Bitcoin fell below $66,000 on Thursday following mixed US economic data. While the initial number of unemployment insurance claims exceeded expectations, the trade deficit widened sharply, reinforcing risk-off sentiment in the cryptocurrency market.
The broader crypto market was closely watching today’s data release, which was cited as one of the economic indicators expected to influence Bitcoin sentiment this week.
Bitcoin falls below $66,000 amid mixed US economic signals
The number of new unemployment insurance claims announced by the Labor Department was 206,000, down from the previous week’s revised figure of 229,000 and significantly lower than the market estimate of 225,000.
The four-week moving average also edged down to 219,000, showing that the labor market remains resilient despite continued economic headwinds.
At the same time, continuing claims, which track continued unemployment, rose by 17,000 to 1.869 million, slightly higher than the 1.869 million expected.
This reflects a stable but softening labor market, with limited new hiring but no significant layoffs.
“(These advanced numbers) support the hypothesis that employment is limited but there are no dramatic job losses and that the labor market is softer but stable,” Truflation said.
Labor data may have suggested stability, but markets were spooked by an unexpected jump in the U.S. trade deficit.
The Treasury report said the trade gap jumped to $70.3 billion in January, well above the $55.5 billion expected and the previously announced figure of $53 billion.
The widening deficit reflects the widening of external imbalances while domestic demand continues. This creates further uncertainty for investors who are already facing a complex macro picture.
Despite signs of slowing inflation, prices have remained below 1% since early February, according to Torflation data. The cryptocurrency market reacted negatively. Bitcoin’s drop below $66,000 coincided with a broader crypto sell-off as traders digested the juxtaposition of strong employment, a weak trade balance, and low inflation.
This highlights how market technical sentiment can amplify reactions to economic surprises. The recent macro environment has led to cautious positioning as investors reduce exposure due to heightened uncertainty.
The disconnect between labor market resilience and exploding trade deficits is indicative of current macroeconomic strains.
Labor market data may allay fears of a sharp economic slowdown, but could weigh on risk assets if a sharp rise in the trade deficit signals broader demand imbalances.
Strong employment figures, sub-1% inflation, and a widening trade gap interact to create a nuanced backdrop for both traditional and digital markets.
Traders will be keeping an eye on future economic releases, particularly the December PCE and Core PCE, as well as the final revised fourth quarter GDP report, to determine whether risk sentiment stabilizes or there is more volatility.
