Friday, July 12, 2024

Fed vs. Bitcoin: the consequences of the decline in jobs in the USA

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The decline in job growth in the USA, and the possible choice of rate cuts by the Fed, could turn out to be good news for Bitcoin. This is revealed by Jag Kooner, Head of Derivatives at Bitfinex. Here is his reasoning. 

Fed vs. Bitcoin: the decline in job growth in the USA as good news for BTC

In the USA, the situation of the decline in job growth could turn out to be positive news for Bitcoin. 

Revealing it is Jag Kooner, Head of Derivatives at Bitfinex, who has prepared a reasoning that also involves the Federal Reserve (Fed).

In practice, the next Non-Farm Payrolls (NFP) report should show a decline in job growth, from 272,000 in May to 200,000 in June, with an unemployment rate expected to remain at 4%.

This data should activate the Fed which has already observed a cooling of the labor market and which could strengthen the choice to opt for the rate cut. 

It is precisely in this eventuality that Kooner of Bitfinex suggests that the bad news could turn into something positive, yes but for Bitcoin.

In fact, Kooner argues that the Fed’s rate cut could support Bitcoin (BTC) prices, as investors seek alternative assets in anticipation of a more relaxed monetary policy.

USA: the decline in employment and the Fed’s rate cuts as a basis to increase the appeal of Bitcoin

In this scenario just described, Kooner adds another theory that suggests an increase in appeal for Bitcoin. 

In fact, for the head of derivatives at Bitfinex, if market operators believe that economic uncertainty will push the Fed towards a potential rate cut, the consideration of BTC as an inflation hedge will instead increase. 

This could lead, in turn, to a surge in the flows of spot Bitcoin ETFs in the USA. 

In this regard, however, Kooner points out that, at the moment, the risk appetite when it comes to Bitcoin ETFs is not yet so broad. In fact, accumulation strategies or buying during bear markets have not yet occurred. 

The tokenized Bond

Recently, Bitfinex has made headlines for Bitfinex Securities which announced the launch of two new tokenized bonds.

These are traditional bonds that, however, could potentially offer higher returns. 

The capital increase will begin on July 3, 2024, and will end on July 31, 2024. 

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