The price of Bitcoin suddenly dropped to a fresh intraday low of $19,116 on the Bitstamp exchange after the U.S. Labor Department reported that initial jobless claims had dropped to the lowest level since April, surprising the market.
Economists polled by the Wall Street Journal had predicted 215,000 jobless applications for the week that ended on Sept. 24. However, jobless claims came in significantly below estimates at 193,000.
As explained by Andrew Aziz, managing partner at Peak Capital Trading, the good news is actually bad news for Wall Street since it means that the U.S. Federal Reserve now has more room to hike interest rates.
With jobless claims going lower, there is absolutely no reason for the central bank to pivot to a more dovish monetary policy given that it believes that the labor market is still too tight.
The fresh economic data stands in the face of the failing recession narrative that could have promoted the Fed to change course.
The recent jobless claims likely mean that the central bank will announce its fourth consecutive 75-basis-point hike in November since previous increases have npt cooled the economy just yet.
Bitcoin's price action has been mainly dictated by broader macroeconomic factors, with the Fed maintaining a tight grip on risk assets.
Pundits of the likes of Galaxy Digital CEO Mike Novogratz do not expect Bitcoin to recover unless the Fed pivots to a more accommodating monetary policy.