Bitcoin climbed above $65,000 after the July U.S. jobs report showed an unexpected decline in payrolls, weakening the case for another Federal Reserve rate hike.
Summary
- U.S. nonfarm payrolls fell by 23,000, missing forecasts for an increase of roughly 80,000 to 85,000.
- Revisions removed a combined 103,000 jobs from May and June payroll figures.
- Bitcoin rose nearly 2% to around $65,200 as traders lowered their expectations for another rate increase.
- Options traders remain cautious, with geopolitical and inflation risks still limiting conviction in further upside.
US payrolls record third-largest decline since 2020
The U.S. economy lost 23,000 jobs in July, according to data from the Bureau of Labor Statistics. Economists had expected employers to add between 80,000 and 85,000 positions.
The contraction was the third-largest monthly payroll decline since 2020. It also marked a sharp reversal from June, when the economy added 57,000 jobs after a downward revision of 37,000.
Revisions to the previous two months removed 103,000 jobs from the earlier estimates, suggesting that labor demand had weakened more than initial reports indicated.
The unemployment rate edged down to 4.1%, compared with forecasts for 4.2%. Annual wage growth also slowed to 3.2%, providing another sign that pressure in the labor market may be easing.
The mixed report leaves the Federal Reserve balancing two sides of its mandate. Weak hiring supports keeping borrowing costs unchanged, but inflation and energy-market risks could prevent policymakers from shifting toward easier policy.
Bitcoin rises as Fed hike expectations decline
Bitcoin traded near $65,200 after the report, gaining almost 2% on the day. The asset had faced selling pressure earlier in the week as traders considered the possibility of a September rate hike.
Prediction market positioning shifted after the payroll data. Polymarket traders placed the probability of a rate increase before the end of 2026 at 56%, down from a recent high of 77%.
The probability that the Fed will leave rates unchanged at its September meeting rose to 66%, compared with about 50% a day earlier.
Iggy Ioppe, chief investment officer at Theo, told crypto.news that one weak report may not be enough to change Fed Chair Kevin Warsh’s policy stance while energy and shipping risks remain elevated.
“A softer jobs number does not automatically close that gap. Risk assets, including Bitcoin, retain the medium-term support that comes from continued inaction, but the same geopolitical energy risk that is keeping the Fed cautious also continues to limit upside.”
Ioppe said oil-price pressure and shipping risks in the Strait of Hormuz and Red Sea were keeping the inflation picture uncertain. Those pressures could prevent the Fed from responding to labor-market weakness with easier policy.
Bitcoin options traders retain downside protection
The options market may provide another signal of whether investors view the jobs report as a lasting change in the interest-rate outlook.
Andrei Grachev, managing partner at DWF Labs, told crypto.news that puts for the end-August expiry had been trading at premiums roughly 50% above calls with similar probabilities of paying out.
“If that gap narrows after a soft print, the caution priced into this market was genuinely about rates. If it holds, traders are hedging something else, and one dovish data point will not change the stance.”
Grachev added that upside positioning had already rebuilt around $70,000. That suggests traders are prepared for a potential rally without showing strong confidence that Bitcoin will reach the level.
A drop in the put premium would indicate that defensive positioning was partly tied to expectations for higher rates. If the premium remains, traders may be hedging against geopolitical, inflation or broader market risks.
August CPI becomes the next test
Fabian Dori, chief investment officer at Sygnum Bank, said in a statement to crypto.news that the Fed must determine whether the weaker report reflects genuine demand deterioration or a manageable slowdown.
“An orderly slowdown supports the liquidity relief case, while a print weak enough to raise growth concerns can still pressure risk assets even as rate odds move.”
Dori said labor-force participation would remain an important secondary measure. He added that Treasury cash balances, changes to the enhanced supplementary leverage ratio, private credit creation and stablecoin flows would also shape liquidity conditions for digital assets.
Markets will next focus on the U.S. consumer price index report scheduled for Aug. 12. The data could show whether energy and transport costs are keeping inflation elevated despite the weakening labor market.
For Bitcoin, softer inflation could support a move toward $70,000, while a hotter reading may revive rate-hike expectations and challenge the recovery above $65,000.
