Bitcoin Pares Gains Above $79,000 as Strong Jobs Data Revives Fed Rate Hike Bets

Bitcoin pared a significant portion of its earlier gains on Friday, though it held above the $79,000 level, after a much stronger-than-expected U.S. jobs report rekindled expectations for a Federal Reserve interest rate hike.

As of 9:54 AM ET, Bitcoin was trading at $79,411, a modest gain of 0.6%. The cryptocurrency had earlier surged to an intraday high above $82,000, its best level in nearly four months, before retreating on the jobs data.

Strong Labor Market Shifts Fed Outlook

The U.S. economy added 162,000 nonfarm payrolls in August, dramatically outpacing economists' forecasts of 55,000, according to the Bureau of Labor Statistics. The unemployment rate remained steady at 4.1%, while figures for June and July were revised upward by a combined 55,000.

The robust data suggests a resilient labor market, which could empower the Federal Reserve to continue its aggressive monetary tightening to combat persistent inflation. Following the report, the probability of a 25-basis-point rate hike at the Fed's September 16 meeting rose to approximately 58%, up from 52% prior to the release, according to the CME FedWatch Tool.

Market Impact and Context

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Despite the pullback, Bitcoin is on track to post a weekly gain of over 2%, marking its third consecutive week of advances. The earlier rally this week was partly fueled by dovish comments from Fed Governor Christopher Waller, who signaled a preference for holding rates steady, which had temporarily pushed U.S. Treasury yields lower.

Higher interest rates and bond yields typically increase the opportunity cost of holding non-yielding assets like Bitcoin, making them less attractive to investors. Sentiment this week was also supported by reports of potential progress on U.S. crypto regulation and a strong overnight session for crypto-related stocks, with major corporate Bitcoin holder MicroStrategy reportedly surging nearly 18%.

Altcoins Follow Bitcoin's Trajectory

Other major cryptocurrencies mirrored Bitcoin's price action, trimming their gains after the employment figures. Key altcoin movements included:

• Ethereum (ETH): Up 1% to $2,455.53, on pace for a 1.4% weekly gain.
• XRP: Gained 1.6%, bringing its weekly advance to over 4%.
• BNB: Rose 0.6%, with a weekly increase of nearly 5%.