The focus of investors has shifted to Bitcoin (BTC) in light of the most recent nonfarm payrolls data from the US Bureau of Labor Statistics (BLS). Despite overall positive market sentiment, economic indicators suggest potential challenges for the leading cryptocurrency in 2025.

Currently, Bitcoin is trading above $94,000, following a period of volatility that resulted in a 3.45% loss over the past week.

Analysts Predict End of Fed’s Rate Cut Strategy

In a recent analysis by experts at The Kobeissi Letter, the employment data for December 2024 was scrutinized. According to the BLS, nonfarm payrolls employment saw an increase of 256,000 jobs, surpassing expectations by 100,000 jobs.

The analysts at The Kobeissi Letter noted a consistent job growth in the US economy, with an average addition of 165,000 jobs since July, marking the highest 6-month average recorded since July 2024.

Following the Federal Reserve’s decision to implement interest rate cuts based on jobs growth and inflation concerns, analysts suggest that the central bank’s strategy may have been misaligned with the current economic trends.

As a result, the Fed is anticipated to pause further rate cuts to address potential inflation pressures stemming from strong jobs data, potentially even considering rate hikes.

The absence of rate cuts or a shift towards rate hikes is typically seen as detrimental to Bitcoin, as lower interest rates encourage investment in riskier assets like cryptocurrencies. The perceived change in the Fed’s stance towards rate cuts led to a 9% flash crash for Bitcoin in mid-December as investors reevaluated their positions across financial markets.

The Kobeissi Letter’s analysis suggests that the Fed’s approach to rate cuts might be coming to an end, with a 44% likelihood of no rate cuts expected through June 2025.

Bitcoin Price Update

As of the latest data, Bitcoin is priced at $94,028, showing a slight 0.22% increase in the past 24 hours. Over the last seven and thirty days, the cryptocurrency has decreased by 3.72% and 6.35% respectively.

Despite potential changes in the Fed’s monetary policy, Bitcoin investors remain optimistic due to historical price trends during bullish cycles, anticipated support from a pro-crypto US government, and continued institutional interest through spot ETFs.

With a market capitalization of $1.84 trillion, Bitcoin maintains its position as the largest cryptocurrency and the world’s eighth-largest asset.