October Fed Rate Cut Odds Rise After Weak U.S. Labor Data, Bitcoin Surges

Paul
2 hours ago
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U.S. Federal Reserve symbol with scissors cutting percentage sign, showing rate cuts amid rising Bitcoin price.

Highlights

  • ADP jobs report shows 32,000 decline, sparking strong October rate cut bets.
  • Bitcoin surges past $116,000 as weak labor data boosts easing expectations.
  • Citi economists forecast Fed 25bp cuts in October and December.

U.S. private payrolls unexpectedly fell in September, raising market bets that the Federal Reserve will cut rates in October. This has coincided with a rise in Bitcoin price. Economists had expected an increase of 50,000 following a revised gain of 54,000 in August.

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Market Participants Expect Fed Rate Cuts After Weak Payroll Data

The ADP National Employment Report showed a decline of 32,000 jobs, the steepest drop since March 2023. The weak data shifted investor expectations sharply, including a positive effect on Bitcoin. On Polymarket, the probability of the Fed keeping rates unchanged fell to only six percent.

Traders now anticipate another cut, as the central bank tries to ease pressure on a slowing labor market. The Fed reduced its benchmark rate in September to a range of 4.00% to 4.25%.

Polymarket chart shows only 6% odds of no Fed rate change in October.
Polymarket data shows slim 6% chance Fed keeps rates unchanged in October.

The release came at a sensitive time. The U.S. government has entered a shutdown after Congress failed to pass funding. The government shutdown has suspended many official reports, leaving private data like ADP with more weight. Without the Labor Department’s jobs release, investors turned to ADP for signals about hiring conditions.

The decline reinforced concerns that employers remain cautious despite strong growth earlier this year. Hence, Citi economists say the Fed will likely deliver 25bp rate cuts in October and December, as signaled in its dot plot.

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ADP Job Losses Fuel October Rate Cut Expectations and Bitcoin Rally

The ADP report showed that a high number of employees from small and medium businesses lost their jobs. A big decline was experienced in industry sectors such as leisure, hospitality and professional services.

Only large companies as well as certain healthcare companies employed many workers. A re-examination of the data added to the downward factor. Expectations for October were shaped by the ADP surprise and compelled many to request another rate cut.

Chicago Fed President Austan Goolsbee recently warned against rate cuts. He argued that the labor market remains steady, but the ADP report challenges that view.

The change brought positive sentiments to crypto markets. Bitcoin price surged beyond $116,000, as it has done over the past week and month. The TradingView data indicated that there was a big move at the beginning of the day even as the futures trading volume increased.

Bitcoin price chart shows sharp surge above $116,000 after jobs data.
Bitcoin spiked after weak U.S. labor data increased bets on October Fed rate cuts.

Bitcoin derivatives activity rose on Coinglass, with futures volumes nearing $100 billion in a single day, up by over 18%. Expectations of easier policy have consistently supported digital assets during periods of economic uncertainty.

The weak dollar and lower interest rate regarding borrowed funds tend to draw funds inflow into other investment options. The next few weeks will determine if the Fed backs market bets regarding rate cuts.

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Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.

Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
Paul Adedoyin is a crypto journalist with 4+ years experience who provides timely news, in-depth research, and insightful content to inform and empower his audience. His works have been featured on sites such as CryptoMode, CryptoNewsFlash among others. He holds a degree in Geophysics from OAU, Nigeria. When he's not writing, he loves watching soccer and reading educative journals. He can be reached via [email protected]
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.