Bitcoin BTC +6.19% gained on Friday alongside major equity indices after a robust U.S. jobs report indicated the domestic economy is strong. However, the report also cast uncertainty over a forthcoming cut in interest rates.

The world's largest cryptocurrency by market capitalization increased by 1% over the past 24 hours to $68,450 at 10:55 a.m. ET, according to The Block's Price Page. 

Stocks rebounded during early U.S. trading hours on Friday as traders evaluated the March jobs report. This follows Thursday's close, which marked the worst session on Wall Street in several months. 

The S&P 500 gained 0.6%, while the Dow Jones Industrial Average climbed 107 points, or 0.3%. The tech-heavy Nasdaq Composite advanced 0.8%.

March jobs data stronger than expected

In March, U.S. employers added 303,000 jobs, exceeding expectations and signaling that the labor market remains strong despite higher interest rates.

The figures, released by the U.S. Labor Department on Friday, were notably stronger than the 200,000 job gains economists had anticipated. Because of the robust employment data and resilient economic activity, the Fed may be able to maintain unchanged rates for a more extended period.

According to the CME's FedWatch tool, interest rate traders are 94.7% certain that the Fed will hold rates steady in May. The market now expects the chances of a rate cut at the June Federal Open Market Committee meeting to be 50.8%. 

Low unemployment and strong job growth can lead to upward pressure on wages and prices, potentially contributing to inflation. In such a scenario, the Fed may be more inclined to consider keeping interest rates steady rather than cutting them to prevent the economy from overheating.

Doubts cast over imminent interest rate cut

The current macroeconomic dynamic could foster risk-off sentiment, potentially exerting downward pressure on risk assets, such as bitcoin.

On Thursday, Richmond Federal Reserve President Thomas Barkin said the U.S. central bank should hold rates steady until the picture on inflation becomes clearer. Speaking at the Home Building Association of Virgina, Barkin said it would be "smart for the Fed to take our time" before lowering interest rates in light of the elevated inflation readings in early 2024.

"No one wants inflation to reemerge, and given a strong labor market, we have time for the clouds to clear before beginning the process of toggling rates down," he added.