Bitcoin Slips Below $79,000 as Strong Jobs Data and Oil Rally Fuel Fed Rate Hike Fears

Bitcoin's price fell toward the $78,000 mark on Tuesday, extending a retreat from a recent three-month high. The cryptocurrency is facing dual pressures from renewed expectations for a Federal Reserve interest rate hike and a surge in oil prices that is stoking inflation concerns.

As of 9:06 AM ET, the world's largest cryptocurrency was trading at $78,577.5, a decrease of 1.1%, according to data from Investing.com. The price had briefly surpassed $82,000 last week before the momentum reversed.

Hawkish Fed Expectations Return

The catalyst for the renewed selling pressure was last Friday's U.S. employment report, which showed the economy added 162,000 jobs in August—nearly triple the consensus forecast. The unemployment rate held steady at 4.1%.

This robust labor market data has prompted traders to re-evaluate the Federal Reserve's next move. The probability of a 25-basis-point interest rate increase at the Fed's September 16 meeting has climbed to approximately 60%, according to the CME FedWatch Tool. Higher interest rates typically weigh on risk-sensitive assets like cryptocurrencies by increasing the appeal of safer, yielding investments such as government bonds. The yield on the benchmark 10-year U.S. Treasury note has risen to around 4.8%.

Inflation Worries and Market Outlook

Compounding the pressure on risk assets is a sharp rise in energy costs. Brent crude, the international oil benchmark, climbed above $98 per barrel on Tuesday, reaching a six-week high amid fears of supply disruptions linked to geopolitical tensions.

Ad

Investors are now closely watching for key inflation reports due later this week, with the Producer Price Index (PPI) on Thursday and the Consumer Price Index (CPI) on Friday. These figures will be the final major data points influencing the Federal Reserve's rate decision.

ETF Inflows Provide Support as Altcoins Falter

Despite the recent downturn, Bitcoin remains well above its recent lows, having gained approximately 25% in August. A key pillar of support has been consistent demand for U.S. spot Bitcoin exchange-traded funds (ETFs), which attracted net inflows of about $1 billion last week, marking their third consecutive week of positive flows.

However, the cautious sentiment was reflected across the broader cryptocurrency market on Tuesday:

• Ethereum (ETH), the second-largest cryptocurrency, fell by 1% to $2,475.92.
• Other major altcoins also saw declines, with Solana (SOL) down nearly 2% and Cardano (ADA) losing 1.5%.
• XRP was largely unchanged, while meme token Dogecoin (DOGE) dropped 1.6%.