US Adds 162,000 Jobs, Triple Expectations, Putting Bitcoin, ETH and XRP on Rate Hike Watch

Key Takeaways

• The US added 162,000 jobs in August, roughly triple expectations, while unemployment remained unchanged at 4.1%.

• The surprise pushed the estimated probability of a September Fed rate hike to around 60%, despite President Trump’s calls for lower rates.

• A rate hike could pressure Bitcoin, Ether and XRP by strengthening the dollar and reducing demand for risk assets.

The US economy added 162,000 jobs in August, roughly triple economists’ expectations, pushing Bitcoin (BTC), Ether (ETH) and XRP onto rate-hike watch ahead of the Federal Reserve’s September meeting.

The unemployment rate remained unchanged at 4.1%, according to the Bureau of Labor Statistics. Economists surveyed by The Wall Street Journal had forecast 53,000 new jobs and expected unemployment to hold steady.

The figures marked a sharp reversal from July’s initially reported loss of 23,000 jobs. The BLS revised its estimates to show that employers added 31,000 positions in June and 21,000 in July.

Although resilient employment is positive for the economy, traders interpreted the surprise as another reason for the Fed to keep monetary policy restrictive.

Markets now face the possibility that strong labor demand will prevent inflation from returning sustainably to the central bank’s 2% target.

September Rate-Hike Odds Jump to 60%

Markets had priced an approximately even chance of either unchanged rates or a quarter-point increase before the report. By Friday morning, the implied probability of a hike had risen to around 60%, according to CME FedWatch data.

The Kobeissi Letter described the market’s negative response as evidence of a distorted incentive structure in which investors effectively hope for weaker economic data because it would encourage easier monetary policy.

“You know the system is broken when stocks FALL after the US unexpectedly adds +162,000 jobs in a month, TRIPLING expectations,” it wrote. “Why? Because a strong jobs report means a higher chance of rate hikes.”

Jerry Tempelman of Mutual of America Capital Management said the data “may corroborate that recent softness was temporary rather than indicative of a broader deterioration.”

Bill Adams, chief US economist at Fifth Third Commercial Bank, added that the report allows policymakers to focus “squarely on controlling inflation” at their September meeting.

Trump Demands Cuts Despite Strong Labor Data

President Donald Trump responded by renewing his call for significantly lower borrowing costs.

“Lower the interest rates because the U.S.A. is a much stronger credit than it was just a short time ago,” Trump wrote on Truth Social. “A STRONG COUNTRY MEANS A LOWER INTEREST RATE – IT’S A BETTER CREDIT.”

“We should have the LOWEST RATE of any country in the World, like ‘the old days,'” he added, urging the Fed to “get smart” and “BE PATRIOTS.”

However, the employment surprise weakens the conventional economic case for an immediate cut. A strong labor market gives the Fed more room to maintain or raise rates while concentrating on inflation.

Bitcoin, ETH, and XRP Face a Hawkish Fed Test

Higher rates typically pressure crypto by increasing bond yields, strengthening the dollar and reducing investors’ appetite for volatile assets.

Bitcoin recently fell toward $77,000 as rate-hike expectations climbed following Fed Chair Kevin Warsh’s hawkish Jackson Hole speech.

More neutral comments from Fed Governor Christopher Waller later helped trigger a 5% recovery in BTC, while spot Bitcoin ETFs attracted $730.8 million in net inflows.

Past cycles underscore the risk. The Fed’s rapid tightening in 2022 coincided with a deep Bitcoin bear market, while its September 2024 rate cut preceded stronger crypto performance and inflows into investment products.

With Bitcoin trading near $80,000, a September hike could threaten the latest rally and drag ETH and XRP lower. A surprise cut could instead fuel risk appetite, unless investors interpret it as evidence of an approaching, more serious economic downturn.

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