Fed rate hike expectations surge after jobs beat; Bitcoin slips
US stock futures fell after a tech-led selloff on June 5, driven by a blockbuster jobs report that shifted Fed rate expectations higher. Nonfarm payrolls rose 172,000 in May versus ~86,000 forecast, while unemployment stayed at 4.3%. The Nasdaq slid about 4.2% and the S&P 500 fell around 2.6%.
Fed rate hike expectations jumped fast. CME FedWatch showed the odds of at least one Fed hike by December rising from ~52% before the data to 68%–72% after the report. Futures weakness carried into the following week as markets repriced interest-rate risk.
Bitcoin took the hit: BTC fell more than 5% on June 5, dropped below $62,000, and briefly touched under $60,000—its lowest since October 2024. The move fits a typical macro transmission channel: higher Treasury yields reduce the relative appeal of speculative assets like Bitcoin, pulling liquidity toward yield-bearing instruments.
For traders, the key watch item is Fed communication (speeches, minutes, and the dot plot). If additional data confirms labor strength and sticky inflation, Fed rate hike expectations could climb further, sustaining pressure on tech and risk assets—and weighing on crypto in the near term.
Bearish
This news is bearish for crypto because it tightens the macro liquidity backdrop. A major jobs beat caused traders to reprice Fed rate hike expectations upward (CME FedWatch: ~52% to 68%–72%), which typically lifts Treasury yields and pulls capital toward yield-bearing instruments. That mechanism directly aligns with BTC’s sharp drop below $62,000 and brief move under $60,000.
In similar past episodes, when rate-hike probabilities jump after unexpectedly strong labor data, crypto often underperforms in the short term due to higher discount rates and risk-off positioning. Equities can also sell off further when tech faces renewed duration pressure, reinforcing a broader “risk assets” de-risking cycle.
Short term: expect elevated volatility in BTC as markets react to each new Fed-related data point and to rate-hike communication.
Long term: the effect depends on whether the labor market cools and whether inflation eases enough to reverse Fed rate hike expectations. If that reversal happens, crypto could stabilize; if not, persistent higher-for-longer policy expectations can cap rallies and keep liquidity conditions restrictive.