Here’s why Bitcoin and altcoins could rise after weak NFP data

Cryptocurrencies and stocks experienced heightened volatility following the release of disappointing nonfarm payroll data from the U.S., which suggests a potentially dovish stance from the Federal Reserve. Bitcoin (BTC) retraced from around $72,500 to approximately $70,000, while Ethereum (ETH) saw a decline of over 3% in the past 24 hours, dropping to $2,500. The overall market capitalization of all cryptocurrencies fell to $2.45 trillion, and the crypto fear and greed index shifted from a greed level of 65 to a more cautious 57.

In contrast, American stock index futures reacted positively, with the Dow Jones, S&P 500, and Nasdaq 100 indices gaining 230, 33, and 130 points, respectively.

According to the Bureau of Labor Statistics, the U.S. economy added just 12,000 jobs in October, a significant decrease from the 223,000 jobs added in September. This figure fell short of the median estimate of 106,000 and the ADP private sector payrolls figure of 115,000. The bureau attributed the weak job growth to the impact of recent hurricanes and strikes at major employers such as Boeing. Notably, manufacturing payrolls declined by 46,000, while government payrolls increased by 40,000.

On a more positive note, the unemployment rate held steady at 4.1%, and wage growth remained robust, with average hourly earnings rising by 0.4% month-on-month and 4.0% year-on-year.

Why the NFP data matters to Bitcoin and other cryptocurrencies

In theory, the recent data could potentially have a positive impact on Bitcoin, altcoins, and the overall stock market for two primary reasons. First and foremost, the timing of this data release just before the upcoming American elections could influence voters to lean in favor of Donald Trump, who has notably expressed his support for the crypto industry. Trump has suggested the possibility of appointing a more crypto-friendly figure to lead the Securities and Exchange Commission (SEC), which could signal a more favorable regulatory environment for digital assets. In stark contrast, the current SEC chair, Gary Gensler, has faced significant criticism for the commission’s approach, which many perceive as overly aggressive and enforcement-heavy. A recent example of this tension is the Wells Notice issued to Immutable X, a layer-2 network focused on gaming, which highlights the ongoing challenges that cryptocurrency projects face under the current regulatory climate.

Additionally, the weak nonfarm payroll data released could also encourage the Federal Reserve to adopt a more aggressive stance on cutting interest rates, especially as inflation trends toward the 2% target. This was evident in the subsequent decline of U.S. bond yields following the report, indicating that investors are reacting to the implications of the data. The Fed has already initiated a process of reducing interest rates, and analysts widely expect this trend to persist in the coming months. According to the CME FedWatch tool, the market anticipates that interest rates will decrease to approximately 3.50% by the end of 2025, down from the current rate of 5.0%.

Historically, riskier assets such as Bitcoin and stocks tend to perform particularly well when the Federal Reserve lowers interest rates, as this environment encourages some investors to shift their capital from relatively safer money market funds into these higher-risk investments. This behavioral trend is already reflected in the recent inflows into Bitcoin ETFs, which indicate a growing interest in the cryptocurrency market amidst shifting monetary policy and economic conditions.