Bitcoin Loses $93K as Goldman Cuts Fed Rate Cut Expectations, BofA Sees Potential Rise After Blowout Jobs Report
Bitcoin (BTC) started the new week on a negative note as major investment banks reassessed their expectations for Federal Reserve (Fed) rate cuts following Friday’s strong jobs report.
The leading cryptocurrency by market value fell below $93,000 in European hours, representing a 1.6% drop on the day, according to data source CoinDesk. Prices look set to test the support zone near $92,000, which has consistently served as a floor since late November.
The CoinDesk 20 Index, a broader market gauge, fell more than 3%, with major coins like XRP, ADA, and DOGE posting bigger losses.
In traditional markets, futures tied to the S&P 500 traded 0.3% lower, pointing to an extension of Friday’s 1.5% decline that pushed the index to its lowest since early November. The dollar index (DXY) is approaching 110 for the first time since late 2022, with high Treasury yields supporting further gains.
Data released Friday showed nonfarm payrolls rose 256,000 in December, the most since March, beating expectations for a 160,000 job addition and the previous figure of 212,000 by a wide margin. The jobless rate fell to 4.1% from 4.2%, and average hourly earnings were slightly lower than expected at 0.3% month-on-month and 3.9% year-on-year.
That prompted Goldman Sachs to push the next interest rate cut to June from March.
“Our economists now expect the Fed to cut just twice in 2025 (Jun/Dec vs Mar/Jun/Dec previously), with one more rate cut in June 2026,” said the Economic Research note by Goldman to clients on January 10.
“If the December FOMC decision marks a significant shift back to inflation in the Fed’s relative weighting of risks, the December jobs report may have completed the pendulum swing. But the case for cuts to mitigate labor market risks have faded into the background,” the note explains.
The Fed’s rate-cutting cycle began in September when the official cut the benchmark borrowing cost by 50 basis points. The bank delivered quarter-point rate cuts in the following months before pausing in December to signal fewer rate cuts in 2025. BTC is up more than 50% since the first rate cut on September 18, reaching to a record high above $108,000 at one point.
While Goldman and JPMorgan still expect rate cuts, Bank of America (BofA) fears an extended pause, with risks turning in favor of a rate hike or another tightening. Note that the US 10-year Treasury note yield, which is sensitive to interest rate, growth and inflation expectations, has risen by 100 basis points since the September 18 rate cut.
“We think the cutting cycle is over … Our base case is the Fed on an extended hold. But we think the risks for the next move are skewed toward a hike,” the analysts said of BofA in a note, according to Reuters.
ING said, “The market is right to see the risk of an extended pause from the Fed” in light of recent economic reports.
“That outlook will only increase if core inflation comes in at 0.3% month-on-month for the fifth consecutive month next week,” ING said in a note to clients over the weekend.
The December consumer price index report is scheduled for release on January 15. Some observers worry that base effects could accelerate the headline CPI and the core CPI, adding to the hawkish Fed narrative.
