A single report from the U.S. Bureau of Labor Statistics has prompted global capital markets to recalibrate their expectations for the start of the monetary easing cycle. On February 11 (local time), the January nonfarm payrolls data surprised with a robust increase of 130,000 jobs, while the unemployment rate fell to 4.3%. This unexpected result quickly shattered the market’s conviction that a rate cut would come in June.
According to the CME FedWatch tool, traders have not only pushed back the probability of a rate cut, but—more importantly—the market has now fully priced in the Federal Reserve’s first rate cut for July 2026, rather than the previously expected June. For traders on Gate who closely follow macro trends, this marks a significant shift in how risk assets are priced.
Expectations Shift: From "Urgency" to "Patience"
Just a few weeks ago, federal funds futures were hotly debating whether the first rate cut would come in March or May. However, January’s nonfarm payrolls far exceeded expectations (130,000 added vs. 55,000 forecast), giving the Federal Reserve more room to maneuver on policy.
John Briggs, Head of U.S. Rates Strategy at Natixis, commented, "The market came in expecting weak data, but got the opposite. Given the Fed’s focus on the labor market, expectations for rate cuts are now receding."
This shift is clearly reflected in the U.S. Treasury yield curve. The yield on the 2-year Treasury note, which is most sensitive to policy rates, jumped nearly 8 basis points to 3.53%. Many seasoned traders on Gate know that rising yields make risk-free rates more attractive, which typically creates short-term outflow pressure on risk assets like crypto.
Key Market Moves on February 12
Macro logic must ultimately be reflected in actual trading data. As of February 12, 2026, Gate’s latest USD trading pairs show the market is in a fragile equilibrium after a sharp decline:
- Bitcoin (BTC): Last traded at $67,800. This level is a psychological battleground for bulls and bears. After being hit by the nonfarm data, BTC briefly fell below $66,000 yesterday, but has since reclaimed the $67,000 mark for now.
- Ethereum (ETH): Last traded at $1,965. ETH is clearly underperforming BTC, currently oscillating narrowly above $1,950 with weak rebound momentum.
- Gate Token (GT): Showing relative resilience, GT remains within its recent trading range, demonstrating strong community support.
User sentiment on Gate Plaza also reflects this state of play: there’s neither the frenzy of FOMO (fear of missing out) nor the despair of panic selling. Instead, most traders are adopting a "waiting for Godot" approach.
If the July Rate Cut Happens, Where Will Capital Flow?
State Street strategist Lee Ferridge issued a clear warning: If the Fed cuts rates more than the market expects this year (the baseline scenario is two cuts), the U.S. Dollar Index could drop by 10%.
This is a crucial forward-looking signal for the crypto industry. Gate Research has observed that the medium- to long-term negative correlation between the dollar and Bitcoin remains strong. If the July rate cut window opens as anticipated, the appeal of dollar-denominated assets will materially decline. David Hernandez, crypto investment strategist at 21Shares, notes that the resilience of the labor market is why the Fed doesn’t need to "backstop" for now; but conversely, once rate cuts begin, the goal shifts from crisis response to preventive easing—a scenario risk assets favor: "soft landing plus low rates."
However, it’s important to consider the perspective of Wintermute strategist Jasper De Maere: Most traders have abandoned hopes for a March cut, but signals from the bond market suggest overall expectations haven’t changed much. In other words, while the June rate cut narrative has faded and July has taken its place, market confidence hasn’t collapsed. Instead, traders are digesting the prospect of "higher for longer" rates.
Key Data Preview: Friday’s CPI Will Set the Short-Term Tone
The shift in expectations to July is now a given, but the market’s focus hasn’t disappeared—it’s simply moved to a new point of tension.
On February 14 (this Friday), the U.S. Department of Labor will release the delayed January Consumer Price Index (CPI). The consensus forecast is for year-over-year growth to slow from 2.7% in December to 2.5%.
Derek Lim, Head of Research at Caladan, emphasizes, "Inflation metrics matter more than jobs data. If inflation comes in below expectations, it increases pressure on the Fed to cut rates sooner."
For traders on Gate, the current strategic framework is relatively clear:
- If CPI is below expectations: This will strengthen the case for a July rate cut, and may even rekindle some hope for June. Bitcoin at $67,000 could challenge the $68,600 resistance level.
- If CPI is above expectations: Even if the rate cut is delayed to July, sticky inflation will threaten that timeline. In this scenario, BTC could again test support at $65,000 or even $63,000.
Conclusion
The shift in Fed rate cut expectations from June to July isn’t the end of bearish sentiment—it’s a phase of clearing uncertainty. Gate data shows that despite sharp volatility in Bitcoin and Ethereum, on-chain data reveals last week’s "capitulation selling" led to a record $3.2 billion in realized losses—the kind of extreme pain often seen at cycle bottoms.
The market has already deleveraged its emotions around a June rate cut and is now pricing July with a more pragmatic outlook. As $23 trillion asset management giant Amundi leads the charge in reducing dollar exposure, global capital is searching for new opportunities.
In this round of macro narrative shifts, Gate will continue to serve as a bridgehead connecting traditional liquidity downturns with the emerging crypto story. Whether you hold BTC, ETH, or GT, staying attuned to the July 26 FOMC timeline will be key to trading profits in the first half of 2026.
