Bitcoin Dumps On Weak U.S. Jobs Data, Fed Rate Cut Odds Surge Past 75%

Why the market blues? A surprisingly soft U.S. jobs report for July should’ve been a rocket booster. Nonfarm payrolls added just 73,000 jobs, far below the 100K consensus, and even worse, revisions to June and May were downright ugly. Altogether, it’s the weakest three-month stretch of job creation since the pandemic-era collapse in 2020.

So, bullish news for risk assets, right? Lower growth means higher chances of a Fed pivot. Traders now peg the odds of a rate cut in September at over 75%. Treasury yields sank like a stone, with the 10-year dropping 14 basis points to 4.22%. Gold shot up 1.5%, nearing its all-time high.

Yet crypto and tech stocks tanked.

The Nasdaq plunged 2.5%. Bitcoin slid. Coinbase fell off a cliff, down 18% after a grim earnings report. Riot Platforms, one of the more high-profile Bitcoin miners, lost 17%. 

Bitcoin dropped to just over $113,000, Source: Bitcoin Liquid Index

Traders seem to be in two minds. One camp says the weak jobs report confirms a slowing economy, which means rate cuts, and in theory, risk-on assets like crypto should rally. But the other camp (the one selling) smells recession and sees a deflating earnings picture. The Kobeissi Letter nailed it on X: “There are 2 scenarios after today’s data: 1. The US labor market is entering a recession. 2. Something is seriously wrong with the data.”

For the record, downward revisions erased 258,000 jobs from the data over the last two months. That’s not a rounding error, that’s a whole city’s worth of employment vanishing from the books.

Donald Trump fired off posts on Truth Social blaming Jerome Powell for being late to the rate-cut party, calling him a “disaster.” He even accused the head of the Bureau of Labor Statistics, Dr. Erika McEntarfer, of manipulating data last year to boost Biden and now using the same tricks to tank the current administration.

President Trump attacked Powell, source: Truth Social

A bit of projection, maybe. But you know how this goes: rate cut pressure is heating up, and Powell’s now stuck between the Fed’s “data dependency” talking point and an increasingly nervous market.

Back to Bitcoin: despite the decline, Bitfinex data suggests buyers are nibbling at the dip, and the order book is stacked in favor of a potential short squeeze. But price action remains volatile. BTC is retesting support near $114K, with traders eyeing $116K as the battleground.

For now, the narrative tug-of-war continues: is the Fed about to save the day, or is this the beginning of a deeper economic unraveling? Is the crypto bull run over? Most likely not, this looks like a dip, but the market needs a good news catalyst for a recovery.