Earlier today, the value of Bitcoin experienced unexpected fluctuation, plunging to $30,600, following a surprising announcement on U.S. private employment data. This rapid descent from the 13-month high of $31,500 occurred post announcement, almost in sync with the release of the U.S. ADP private employment report. The data presented was not aligned with predictions, painting a vibrant picture of 497,000 private-sector jobs added in June- much more than any forecasted figure of 220,000.
This American labor success story managed to divert attention from a previously released report highlighting the potential vulnerabilities of the labor market. The report by the Labor Department underlined first-time jobless claim filings increased to 248,000 last week, edging slightly over the pre-forecasted 245,000.
The financial market equally felt the tremors from this unexpected data release. Treasury yields, already on an incline, seemed to advance further post the ADP report. The two-year yield escalated roughly 15 basis points, peaking at 5.118%, unseen since 2006, with the 10-year yield gaining 11 basis points, settling at 4.05%, its highest since March.
The financial market behavior indicates an anticipation of the Federal Reserve extending its rate hike campaign. Evidence of this speculation can be seen from the fact that fed fund futures traders now estimate a 94% probability of 25 basis point rate hike in the current month. The market projects a 75% chance of three additional rate hikes by the end of the year. The Federal Reserve initiated its tightening cycle back in March 2022 and has since elevated rates by a whopping 500 basis points to the current 5%-5.25% range.
While the tighter monetary policy is viewed as a stability measure, the crypto markets tell a different tale. The policy has inadvertently contributed to a decline in crypto markets over the past 18 months. The world of stocks also reacted negatively, with futures tied to the S&P 500 trading 0.9% at press time and Nasdaq futures registering a reduction by 1.1%.
The commodities market, too, felt the shockwave with gold trading 0.5% lower for the day, valuing at $1,905 per ounce. The dollar index managed an impressive recovery from early losses and traded unchanged for the day at 103.24.
Source: Coindesk
