising inflation and steady hiring trends keep crypto traders cautious as the Federal Reserve holds firm on rates.
- Bitcoin faces renewed volatility after lower jobless claims strengthened confidence in the US economy and labor market.
US jobless claims rose modestly last week, yet the American labor market continued showing surprising strength despite ongoing layoffs across major corporations. The Labor Department reported 200,000 new unemployment claims for the week ending May 2, slightly below economists’ expectations of 205,000 filings.
The data reinforced expectations that the Federal Reserve could keep interest rates higher for longer as inflation pressures persist. As a result, bitcoin and other cryptocurrencies faced renewed pressure because traders reduced bets on near-term rate cuts.
Meanwhile, continuing claims fell to 1.77 million while the four-week moving average declined to 203,250, signaling that employers still avoid widespread layoffs even amid economic uncertainty and slowing corporate hiring.
Strong Labor Market Delays Fed Easing
The U.S. labor market continued to show resilience, supporting the Federal Reserve’s cautious approach to interest rates. Employers added 178,000 jobs last month, while the unemployment rate edged down to 4.3% following February’s weaker payroll figures.
Still, inflation remains a major concern for policymakers and consumers alike. Rising energy costs and ongoing geopolitical tensions, particularly involving Iran, have kept pressure on global markets despite the current ceasefire agreement.
Oil prices have stayed close to $90 a barrel after briefly surging to $112 last month. At the same time, gasoline prices have climbed sharply across the country. According to AAA, the national average for regular gasoline reached $4.56 per gallon on Thursday.
Higher fuel costs are continuing to push up prices across the broader economy. Data from the Commerce Department showed inflation rose 3.5% in March from a year earlier, marking the sharpest increase in nearly three years. Core inflation, which excludes food and energy, also moved higher, signaling that price pressures remain persistent.
Against that backdrop, the Federal Reserve left interest rates unchanged at its latest meeting as officials wait for clearer signs that inflation is easing.
Crypto Markets React to Economic Strength
Crypto markets continue facing pressure as strong US economic data weakens expectations for near-term Federal Reserve rate cuts. Investors usually move away from riskier assets like bitcoin when Treasury yields rise and borrowing costs stay elevated. Yahoo Finance recently reported that stronger employment figures continue pushing yields higher, making the outlook tougher for digital assets after recent rallies.
Traders already saw a similar market reaction during April’s jobless claims release. Initial claims came in at 207,000, below the 213,000 forecast. Shortly after the report, bitcoin dropped below $75,000 before recovering part of the loss later in the session.
Meanwhile, prediction platform Forecastex showed that most traders expected claims to remain relatively low this week, reflecting continued confidence in the US economy.
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