Bitcoin tops $78,000 as weak ADP data trims Fed hike odds

Bitcoin rose 2.3% to $78,500, breaking above $78,000 after ADP data showed US private payrolls grew by just 38,000 in August, the weakest gain in seven months.

"Pay can tell us a lot about today's choppy hiring," Nela Richardson, chief economist at ADP, said. "To understand hiring patterns, you have to look deeply into where pay growth is accelerating, where it's slowing, and for whom."

The ADP reading missed the 47,000 consensus estimate and marked the smallest monthly increase since January. Hiring was concentrated in education and health services, which added 45,000 positions, while manufacturing shed 17,000 jobs and professional and business services lost 16,000. Companies with at least 500 employees accounted for 34,000 of the net gain, while firms with fewer than 50 workers added just 3,000.

The soft jobs print prompted traders to reassess Federal Reserve policy expectations. The probability of a 25 basis point rate increase at the Sept. 15-16 meeting fell to roughly 62 percent from more than 67 percent a day earlier, according to CME FedWatch data. That repricing lowers the hawkish pressure on risk assets at a moment when fresh spot Bitcoin ETF inflows are adding demand momentum. Lower US Treasury yields also reduce the opportunity cost of holding non-yielding assets like Bitcoin.

The shift in rate expectations is notable given Fed Chair Kevin Warsh's hawkish tone at Jackson Hole last month, where he said the Fed's "predominant focus right now should be on prices." Twelve-month PCE inflation stood at 3.7 percent, while the six-month measure was 4.1 percent, according to a Bank of America analysis of Warsh's speech. The bank found Warsh devoted roughly twice as many words to inflation as to the labor market, suggesting payrolls alone may not determine the September decision.

Separate Labor Department data released Tuesday reinforced the cooling picture. Job openings rose by 89,000 to 7.271 million at the end of July, but hiring fell by 278,000 to 5.054 million, with the hiring rate declining to 3.2 percent from 3.4 percent. Layoffs remained contained at 1.666 million, pointing to a labor market that is becoming more cautious rather than one undergoing widespread job destruction.

The next macro test comes Friday, when the Bureau of Labor Statistics releases August nonfarm payrolls. Economists expect a gain of 53,000 jobs after a 23,000 decline in July, with the unemployment rate forecast to hold at 4.1 percent. A weak government report would reinforce the case for the Fed to hold rates steady, potentially pushing Bitcoin toward the $80,000 level. The August CPI report due Sept. 11 will serve as the final consequential data point before the Fed's decision.

This article is for informational purposes only and does not constitute investment advice.