Rate expectations reverse after weak jobs report
Bitcoin traded near $86,000 on October 5, up about 1% for the day, as financial markets sharply reduced the odds of another U.S. Federal Reserve interest rate hike. Following a weak September jobs report, markets priced an 18% probability of a rate increase at the Fed's October 28 policy meeting, down from 70% at the end of September. The shift reflects growing expectations that the central bank will hold rates steady rather than tighten further.[S1]
September's employment data came in far weaker than anticipated, with just 29,000 jobs created against economist forecasts of 84,000. Unemployment climbed to 4.2%, while pay increases decelerated to the slowest rate seen since May 2021. In September the Fed lifted rates by a quarter point — its first such move in three years — citing stubborn inflation. Traders now expect policymakers to hold steady in October, a shift that favors Bitcoin along with Ethereum and Dogecoin.[S1]
FOMC minutes and on-chain data in focus
Bitcoin's price reached $86,160 on October 5, pushing the total crypto market capitalization to $2.93 trillion. Traders are awaiting the release of minutes from the September Federal Open Market Committee meeting on October 7, which could clarify whether officials lean hawkish or dovish. The Fed held its policy meeting on September 16 and raised rates by 25 basis points to a range of 3.75% to 4%. After that meeting, rate hike odds for October rose above 80% following comments from Fed Chair Kevin Warsh that inflation was too high. However, last week's PCE inflation report showed a noticeable drop in consumer prices, and rate hike odds have since fallen to 17% on CoinGape prediction markets. Fed governor Phillip Jefferson has suggested the Fed might hold rates steady in October.[S2]
On-chain data from CryptoQuant shows 6,036 BTC flowed out of exchanges between September 28 and October 4, with 1,071 BTC leaving on October 4 alone, indicating most traders are unwilling to sell. Whale activity also remains subdued: transfers by addresses holding 100 to 1,000 BTC have stayed fairly flat, while accounts with 10 to 100 BTC have increased transfers to exchanges. Meanwhile, SoSoValue data shows Bitcoin ETFs recorded three consecutive weeks of inflows, suggesting institutional demand remains strong. On the four-hour chart, Bitcoin has entered a sell wall at $86,000, where short-term holders are taking profits; a break above could target $87,395.[S2]
