Key Points:
The Federal Reserve may lower interest rates against the backdrop of weak U.S. employment data, which is expected to drive a new round of increases in Bitcoin (BTC).
Bitcoin (BTC) rebounded within a wedge pattern after holding key support levels, targeting $129,000.
Bitcoin (BTC) fell below $111,000, moving in sync with the decline of the U.S. stock market. Previously, the U.S. Bureau of Labor Statistics (BLS) cut 911,000 jobs from employment data, marking the largest historical decline.
As the risk of a U.S. economic recession increases, will Bitcoin continue to decline? Let's analyze.
In the benchmark revision by the U.S. Bureau of Labor Statistics in March 2025, 880,000 private sector jobs were cut, along with 31,000 government jobs. The unemployment rate rose to 4.3%, with employers adding only 22,000 jobs in August, far below the expected 75,000.
Core Personal Consumption Expenditures (PCE) inflation remained at 2.9%, increasing the risk of recession unless the Federal Reserve adopts a more accommodative monetary policy.
Bond traders have bet that Federal Reserve officials will approve a 25 basis point rate cut in September, with the probability rising to 92% as of Tuesday. CME data indicates that there may be two more rate cuts by the end of 2025.
Market commentator The Kobeissi Letter stated: "The Federal Reserve will lower interest rates in a high-inflation environment due to a weak labor market," and added:
History shows the same situation.
For example, during the 1990-1991 recession, even with core PCE remaining at 4% and the unemployment rate rising to 6.8%, the Federal Reserve significantly lowered rates from 8.25% to 3%.
The stock market initially fell over 20%, but rebounded more than 30% the following year as the Federal Reserve's lower credit costs spurred economic recovery.
The Kobeissi Letter noted that in 2025, months before the U.S. Bureau of Labor Statistics data revision, gold prices had risen by 40%, and metal traders "had reflected [weak employment data] in prices months in advance."
In a similar environment, Bitcoin (BTC) has risen 20.30% year-to-date in 2025, and if its historical lagging correlation with gold continues, it may replicate gold's upward trend.
From a technical perspective, Bitcoin (BTC) is expected to break through the historical high of $124,500.
The cryptocurrency has rebounded from the lower trendline of an ascending wedge, indicating that bulls are regaining control. The upward target is close to the 1.618 Fibonacci extension level, which is $129,000, representing a potential increase of 12% to 15%.
Bitcoin (BTC) continues to operate above the 20-week Exponential Moving Average (EMA, red curve, approximately $108,500), further reinforcing bullish expectations and confirming strong support below the current price level.
If Bitcoin (BTC) decisively breaks through the resistance zone of $115,000 to $116,000, it will attract more buyers, accelerating the price increase, setting a new historical high, and initiating a new bull market cycle.
Related: U.S. Congress requests the Treasury Department to report on strategic Bitcoin (BTC) reserve details.
Original: “U.S. Employment Data Major Revision Triggers Bitcoin Volatility: What’s Next for BTC?”
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