Bitcoin Set for Third Consecutive Weekly Gain Despite Strong US Jobs Report

Bitcoin was on course for a third consecutive weekly gain on Friday after rising above $82,000 overnight, extending a rebound that began when the cryptocurrency broke out of the $60,000-to-$70,000 range that had held for much of the summer.

The world's largest cryptocurrency topped $82,000, reaching its highest level since May 11, before falling more than 2% by 1:36 p.m. ET.

Bitcoin's latest advance followed a sharp shift in momentum during the second half of August, when the cryptocurrency climbed above $70,000 and later reclaimed $80,000. The rally coincided with renewed interest in the so-called debasement trade, in which investors move money into assets such as Bitcoin and gold when concerns over currencies, government debt or monetary policy intensify.

The US Treasury helped trigger that trade last month by announcing plans to increase purchases of longer-dated government bonds in an effort to contain borrowing costs. The move pushed long-term yields lower and weakened the dollar at the time, while Bitcoin and gold rose.

That backdrop changed on Friday after the US Labor Department reported a much stronger-than-expected increase in employment. Nonfarm payrolls rose by 162,000 in August, following an upwardly revised gain of 21,000 in July. Economists surveyed by Reuters had expected an increase of 56,000. The unemployment rate remained at 4.1% even as the labour force expanded by 683,000.

Investors responded by increasing their bets that the Federal Reserve will raise interest rates at its September 15-16 meeting. Short-term interest-rate futures indicated roughly a 65% probability of a rate increase after the jobs report, up from about 55% beforehand, while Treasury yields rose and the dollar strengthened.

The stronger employment figures also put pressure on US equities. The S&P 500 and Dow Jones Industrial Average fell on Friday as traders reassessed the outlook for interest rates. The jobs data gave the Fed more room to focus on inflation after months of uneven labour-market readings.

Inflation has remained a central concern as energy prices rise again amid renewed fighting between the United States and Iran. Brent crude was on course for a weekly gain of more than 6% on Friday, while West Texas Intermediate had risen more than 8% for the week as the two countries exchanged fresh attacks in the seventh month of the conflict. US diesel prices also reached a record high.

Originally published on IBTimes