The cryptocurrency market experienced sharp fluctuations after the US jobs report. After briefly rising to $57,000, Bitcoin experienced a decline, causing traders to liquidate almost $50 million in positions. The cryptocurrency market reacted to Friday’s US jobs report with a sharp increase in volatility. Bitcoin (BTC) briefly rose to $57,000 but then collapsed below $54,000, hitting its lowest since August 5 and losing almost 3% of its value in 24 hours. Other popular cryptocurrencies, including Ethereum (ETH), Solana (SOL), XRP (XRP), and Cardano (ADA), also saw declines of 2-4%. The CoinDesk 20 Index, which tracks the performance of the 20 largest cryptocurrencies, fell 2.7%.
The sharp price swings triggered the liquidation of positions worth about $50 million in just one hour in crypto derivatives markets. The volatility caught leveraged traders off guard, mainly those betting on further price gains, data from CoinGlass shows. The difference between BTC’s daily high and low exceeded $3,000, marking the largest swing since August 28. Negative dynamics were also seen in the US stock market. The Nasdaq Composite Index fell 2.5%, while the S&P 500 lost 1.6% by midday.
Jobs Report and Fed Rate Cut Expectations
The long-awaited US jobs report showed that the economy added 142,000 jobs in August. At the same time, the unemployment rate fell to 4.2%, compared to 4.3% in July. The release of these data has sparked discussions about how aggressively the Federal Reserve will cut interest rates this month. According to the CME FedWatch Tool, traders are pricing a more than 70% chance of a 25 basis point rate cut, while a larger 50 basis point cut is nearly 30%. Speaking at the University of Notre Dame, Fed Governor Christopher Waller said “the time has come” to cut rates and that he would personally advocate “faster reductions if appropriate.”
Some analysts believe a more moderate rate cut would be better for risk assets, as a 50 basis point cut could be seen as a signal that the Fed is seriously concerned about a possible recession in the U.S. economy, notes NIX Solutions. “Ultimately, whether a rate cut is bullish or bearish depends on economic data and the Fed’s commentary, but all else being equal, I still think a 25 basis point cut is better for asset prices than a 50 basis point cut,” said Sean Farrell, head of digital asset research at Fundstrat.
As the cryptocurrency market continues to react to economic indicators and policy decisions, we’ll keep you updated on any significant developments that may impact digital asset prices and market sentiment.