Brothers, the Americans dropped a 'deep-water bomb' last night (assuming the release time is after the data was announced)! The freshly released May employment data directly rocked the crypto market! Bitcoin led the plunge, and altcoins were in a bloodbath! Why? All because of that 'damn' low unemployment rate!
Data interpretation: It's not 'stable', it's 'too strong'!
Unemployment rate: Steady at 4.2%, exactly the same as the previous value and expectation. Does it look 'stable'? Wrong! The key is that it hasn't risen! The market was actually secretly hoping for a slight increase in the unemployment rate (e.g., 4.3%), which would provide a stronger reason for the Federal Reserve to cut rates. As a result, it remains 'as steady as a mountain', and the Federal Reserve sees this and thinks: 'Wow, the economy can hold up pretty well!'
Non-farm employment population (new jobs): Off the charts! 177,000 vs. the expected 130,000! This is not a small beat, but a significant one! It shows that U.S. companies are hiring vigorously, and the economic vitality is strong, with no signs of recession. This slaps those waiting to see the U.S. economy 'stall'!
Wage growth:
Annual rate 3.9% (Note: The original expectation was 3.7%, and the actual announcement of 3.9% is above expectations) vs. previous value 3.8%! Wages are still rising!
Monthly rate 0.4% (Note: The original expectation was 0.3%, and the actual announcement of 0.4% is above expectations) vs. previous value 0.2%! It's rising even faster!
Here comes the key point! What does this mean for the crypto market? One word: Cold! Two words: Major negative!
Why? The core logic is simple: The expectations for the Federal Reserve to cut rates have been doused with a bucket of cold water!
The economy is too strong, and inflation is hard to bring down: Low unemployment rate, jobs are easy to find, and wages are rising fast! What does this indicate? It indicates that American consumers have money to spend, and their purchasing power is strong! Strong consumption makes it easy to keep prices (inflation) from being suppressed. If inflation cannot be controlled, this is what the Federal Reserve fears the most!
The Federal Reserve's 'hawkish grasp' is hard to loosen: Why is the Federal Reserve raising rates? It's to suppress inflation and cool down the economy. Now looking at the data, the economy is not cooling down, but quite hot, with wages rising faster than expected (wage increases are the 'fuel' for inflation). The Federal Reserve Chairman Powell must be thinking: 'Cut rates? Wouldn't that just pour gasoline on inflation? No way, rates need to be held for a while longer (not ruling out further increases)!'
The U.S. dollar and U.S. Treasury bonds are thriving, while the crypto market is taking a plunge:
Delay in the expectation of Federal Reserve rate cuts → The U.S. dollar becomes more valuable and attractive (high interest rates continue to attract funds).
Funds pursue 'risk-free' or 'low-risk' returns → Buy U.S. Treasury bonds (high and stable yields).
Risk assets (Bitcoin, altcoins foremost) are being abandoned! Money is fleeing back to the dollar and U.S. Treasury bonds; who still plays in the high-risk, volatile crypto market? Thus, we see that as soon as the data is released, Bitcoin and Ethereum immediately plummet, and altcoins drop so much that even their mothers wouldn't recognize them.
Simple and straightforward summary:
Low unemployment rate + rapid job growth + fast wage increases = The U.S. economy is exceptionally robust.
Robust economy + significant wage inflation pressure = Federal Reserve rate cuts are far away (and might even raise rates)!
Federal Reserve does not cut rates (or delays cuts) = Strong dollar, attractive treasuries!
Strong dollar, attractive treasuries = Crypto market (high-risk assets) getting bled dry, with a sharp decline inevitable!
What to do next? Brothers need to stay vigilant!
Short term (next few months): As long as the U.S. job market remains so 'vibrant', and if inflation data does not show a significant decline, the Federal Reserve's 'hawkish' (favoring tightening, not cutting rates) voices will prevail. Want a big trend in the crypto market? Difficult! It's likely to be a volatile downturn or a gradual decline. Bottom fishing? Be careful not to catch it halfway up the mountain!
Focus points: Keep a close eye on the upcoming monthly U.S. CPI (inflation data) and non-farm employment data! They directly determine the Federal Reserve's stance and the life and death of the crypto market! If the next data is still this strong, the crypto market will take another hit!
Operational advice (for reference only, DYOR!):
Hold your horses! Don't rush to all-in bottom fish; wait for clearer signals (like inflation really dropping significantly, and the Federal Reserve easing up).
Cash (stablecoins) is king! In times of market panic, holding stablecoins like USDT, USDC is the safest, waiting for opportunities.
Reduce leverage! In this kind of volatility, high leverage is suicide!
Concerned about the 'anti-inflation' narrative? In the long run, if high inflation proves stubborn, the narrative of Bitcoin as 'digital gold' may be raised again, but that requires time to ferment, so don't expect it in the short term.
Conclusion: A single unemployment rate data point from the U.S. can shake the global market, and the crypto market is the first to be hit down. What does this indicate? It indicates that the crypto market is still the 'younger brother', needing to watch the face of this 'big brother' (the Federal Reserve) to thrive! To survive in this market, you must understand some macroeconomics and see the tricks behind these key data! Don't just bury your head in trading coins; look up at the sky (the Federal Reserve)! Brothers, fasten your seatbelts; the storm may not be over yet!
If you currently feel helpless and confused in trading, and want to learn more about the crypto market and get firsthand cutting-edge information, click on my profile and follow me; you won't get lost in this bull market!
