Bitcoin, gold slide as payrolls hit 162,000, nearly 3x forecast

Bitcoin and gold dropped as US August payrolls hit 162,000, nearly triple the 56,000 consensus, lifting Fed rate-hike odds to 59 percent.

"This is obviously a very volatile report, but it does mean that at this point the Fed's focus is going to be on inflation," Josh Stevens, chief investment officer at Cresalta Investment Management, said.

Gold fell 1.7 percent to $4,392, reversing recent gains, while the 2-year Treasury yield rose 7.6 basis points to 4.41 percent. The dollar index gained 0.3 percent to 99.3. The Bureau of Labor Statistics also revised July's payroll decline of 23,000 to a gain of 21,000 and lifted June from 20,000 to 31,000, adding 55,000 jobs to the prior two months.

The repricing carries direct implications for rate-sensitive assets. Bitcoin had been supported by expectations of monetary easing, and the shift toward a potential hike removes that tailwind. Markets now look to next week's CPI print as the next inflection point for Fed policy.

The August report marked a sharp reversal from a summer of weak hiring. ADP's private payrolls gauge had shown just 38,000 jobs added in August, below the 47,000 consensus, with manufacturing and professional services shedding workers. The divergence between ADP's softer read and the government's stronger count shows how volatile the labor cycle has become.

The unemployment rate held steady at 4.1 percent, while labor force participation ticked up to 61.6 percent from 61.4 percent. Average hourly earnings rose 3.1 percent year over year, edging past the 3.0 percent forecast, with monthly wage growth matching expectations at 0.3 percent.

Fed officials had expressed comfort with the labor market before Friday's release. Governor Christopher Waller described the jobs picture as being in "satisfactory shape" just a day earlier, and Governor Michael Barr had called the labor market "stable." Those comments had pushed traders toward expecting the Fed to hold rates steady.

The strong payrolls number complicates that narrative. Christopher Hodge, chief U.S. economist at Natixis, said the onus is now on doves to deliver a disinflationary CPI print that justifies another hold. "Absent that, the Fed will likely hike in September," he said.

For Bitcoin, the macro backdrop has shifted from one of potential easing to one of possible tightening. The simultaneous selloff in gold — traditionally a hedge against both inflation and policy uncertainty — suggests the move is driven by rate repricing rather than asset-specific factors. S&P 500 futures also slipped 0.2 percent in pre-market trading.

Next week's CPI and PPI releases will determine whether the rate-hike scenario gains further traction. A hot inflation print would cement expectations of tightening at the September Federal Open Market Committee meeting, extending pressure on Bitcoin and gold.

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