Summary:
Soft U.S. job numbers released on Friday have solidified expectations for a Federal Reserve interest rate cut and sparked a sudden downturn in cryptocurrency markets.
Crypto prices plunge
Crypto prices plunge (Eva Blue/Unsplash)
Key Points:
- Cryptocurrency markets reversed early gains and declined after underwhelming U.S. job growth raised rate-cut optimism.
- Ether (ETH) led the drop, losing nearly 4% in minutes, while Bitcoin (BTC) saw only minor dips.
- Traders increased bets on a potential 50 basis point cut after already expecting a 25 basis point reduction for September.
Despite the earlier positive market sentiment following the U.S. employment report showing a mere 22,000 jobs added last month, the markets quickly turned negative once stock trading commenced. Ether was heavily impacted, dropping significantly within minutes. Bitcoin outperformed ETH but was still down nearly 2.5%.
Heather Long from Navy Federal remarked, “There’s barely been any job growth in the past 4 months. The Federal Reserve has to cut in September. And maybe October now.”
In response to the employment data, expectations for a Federal Reserve interest rate cut have shifted: previously considered a certainty, the odds of a 25 basis point cut now stand at 86%, with a 14% chance of a 50 basis point reduction.
Further observations show that during the week, related cryptocurrency stocks have continued to show notable weakness. For instance, Coinbase fell by 4%, while other firms also experienced declines. Key players in the Ethereum space, such as Bitmine Immersion and Sharplink Gaming, also saw significant drops in their values.
