Bitcoin Trims July Gains as Jobs Data, Oil Lift Rate Bets

Bitcoin (BTC) fell 2.1% over the previous 24 hours to around $64,800 as of 18:00UTC after reaching $66,270 over the day. Despite the decline, the cryptocurrency remained about 8% higher in July, recovering part of the ground lost during a 19% sharp slide in June. The broader crypto market fell more than 1% to $2.3tn, while 24-hour trading volume rose to $57.4bn during the sell-off.

BTC's price declined as new US jobless claims dropped by 22,000 to 187,000 in the week ending 18 Jul – the lowest level since September 1969 and below the 215,000 forecast by analysts surveyed by FactSet. 

The decline showed that employers were laying off fewer workers, even though hiring remained weak. US employers added just 57,000 jobs in June, less than half the previous month's total, suggesting companies were reluctant to expand their workforces but were not yet cutting staff in large numbers.

That combination matters for monetary policy. The Federal Reserve lowers interest rates when it believes the economy needs support, including when unemployment is rising and households are at risk of losing income. If few people are losing their jobs, households are more likely to keep earning and spending, meaning the economy needs less support from lower interest rates. A resilient labour market can also give the Federal Reserve more room to keep rate levels while it focuses on controlling inflation.

For Bitcoin, that can be a negative pressure because it increases the likelihood that interest rates remain high. Elevated rates make safer assets such as government bonds more attractive, reducing investors' incentive to hold volatile assets such as cryptocurrencies.

Rising oil prices could also add to inflation and increase pressure to keep rates high or raise them. Brent crude rose above $100 a barrel on 23 Jul, for the first time since May following renewed disruption to shipping through the Strait of Hormuz.

Traders placed a 35.8% chance on the Fed raising rates at its 29 Jul meeting, up from 11.8% a week earlier, according to CME FedWatch. Still, keeping rates unchanged remained the most likely outcome, with a probability of 64.2%. However, the traders now see the odds of the Fed hiking rates by a cumulative 25 basis points by the end of the central bank's September meeting at 56.9%, up from 47% a week earlier. 

The Federal Reserve's benchmark interest rate currently stands at 3.5%–3.75%.

Layoff fall to lowest levels since 1969

Weekly jobless claims are an early indicator of layoffs and the latest figures suggest employers are still holding on to workers despite rising geopolitical tensions and higher energy costs.

Claims for the previous week were revised slightly higher to 209,000 from 208,000. The four-week average, which is meant to smooth out weekly swings, fell by 7,250 to 207,500. 

Overall, the unemployment rate fell to 4.2% from 4.3% – however, this was largely due to unemployed people pausing their search for work and not because people found jobs. 

Oil adds to inflation risk

Brent crude rose 6.4% to around $100.13 a barrel, extending its gains for a fifth consecutive session, according to Trading Economics. Higher oil prices can lead to higher transport and production costs, which experts say could be passed on to consumers. That could make the Fed more concerned about inflation when it meets on 28–29 Jul.

The surge came after Iran-backed Houthi forces in Yemen claimed they had attacked two Saudi tankers in the Red Sea, the New York Times reported. In turn, US President Donald Trump said the US would hold Iran responsible for future Houthi attacks on commercial ships in the Red Sea. Trump also threatened military action against the Yemeni group, the New York Times said.

"Markets are in a bit of a tug-of-war this week as macro and crypto-specific signals pull in opposite directions," Diogo Cassinelli, sales and partnerships manager at Trace Finance, said in comments shared with Sandmark. 

"Moreover, there is renewed geopolitical pressure from the collapsed Iran ceasefire and inflation risk from rising oil prices, keeping risk appetite in check," he said. "The market is currently caught between hawkish rate expectations and cautious positioning, with participants waiting for clearer direction before committing fresh capital." 

Options traders expect Bitcoin to stay in a range

Bitcoin options traders are not expecting a big move higher or lower, according to Maxime Seiler, chief executive and co-founder of options and structured-products platform STS Digital.

"The recent trading reflects investors adjusting their positions rather than making strong bets on where Bitcoin is headed," Seiler said in comments shared with Sandmark. He said investors who bought protection against falling prices during June's weakness have mostly closed those positions, suggesting they now expect Bitcoin to trade sideways.

Some traders have also continued selling bullish options, which has further reduced expectations of large price swings. "The market is positioning for Bitcoin to stay in a range rather than move decisively in either direction," Seiler said.

That said, some traders are betting Bitcoin could climb to between $70,000 and $72,000 by the end of July. Seiler said Bitcoin first needs to break above the $67,000-$68,000 range, while $60,000 remains the key support level if prices fall.

He added that the Fed's meeting and whether spot Bitcoin ETF inflows continue will likely be the main factors determining Bitcoin's next move. Spot Bitcoin ETFs recorded roughly $69mn in inflows on 22 Jul – their seventh straight day of inflows, according to SoSoValue.