Nonfarm payrolls unexpectedly weakened, pushing BTC to rebound 11%. FOMC minutes will test this narrative.

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Author: CryptoSlate

Compiled by: TechFlow

Deep Tide Introduction: Bitcoin has just rebounded 11% from its 21-month low, but this rally is based solely on a weak employment report. The Fed's meeting minutes on Wednesday will reveal whether officials are truly concerned about an economic slowdown as the market expects. This document will determine whether $64k can hold or if it will be pushed back to $58k.

Bitcoin has rebounded 11% from its 21-month low hit on July 1, but whether this rally can sustain depends entirely on the Fed's June 16-17 meeting minutes released at 2 p.m. Eastern time on Wednesday.

Traders are buying into this rally based on a macro assumption: the weakening U.S. labor market limits the Fed's ability to remain hawkish. The meeting minutes, the first complete record of internal discussions since Kevin Warsh became chair, will show whether officials had already recognized this issue in mid-June, weeks before the employment data that triggered this rally.

The answer to this question is crucial. Bitcoin traded near $64k on Tuesday, up nearly 11% from its low below $58k hit on July 1, with a single-day fluctuation of over $3,400 on Monday, oscillating violently between $61.25k and $64.66k.

This rally began with Thursday's U.S. employment report, which showed employers added only 57k jobs in June, about half of economists' expectations. The weak labor data prompted traders to reduce bets on another rate hike, and Bitcoin rose along with gold and stocks, with Barron's describing it as a repricing of U.S. interest rates.

The Bitcoin market repriced before seeing the Fed's reasoning

The June meeting gave little positive signal to the crypto market at the time. Officials kept rates at 3.50%-3.75%, removed language hinting at a possible rate cut soon, and adjusted the 2026 median forecast to at least one more rate hike. Bitcoin moved toward its low over the next two weeks as the market expected a longer period of tightening.

But the employment report changed everything. Besides the overall data missing expectations, the Bureau of Labor Statistics (BLS) revised down April and May job numbers by a total of 74k positions. The unemployment rate fell to 4.2% only because about 720k people left the labor force, pushing the participation rate down to 61.5%.

Traders responded by pushing back rate hike expectations: CME FedWatch pricing currently shows about a 76% probability of the Fed holding rates steady at the July 28-29 meeting and about a 40% probability of a rate hike by December.

If Wednesday's minutes show officials were already warning about labor market weakness, credit tightening, or the risk of overtightening, the market's dovish shift will gain support, and the rally will have a foundation.

If the discussion focuses on persistent inflation and conditions for another rate hike—as Warsh has stated publicly—then this rally loses its main pillar. Bitcoin has already priced in substantial easing, so if the document falls short of the market's dovish expectations, it will be enough to put pressure on prices. The bar for disappointment is low because the rally came too early.

One day of inflows and 49k BTC in new exchange supply

From an ETF perspective, this rally is equally fragile. U.S. spot Bitcoin ETFs saw $223 million in inflows on Thursday, the largest single-day inflow since May, ending a 10-day outflow streak that lost $2.73 billion.

The single-day recovery did not reverse the trend: these products have seen nearly $8.5 billion in outflows since early May, and institutional demand requires consecutive days of inflows for the outflows to look like entry opportunities in the data.

On-chain flows add further warning signs. When the price returned above $60k, whale-scale exchange deposits reached about 49k BTC, increasing supply that could be sold after the minutes' release if prices rise.

Options positions are concentrated in the same area, with market makers' gamma clustering at $60k and $62k. These levels could lock in prices or accelerate declines, depending on the breakout direction.

Holding the $62k area after the minutes' release will keep the rally intact; breaking Monday's high near $64.7k will confirm the rally. Falling back to $58k would mark the employment-data-driven rally as a failed bear market rally, which began after the all-time high of $126.2k hit in October last year.

Bitcoin's 11% rally is built on speculation about what Fed officials discussed behind closed doors three weeks ago. Wednesday afternoon will replace speculation with meeting records, and the gap between the two will determine the price direction.