What can we expect from the Nonfarm Payrolls report? | Credit: Stephen Chernin / Getty Images.
Key Takeaways
- Crypto traders await the US job data report, set to be released later today.
- The US unemployment rate was higher than expected in July.
- This report is expected to impact the Fed rate cut and broader financial markets.
Traders across crypto and broader financial markets are waiting for the US jobs report, which is slated for release on Friday, Sept. 6. The non-farm payroll report is released on the first Friday of every month at 12:30 p.m. UTC.
The job data affects crypto and traditional finance markets as it will influence the Federal Reserve rate cut later this month.
Crypto Market Bleeds Red
Bitcoin (BTC) and the crypto market turned red ahead of the US jobs report. In the past 24 hours, the Bitcoin price dipped to around $55,200, its lowest in a month. BTC price slumped to a multi-week low below $56,000 before recovering above the crucial resistance. At the same time, most of the altcoins traded in red on the 24-hour price chart, barring a few.
Bitcoin exchange-traded funds (ETFs) recorded significant outflows, and Bitcoin futures open interest has decreased, indicating reduced confidence in short-term price increases.
The unemployment data slated for release today might decide the fate of the crypto and stock market in the coming weeks. The data will give investors insight into whether the US economy is experiencing a big slowdown or is poised for a bullish boost in the short term.
Last month’s US employment rate was higher than expected, leading to a volatile market. The higher-than-expected unemployment rate triggered fears of recession, with today’s data release even more crucial for traders.
In July, the unemployment rate shot up to 4.3% compared to the 3.4% set in April 2023. The rise in unemployment prompted the Federal Reserve to take notice. The surge in unemployment led the Fed to reconsider its interest rate policy for the first time in four years.
Fed chair Jerome Powell has warned earlier that the Federal Reserve may lower its benchmark lending rate, depending on the latest economic data.
How Fed Interest Rate Cuts Impact Crypto?
From a crypto perspective, a higher unemployment rate could prompt the Federal Reserve to make a larger interest rate cut, while strong employment data could lead to a smaller rate cut.
A high interest rate has historically had a bearish impact on crypto while lowering interest rates has triggered bullish momentum. This is evident from the 2021-2022 bull cycle dominated by Covid-19-focused Fed interest rate hikes.
In November 2021, the Federal Reserve announced plans to increase interest rates amid worsening financial conditions. As a result, crypto and the broader equity markets reacted passively and continued to show a phase of low liquidity throughout 2022. When treasury rates peaked in October 2023 and fell thereafter, the crypto market returned from a two-year bearish slump.
Will September Follow Historical Bearish Trend?
September has historically been a bearish month for crypto, with negative returns in eight out of the last nine years. With key pressure from August added to a multi-week-long sideways momentum for cryptocurrencies, September might continue its bearish momentum in 2024.
Crypto proponents hope for a bullish fourth quarter amid stagnant crypto progress this bull season. With key macroeconomic factors set to play a key role in September, crypto proponents will hope for a favorable rate cut and a continued bullish cycle.
Historically, BTC’s price has doubled from its previous cycle’s all-time high. However, BTC has only surpassed the previous cycle’s $69,000 ATH in this bull cycle and set a new ATH of $73,750, still far from historical price highs.
Bitcoin ETF Outflows and Inflows Don’t Influence BTC Price Directly, Whales Do
Bitcoin Exchange-Traded Products Now Hold 1 in 12 of Every Available BTC
US Inflation Slowdown Won’t Alter Fed Policy—Bitcoin Unfazed By CPI Numbers