Crypto markets experienced a swift sell-off during the mid-morning hours on Friday, even as disappointing August employment data initially fueled optimism for potential monetary easing from the Federal Reserve. The U.S. added only 22,000 jobs last month, prompting hopes across various markets—including cryptocurrencies, stocks, bonds, and gold—that the Fed might cut its benchmark interest rate by either 25 or 50 basis points in its upcoming September meeting.
Initially, this news sent markets rallying, but the positive momentum quickly reversed after the stock market opened. Ether (ETH) led the decline, plunging nearly 4% within minutes and ultimately settling down 1.5% over the past 24 hours at approximately $4,279. Other cryptocurrencies, such as Solana (SOL) and XRP, also experienced similar percentage drops. Bitcoin (BTC) showed slightly better performance, dropping closer to 2.5% but still maintaining a slight overall gain for the day, hovering around $110,500.
The U.S. stock market mirrored the reversal, with indexes like the Nasdaq declining by 0.6% and the S&P 500 sliding by 0.7%. Conversely, gold continued to attract investor interest. Despite a minor dip since reaching a record high of $3,654 following the jobs report, gold remained up by 0.9% for the session.
Economists weighed in on the implications of the job data. Heather Long, chief economist at Navy Federal, commented on social media that the labor market has not seen substantial job growth in the past four months, urging the Fed to consider a rate cut in September, and possibly October. Traders at the Chicago Mercantile Exchange adjusted their predictions regarding the likelihood of Fed rate cuts; previously, the odds for a 25 basis point cut were nearly 100%, but that has now decreased to 86%, leaving a 14% chance of a larger cut.
Former President Donald Trump also chimed in via his Truth Social platform, criticizing Fed Chair Jerome Powell for acting too slowly in adjusting interest rates. He stated, “As usual, he’s ‘too late.'”
Olu Sonola, Head of U.S. Economic Research at Fitch Ratings, noted that the weak jobs report signals a clear need for the Fed to lower rates. He emphasized the importance of prioritizing labor market stability, even as inflation remains above the Fed’s 2% target. Sonola pointed out that four consecutive months of manufacturing job losses highlight ongoing uncertainties influenced by tariffs.
The effects of this week’s market turmoil also extended to crypto-related stocks. Coinbase (COIN) fell by 4%, while Circle (CRLC) saw a 7.5% drop. Other notable declines were noted in Strategy (MSTR), down 1.5%, and MARA Holdings (MARA), which dipped 3.2%. Ether-focused companies like Bitmine Immersion (BMNR) and Sharplink Gaming (SBET) also faced losses, dropping 5.4% and 6% respectively.
