DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.

Citigroup has pushed its forecast for the Federal Reserve’s first interest rate cut to June 2027 after US employers added 162,000 jobs in August. The gain was more than triple the 53,000 economists had expected, extending the bank’s timeline for lower borrowing costs by nine months.

The surprise reopened a central question for Bitcoin traders. A resilient labor market could keep real yields, the dollar, and interest rates elevated, maintaining pressure on demand for risk assets.

The August payroll report delivered strength beyond the headline figure. The unemployment rate held at 4.1%, while labor force participation increased by 0.2 percentage point.

Earlier employment estimates also received substantial upward revisions. July payrolls changed from a reported loss of 23,000 jobs to a gain of 21,000, while June’s total was revised upward by 11,000.

Citi economists Andrew Hollenhorst and Veronica Clark concluded that employment conditions appeared stable enough for the Federal Reserve to focus squarely on inflation. That assessment marked a substantial shift for one of Wall Street’s more dovish desks.

Citi previously expected rate cuts in October and December 2026, followed by another reduction in January 2027. The bank now projects reductions in June, September, and December 2027.

Rate futures reacted immediately after the jobs report. The implied probability of a September Federal Reserve rate increase climbed from 52% to 61%, and Bitcoin was rattled within hours of that repricing.

The Federal Reserve followed through on September 16, increasing its benchmark rate by 25 basis points to a target range of 3.75% to 4%. It was the first increase since July 2023, even though traders had wanted a cut.

Sixteen of 18 officials projected at least one additional increase before year end. Inflation has remained above the Federal Reserve’s 2% target for more than five years, according to the central bank’s own framing of the data.

The basic case against Bitcoin in this environment is straightforward. Treasury yields and a stronger dollar compete with risk assets for capital, while Bitcoin produces no yield simply from being held.

Every delay in rate cuts therefore increases the opportunity cost of holding Bitcoin instead of government debt. That familiar crypto liquidity pressure initially appeared in Bitcoin’s price, although the reaction changed once the rate increase arrived.

Bitcoin briefly dropped toward $75,000 immediately after the September 16 decision. It then reversed and climbed above $86,000 as exchange traded fund demand returned, yields eased, and short sellers were forced out of bearish positions.

The rebound cannot be attributed to one cause, and it does not establish that Bitcoin has separated from monetary policy. It does show that a rate increase alone is not an automatic sell signal when other capital flows are moving in the opposite direction.

Bitcoin had already demonstrated its sensitivity to macroeconomic surprises after the August jobs report. The cryptocurrency fell below $80,000 after reversing from an intraday high near $81,370 and was later quoted around $79,600, down roughly 1.5% for the day.

Before the September Federal Reserve meeting, Bitcoin dropped below $76,000 as the probability of an increase moved above 92%. After its post decision decline toward $75,000, the cryptocurrency recovered and briefly touched $87,000.

Flow data supported the recovery narrative. US spot Bitcoin exchange traded funds recorded $433 million in net inflows on September 18 after heavy withdrawals earlier that week, suggesting institutional demand returned once the rate increase had been priced in.

The variables that moved Bitcoin twice during the past month remain central for traders. They include real yields, Treasury yields, dollar strength, spot exchange traded fund flows, and the next inflation and payroll reports.

Firm labor data and persistent inflation would support a higher for longer policy stance, keeping yields elevated and tightening crypto liquidity. If yields ease and exchange traded fund demand persists, Bitcoin could continue absorbing hawkish surprises before Citi’s projected June 2027 cut arrives.

DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.