Bitcoin has swung wildly over the last week, first plunging on news the U.S. had launched strikes on Iran only to bounce back as president Donald Trump fueled a massive bitcoin price prediction.
The bitcoin price has plunged again as traders fret the Middle East conflict could send shock waves through the global economy.
Now, as Elon Musk reveals “a once-in-a-generation opportunity,” a looming artificial intelligence jobs disaster is pushing the Federal Reserve toward interest rate cuts—predicted to sent the bitcoin price sharply higher.
This week, the latest U.S. jobs report showed the U.S. economy lost 92,000 jobs in February, a figure described as “shocking” after economists had predicted a jobs gain of 50,000.
“The Federal Reserve now faces an even more complex policy challenge,” Isaac Stell, investment manager at Wealth Club, said in emailed comments, pointing to the soaring oil price in the aftermath of the U.S. strikes on Iran as adding to fears of a fresh inflation spike.
Goldman Sachs analysts this week predicted the oil price could top $100 per barrel, with JPMorgan researchers warning oil could reach $120 per barrel.
“An unexpected drop in hiring alongside building inflationary pressures presents policymakers with a difficult balancing act,” Stell wrote. “The Fed is widely expected to keep rates on hold at its March meeting while it evaluates the slowdown in job creation and the wider economic fallout from the conflict. For the moment, uncertainty continues to dominate, complicating planning for businesses and clouding the outlook for policymakers.”
Traders are now pricing in a near-50% chance of a June Federal Reserve interest rate cut, according to the CME’s FedWatch tool.
The surprise decline in U.S. jobs comes as cloud computing giant Oracle joins payment company Block in axing jobs, blaming the company’s transition to AI data center hyperscaler, while Amazon also announced layoffs.
Block chief executive Jack Dorsey cited AI as the driving force behind cutting 40% Block’s staff, writing in a letter to shareholders that, “a significantly smaller team, using the tools we’re building, can do more and do it better. And intelligence tool capabilities are compounding faster every week,” he wrote. He also said that Block’s business remained strong and that these cuts weren’t an austerity measure.
“February’s employment report resumed the trend of a weakening labor market from last year,” Brad Conger, chief investment officer at Hirtle Callaghan, said in comments reported by CNBC. “Block’s decision to lay off 40% of its workforce is a sign of the job bloat in the economy. Artificial intelligence is not replacing jobs, but job cuts are funding AI expenditures.”
Dorsey’s move was taken by many as a sign that a future AI jobs and financial crisis outlined by analysts with Citrini Research is already coming true.
“This is the first AI cut. And it will send shockwaves,” Balaji Srinivasan, former Coinbase chief technology officer and Network State author, posted to X.
Crypto trader Arthur Hayes last month predicted an AI financial crisis worse than 2008 will catapult the bitcoin price to a record high the government scrambles to dole out cash to keep the economy moving.
“This AI financial crisis will restart the money printing machine,” Hayes, a cofounder of the bitcoin and crypto derivatives pioneer BitMex who now runs the Maelstrom family office, wrote in a blog post, pointing to the 2023 regional U.S. banking crisis that “destroyed” three banks in just two weeks.
“This time it will be much worse, as the genesis of the crisis is the unstoppable nature of AI, a narrative the market believes and is terrified by.”
Hayes also expects the U.S. war in Iran will lead to additional Federal Reserve money printing, predicting it will boost the bitcoin price.
Hayes has said he expects the bitcoin price to soar in coming months, issuing a bitcoin price prediction of $200,000 by March 2026, later going on to say the bitcoin price could top $500,000 later this year as the Trump administration tries to juice the economy going into the midterm elections in November.
This article was originally published on forbes.com and all figures are in USD.
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