The latest non-farm employment report was released by the United States on Friday evening, with a surprising increase of 272,000 non-farm employment in May, far exceeding expectations. The market believes that the Federal Reserve’s first interest rate cut may be further delayed, with only about a 50% chance of a rate cut starting in September. QCP Capital stated that the unexpected surge in employment numbers will trigger risk aversion next Wednesday before the release of US inflation data and the FOMC.
September Rate Cut Uncertain?
Bitcoin plunged 5% and fell below $70,120, while Ethereum dropped below $3,800. The top ten tokens all experienced a general decline in the past 24 hours, with the total liquidation on the network amounting to $417 million. QCP Capital mentioned that this decline presents a good buying opportunity.
The US Department of Labor announced the May non-farm employment report on Thursday evening, revealing a surge of 272,000 non-farm employment in May, higher than the 165,000 increase in April and far exceeding the market’s expectation of 190,000. Additionally, wage growth accelerated, rising by 0.4% compared to the previous quarter and 4.1% year-on-year, exceeding market predictions. Despite the 4% increase in the unemployment rate, the significant increase in employment and wage growth indicates that the US job market remains hot, potentially delaying the Federal Reserve’s first interest rate cut.
After the employment data was released, traders reduced their bets on a rate cut. Bloomberg cited Jay Bryson, chief economist at Wells Fargo, who commented that traders have lowered their expectations for a rate cut, with the likelihood of a rate cut at the end of July’s FOMC meeting reduced to 8.1%, and the probability of a rate cut starting in September slightly higher than 50%.
The unexpected surge in non-farm data, which may further delay the rate cut, led to a bearish market sentiment. As a result, all four major US stock indices closed in the red on Friday:
– Dow Jones Industrial Average fell 87.18 points, or 0.22%, to close at 38,798.99 points.
– S&P 500 Index dropped 5.97 points, or 0.11%, to close at 5,346.99 points.
– Nasdaq Index declined 39.99 points, or 0.23%, to close at 17,133.13 points.
– Philadelphia Semiconductor Index decreased by 14.442 points, or 0.27%, to close at 5,287.242 points.
Bitcoin also experienced a significant drop, starting from $71,997 and falling to as low as $68,300 during the night, with a maximum decline of over 5%. At the time of writing, it had slightly rebounded to $69,469, marking a nearly 2% decrease in the past 24 hours.
Ethereum showed even higher volatility, dropping to a low of $3,568 at one point. At the time of writing, it was at $3,690, with a decrease of over 3% in the past 24 hours.
According to CoinMarketCap data, the other top ten tokens experienced a general decline in the past 24 hours. Dogecoin (DOGE) had the highest drop, exceeding 7.5%, while SOL and XRP also experienced declines of over 4%.
During the downturn in the cryptocurrency market, Coinglass data showed that over the past 24 hours, the total amount of liquidated positions exceeded $417 million, with long positions accounting for $361 million, resulting in over 149,000 people being liquidated.
On the other hand, QCP Capital pointed out in its latest market analysis that the unexpected surge in non-farm employment accompanied by an increase in the unemployment rate caused confusion in the data, potentially leading to risk aversion before the release of US inflation data and the FOMC next Wednesday. However, they observed bullish capital inflows, especially in BTC, including aggressive put option sellers and call spread buyers. QCP Capital concluded that the market is digesting the expectation of a Fed rate cut in advance, with increasing risks associated with high interest rates.