Bitcoin bull case hinges on Fed rate cut expectations, analysts say

With bitcoin hovering around $105,000, analysts at Bitfinex suggest it could target the $120,000 to $125,000 range in June if a weak U.S. jobs report triggers a domino effect toward earlier-than-anticipated Fed rate cuts. However, stronger-than-expected Labor data could see bitcoin drop toward $95,000, they said.

The latest U.S. jobs report, set for release on Friday, is expected to show a slowdown in labor market growth, with forecasts ranging from 125,000 to 130,000 new nonfarm payrolls added, down from April's 177,000, the Bitfinex analysts noted in an email to The Block. The unemployment rate is expected to hold at 4.2%, while average hourly earnings are forecast to rise by 0.2% to 0.3% month-over-month.

A weaker-than-expected report could support the disinflation narrative and bring forward potential Fed rate cuts, boosting risk assets like bitcoin, according to Bitfinex. "We believe if bitcoin maintains support above $105,000, it could target the $120,000–$125,000 range in June," the analysts said. "This will not be catalysed just from the labor market, but it could be a domino in multiple catalysts prompting the Fed to cut rates at a faster than expected pace."

On the other hand, a stronger report may delay cuts, lift the dollar, and put downward pressure on bitcoin, testing support at $102,000 or lower, Bitfinex warned. "On the downside, we see a 95-97K region for any local bottom and see some good accumulation there," they said. "Overall, the report's outcome will be pivotal for lower timeframe traders but will only be a smaller piece of a larger puzzle in the larger scheme of things."

Rates are currently forecast to remain unchanged in the 425 to 450 bps target range until at least the end of July, according to the CME FedWatch tool, with cuts not anticipated by the majority of traders until September at the earliest.

'Bearish signals accumulate'

BRN Lead Research Analyst Valentin Fournier took a more negative stance, making the case for going defensive as bearish signals continue to accumulate, including declining exchange-traded fund inflows, weakening momentum, and a surge in crypto IPOs pointing to profit-taking near-term.

"Following Pump.fun's token sale, Circle announced a $1 billion share sale, valuing the company at $6.9 billion. Meanwhile, Kraken is reportedly planning an IPO later this year," Fournier told The Block. "These moves hint that crypto firms see the current market as a window of opportunity to capitalize on high valuations — a classic signal that insiders may expect slower growth or lower prices ahead."

Flows into U.S. spot crypto ETFs have also started to deteriorate, Fournier noted, with Bitcoin ETF inflows slowing to $87 million on Wednesday from $375 million on Tuesday, while Ethereum ETF inflows nearly halved to $57 million in the same period — breaking its recent strength and confirming a loss of momentum, the analyst said.

Recent price action reinforces that view, Fournier continued, with BTC down 3.5% over the past week, according to The Block's prices page, ETH falling 4.3%, and Solana dropping 11.8% — the hardest hit among majors.

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"Despite strong macro data and easing inflation, crypto markets are failing to respond," Fournier said. "The spike in IPO activity signals frothy valuations and a desire by insiders to exit while prices are still elevated. Combined with shrinking ETF inflows and declining prices, we interpret this as a sign of a tired market running out of fuel."

"We're trimming risk and shifting to a more defensive posture as we expect a gradual downside while long-term investors reload," he concluded.

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