Bitcoin loses $93,000 as Goldman Sachs trims Fed rate cut expectations, Bank of America sees potential rally after blowout jobs report

Bitcoin (BTC) started the new week on a negative note as major investment banks reassessed their expectations for interest rate cuts by the Federal Reserve (Fed) following Friday’s strong jobs report.

The leading cryptocurrency by market cap fell below $93,000 during European trading hours, representing a 1.6% decline on the day, according to data source CoinDesk. Prices appear poised to test the support area near $92,000, which has served as the floor since late November.

The CoinDesk 20 Index, a broader measure of the market, fell more than 3%, with major coins such as XRP, ADA, and DOGE recording larger losses.

In traditional markets, futures contracts tied to the S&P 500 fell 0.3%, signaling a continuation of Friday’s 1.5% decline that pushed the index to its lowest level since early November. The dollar index (DXY) approached 110 for the first time since late 2022, with rising Treasury yields supporting further gains.

Data released Friday showed that nonfarm payrolls increased by 256,000 in December, the most since March, beating expectations for an addition of 160,000 jobs and the previous figure of 212,000 by a wide margin. The unemployment rate fell to 4.1% from 4.2%, and average hourly earnings came in slightly lower than expected at 0.3% monthly and 3.9% yearly.

This prompted Goldman Sachs to postpone the next interest rate cut to June instead of March.

“Our economists now expect the Fed to cut interest rates only twice in 2025 (June/December vs. March/June/December previously), with another rate cut in June 2026,” Goldman Economic Research said in a note to clients on 10 January.

“If the December FOMC decision marked a significant shift toward inflation in the Fed’s relative risk weighting, the December jobs report may have completed the pendulum swing. The weak average hourly earnings figure kept the print run from sending a re-signal Heating up more worryingly, the memo made clear that the issue of cuts to mitigate risks to the labor market faded into the background.

The Fed’s rate-cutting cycle began in September when the official lowered the benchmark borrowing cost by 50 basis points. The bank introduced quarter-point rate cuts in the following months before pausing in December to signal smaller rate cuts in 2025. Bitcoin has risen more than 50% since the first rate cut on September 18, reaching record levels above 108,000. dollars at some point.

While Goldman and JPMorgan still expect rate cuts, Bank of America fears an extended pause, with risks skewed in favor of higher interest rates or renewed tightening. Note that the 10-year US Treasury yield, which is sensitive to interest rate, growth and inflation expectations, has already risen by 100 basis points since the September 18 rate cut.

“We believe the tapering cycle is over… Our rule of thumb has the Fed waiting to extend the tapering cycle,” Bank of America analysts said in a note, according to Reuters. “But we believe the risks of the next move are towards raising interest rates.”

“The market is right to see the risk of an extended pause from the Fed” in light of recent economic reports, ING said.

“This view will only increase if core inflation reaches 0.3% m/m for the fifth month in a row next week,” ING said in a note to clients over the weekend.

The December CPI report is scheduled to be released on January 15. Some observers worry that base effects could accelerate the headline CPI and core CPI, adding to the Fed’s hawkish rhetoric.