Bitcoin's future depends on upcoming US labor data

Bitcoin's (CRYPTO:BTC) trajectory is closely tied to macroeconomic conditions, particularly the upcoming U.S. labor market data, which could significantly influence its price.

Quantitative analyst Benjamin Cowen highlights that the unemployment rate will be a crucial indicator to watch.

If the rate remains stable between 4.1% and 4.2%, Bitcoin might replicate last year's rally into February and March.

Conversely, significant deviations from this range could create uncertainty, impacting bond yields and Federal Reserve policy expectations.

The latest labor report indicated a slight decrease in the unemployment rate to 4.1% in December, with job growth surpassing forecasts by adding 256,000 jobs.

A robust labor market typically reduces the urgency for the Federal Reserve to cut interest rates, which can negatively affect Bitcoin as higher rates tighten financial conditions.

Recent jobless claims have also shown a decrease, with initial claims falling to 207,000, suggesting a cooling labor market despite historically low layoffs.

If upcoming reports confirm this trend, it may lead to expectations of monetary easing, which is generally favorable for risk assets like Bitcoin.

The Federal Reserve recently maintained its benchmark interest rate at 4.25%-4.50%, despite acknowledging persistent inflation.

Political dynamics are also influencing market sentiment, with former President Donald Trump criticising the Fed for not being more aggressive in its policies.

Treasury yields have declined following weaker-than-expected GDP growth, which typically benefits Bitcoin by easing financial conditions.

However, any sharp changes in employment data could introduce volatility into the market.

At the time of reporting, the Bitcoin (BTC) price was $104,300.