Global markets stand at the brink of a disastrous tumble or a cradled recovery with US payroll data right around the corner. Fresh payroll data will reveal if the US job market will weaken further and push the Fed to lower rates by more than a quarter percentage point when officials meet in less than two weeks. Despite gaining the label of operating independently, crypto markets also brace for a possible plunge in light of upcoming data.
Tomorrow’s jobs report will be the key factor in determining if a 50 bps rate cut is coming this month.
If the jobs report is in-line with expectations, or better, we believe a 25 bps rate cut is coming.
Interest rate expectations appear to be shifting too dovish again.
— The Kobeissi Letter (@KobeissiLetter) September 5, 2024
Crypto experts believe Friday’s payroll data will dictate the direction of crypto prices. In anticipation of the report, blue-chip cryptocurrencies like Bitcoin and Ethereum took their first hit. Bitcoin fell below $56,500 levels earlier today, signaling an imminent bearish chart. Vikram Subburaj, CEO of Giottus Crypto Platform, informed The Economic Times that “Bitcoin has been trading between $56,000 and $58,000, showing a bearish trend with lower highs and lows. Traders hope the US jobs report will improve the outlook for September’s rate cuts and provide a boost to the crypto market.”
Recent employment data from August outlined that 99,000 jobs were added in the month, well below economists’ estimates of 145,000 and fewer than the 122,000 jobs added in July. These numbers marked the lowest addition to the private sector labor pool in a month since January 2021. Alternatively, weekly jobless claims stood at 227,000 for the last week of August, compared with expectations for 230,000. Contradictory employment statistics coupled with rising anticipation for imminent rate cuts have prematurely halted crypto’s uphill climb.
The global cryptocurrency market capitalization declined by 0.61% to $1.98 trillion in the last 24 hours. Hours before the monumental employment report, the total volume of stablecoins in the cryptosphere sits at $50.73 billion, according to data from CoinMarketCap.
The Fed is beginning to pivot their policy agendas to remedy rampant joblessness in the US. Fed Chairman Jerome Powell reiterated an employment-first approach, as opposed to inflation recovery, during his recent speech at Jackson Hole on 23rd August, stating “the current level of our policy rate gives us ample room to respond to any risks we may face, including the risk of unwelcome further weakening in labor market conditions.”
