Bitcoin and various altcoins experienced a significant drop as recent employment figures raised alarm bells about a potential recession. The price of Bitcoin fell below $110,500 on Friday morning following the release of weaker-than-expected job data for August. The Bureau of Labor Statistics reported that the U.S. economy managed to add only 22,000 jobs last month, a stark decrease from the 79,000 jobs added in July. Furthermore, the unemployment rate increased slightly to 4.3% from 4.2%, intensifying concerns as July’s job gains were also revised downward.
This sharp slowdown in job creation suggests that businesses are becoming more cautious about hiring, a trend often seen as a precursor to reduced consumer demand and a slowdown in economic activity. The three-month job growth average has dipped significantly, indicating a consistent cooling in the labor market which could adversely affect consumer spending and overall economic growth, thus heightening the risk of a recession.
In reaction to the poor job report, gold surged to a record high of $3,580, while Bitcoin initially dropped to a low of $112,500 but managed to bounce back above $113,300, as reported by TradingView. Traditional equity indices such as the Dow, S&P 500, and Nasdaq reached new highs before retracting, mirroring the volatility observed in the crypto markets.
Market participants have now fully priced in a potential rate cut from the Federal Reserve in its upcoming meeting scheduled for September 16-17. Traders are currently estimating a 98% probability that the Federal Reserve will implement a quarter-point reduction, with only a 2% chance of a more aggressive half-point cut. Recent remarks from Fed Chair Jerome Powell during the Jackson Hole Economic Symposium indicated that while the Fed is considering rate cuts, they would be cautious and would not signal the beginning of a more extensive easing cycle. He emphasized existing inflation risks while acknowledging a downside tilt concerning employment.
As the markets brace for the release of the August Consumer Price Index (CPI) data on September 11, all eyes will be on indicators that could inform possible future rate cuts. Historically, September has been a turbulent month for both cryptocurrencies and stock markets. In the previous year, Bitcoin saw its value drop below $55,000 before bouncing back sharply following a 50-basis-point rate cut, which was announced amid growing concerns over unemployment and stagnant job growth.
