Critical nonfarm payrolls and unemployment data from the US have stimulated both traditional markets and the crypto ecosystem. The employment figures, which fell well below expectations, and the rise in the unemployment rate have investors focused on the Fed's interest rate decision, which will be announced in September.
Employment data surprises
The US Bureau of Labor Statistics (BLS) announced that nonfarm payrolls increased by only 22,000 in August. This figure fell well short of the market expectation of 75,000. The previous month's employment gain was 73,000. This result marked the second-lowest employment data since July 2021.
Meanwhile, the unemployment rate was announced at 4.3%. While this figure was in line with expectations, it was above the 4.2% reported the previous month. Average hourly earnings, at 3.7%, came in slightly below expectations.
This weak data release reinforced expectations that the Fed will cut interest rates in September. Analysts agree that the weakening labor market will make it difficult for the Fed to maintain its tight monetary policy.
Criticism of the BLS
Shortly before the release of the labor force data, it was reported that the BLS was experiencing technical issues. Revisions made in recent months and inconsistencies in the released data have sparked debate about the agency's credibility. US Commerce Secretary Lutnick recently stated that "the BLS needs new management," adding to the criticism of the agency.
Crypto markets gain momentum
These data, released at a time of intense macroeconomic uncertainty, have had a positive impact on the crypto markets. Bitcoin (BTC), in particular, strengthened from the $108,000 support level to test $113,000. At the time of writing, the BTC price is trading around $112,700.
The September Effect and Fed Expectations
Historically, September is known for its bearish trend in crypto markets. However, this year's scenario could be different. A Fed rate cut signal could disrupt the traditional "September nightmare" in the market.
Fed Chair Jerome Powell highlighted the weakening labor market in his Jackson Hole meeting last month. The figures released today confirm the risks Powell highlighted, making the possibility of a rate cut at the September meeting virtually certain.
