The cryptocurrency market experienced sharp fluctuations after the US jobs report. After briefly rising to $57,000, Bitcoin crashed, causing traders to liquidate nearly $50 million in positions.
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The cryptocurrency market reacted to Friday’s US employment report with a sharp increase in volatility. Bitcoin (BTC) briefly rose to $57,000 but then fell below $54,000, hitting its lowest level 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%.
Sharp price swings triggered the liquidation of nearly $50 million worth of positions in just one hour in the cryptocurrency derivatives markets. The volatility caught leveraged traders by surprise, mainly those betting the price would rise further, CoinGlass data shows. The difference between BTC’s daily high and low exceeded $3,000, marking the biggest swing since August 28th. Negative dynamics were also observed on the US stock market. The Nasdaq Composite Index was down 2.5% and the S&P 500 was down 1.6% by midday.
The long-awaited US jobs report showed the economy added 142,000 jobs in August. At the same time, the unemployment rate dropped to 4.2% compared to 4.3% in July. The release of the data has sparked debate about how aggressively the Federal Reserve will cut interest rates this month. According to the CME FedWatch Tool, traders estimate the likelihood of a 25 basis point rate cut to be more than 70%, and the likelihood of a wider cut to be 50 basis points – almost 30%. Speaking at the University of Notre Dame, Fed board member Christopher Waller said that “the time has come” to cut rates and that he would personally advocate for “accelerated cuts 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 US economy. “Ultimately, the nature of the rate cut (bullish or bearish) depends on economic data and Fed commentary, but all things being equal, I still believe 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.