Bitcoin Dips Below $30K Amidst Strengthening Fed Rate Hike Speculations Triggered by Blowout ADP Report

Bitcoin (BTC) experienced a decline below the $30,000 mark following the release of a strong U.S. ADP private employment report.

The report revealed a surprising addition of 497,000 private-sector jobs in June, surpassing the consensus forecast by a significant margin.

As a result, market sentiments shifted towards expectations of a potential rate hike by the Federal Reserve, leading to an increase in Treasury yields. This article explores the impact of the ADP report on Bitcoin’s price and the growing speculations of a Fed rate hike.

The ADP report exceeded expectations by showcasing robust growth in the private sector job market. The addition of 497,000 jobs in June surpassed the consensus forecast of 220,000, significantly boosting investor confidence.

Despite a separate Labor Department report indicating some labor market weakness with an increase in jobless claims, the strong ADP figures overshadowed the modest weakness.

Treasury Yields Rise: Following the release of the ADP report, Treasury yields experienced an upward surge. The two-year yield spiked approximately 15 basis points to reach 5.118%, the highest level since 2006.

The ten-year yield also climbed by 11 basis points, hitting 4.05%, its highest level since March. The surge in yields reflects growing expectations of the Federal Reserve extending its rate hike campaign.

The rise in short-term interest rate expectations, indicated by the surge in two-year Treasury yields, suggests that traders anticipate the Federal Reserve to continue raising rates.

Market participants now assign a 94% probability of a 25 basis point rate hike this month. Additionally, there is a 75% chance of three more rate hikes by the end of the year. The Fed’s tightening cycle, initiated in March 2022, has led to a total increase of 500 basis points in interest rates, impacting various markets, including cryptocurrencies.

The tightening of monetary policy by the Federal Reserve has played a role in the recent decline in crypto markets. Over the past 18 months, the tighter policy, along with other factors, has contributed to a downturn in the crypto industry.

The latest developments, including the blowout ADP report and expectations of further rate hikes, have added to the challenges faced by cryptocurrencies, including Bitcoin.