Crypto Markets Plunge after August Jobs Report Misses Expectations

Cryptocurrency markets fell again on Friday as August's jobs report failed to meet analyst expectations.

Bitcoin (BTC) and Ethereum (ETH) plunged 4% to trade at $54,200 and $2,280, respectively. Polkadot (DOT) was flat, while Solana (SOL) dipped 2.5%.

The latest U.S. employment figures from the Bureau of Labor Statistics revealed an increase of 142,000 jobs in August, below the 161,000 forecasted by Dow Jones analysts. Despite this, the unemployment rate slightly decreased to 4.2%, aligning with expectations.

This data will influence the Federal Reserve's monetary policy decision later this month. Investors hope the Fed will lower interest rates by at least 0.25 basis points during its Sep. 17-18 meeting.

Slowing job growth indicates companies might be reducing hiring due to economic uncertainty, cost control measures, or weaker demand for their products or services, signaling a cooling economy. A slowdown in job growth can also slow wage growth, meaning people have less money to spend, which can impact overall economic growth.

The Federal Reserve closely monitors the labor market because strong job growth can lead to inflation. If the job market slows, the Fed might cut interest rates to make borrowing cheaper and stimulate growth.

Crypto Market In ‘Extreme Fear’

The Crypto Fear and Greed Index stands at 22, indicating extreme fear. The index ranges from 0, which means "Extreme Fear," to 100, representing "Extreme Greed."

“At the $49K level, the index fell to 17%,” shared Axel Adler J, a crypto analyst. “During the mining ban in China, the index dropped to 10%. The maximum drop to 6% occurred during the Luna crash.”

According to CoinGlass, over 38,684 traders were liquidated in the past 24 hours, mainly those who bet on Bitcoin’s price rising. Nearly $71 million of long positions were liquidated, including $39 million in Bitcoin longs, making up nearly 40% of the day’s liquidations. Another $12 million in Ethereum long bets were also liquidated.

On-chain analytics platform CryptoQuant reported a significant drop in the percentage of Bitcoin Unspent Transaction Outputs (UTXOs) in profit. Bitcoin UTXOs are a way of keeping track of Bitcoin that hasn't been spent yet.

In June, almost every Bitcoin owner was making money, with nearly 99% in profit. By September, only 68.5% of people were in the green on their Bitcoin due to the price decline.

“The last time the percentage of Bitcoin UTXOs in profit dropped to 68.5%, Bitcoin's price surged by 273%, rising from $26,700 to $73,000 and reaching a new all-time high,” said CryptoQuant contributor Egy Hash.

Meanwhile, Arthur Hayes, former CEO of BitMEX, believes that Bitcoin will drop to $50,000.

“BTC is heavy. I’m gunning for sub $50k this weekend. I took a cheeky short,” he tweeted.

Bitcoin ETFs Record Outflows

According to Farside Investors data, spot Bitcoin exchange-traded funds (ETFs) recorded outflows on Thursday, totaling $211 million.

BlackRock’s iShares Bitcoin Trust (IBIT) had no inflows for three consecutive days, while Fidelity’s Fidelity Bitcoin Trust (FBTC) saw $149.5 million in net outflows. Bitwise’s Bitwise Bitcoin Fund (BITB) and Grayscale’s Grayscale Bitcoin Trust (GBTC) each had around $30 million in outflows.

Stocks also sold off on Friday. The S&P 500 is down 1.5%, the Dow Jones Industrial Average 0.8%, and Nasdag 2.5%.