On June 6, the U.S. Department of Labor released the May non-farm payroll report: 139,000 new jobs were added, and the unemployment rate remained unchanged at 4.2%. Although this is better than market expectations, it is below the average level for the past year. More crucially, the employment data for March and April was significantly revised down, directly overshadowing the 'good news' of May.
Once the non-farm data came out, the cryptocurrency market experienced a typical 'first joy then worry' trend:
Bitcoin (BTC) briefly surged to $69,800 before the data release, then quickly dropped to $67,500, evaporating over $20 billion in market value. Ethereum (ETH) also experienced a 'piercing' trend, retreating from around $3,800 to about $3,600. Other mainstream cryptocurrencies also faced pressure.
Why does non-farm data affect the cryptocurrency market?
The non-farm payroll report is one of the core references for the Federal Reserve's monetary policy. Strong employment indicates a hot economy, which means the Fed may raise interest rates or delay cuts, negatively impacting risk assets; weak employment, on the other hand, opens up space for easing expectations, benefiting the cryptocurrency market.
This May data is somewhat 'neutral to weak':
• New jobs are not bad, but the trend is slowing: The average over the past 12 months was 149,000, while this time it was 139,000, and the previous two months were revised down by 95,000, effectively making the entire quarter look 'overstated.'
• The unemployment rate has remained high for three consecutive months: 4.2%, far higher than the 3.5% at the end of 2023.
• Wages remain resilient, rising 3.9% year-on-year, indicating that inflation has not yet fully subdued.
The market once thought this data could prompt the Federal Reserve to release clearer signals for rate cuts at the next meeting, but the real reaction was: no clear path for easing.
As Bloomberg said: 'This is a lukewarm signal; the Federal Reserve will not loosen its grip for the time being.'
The Federal Reserve is 'hesitant,' and the cryptocurrency market is 'shaky.'
The previous rise in the cryptocurrency market was built on the expectation that the Federal Reserve could cut rates as early as July. Now, the non-farm data shows that the labor market remains resilient, especially with wages still supporting inflation, raising concerns that the Fed may again delay the easing window.
This 'uncertainty' is particularly fatal for cryptocurrency assets because:
• The cryptocurrency market is extremely sensitive to changes in liquidity;
• After the leverage ratio rises, it becomes extremely dependent on macro news;
• Hot money tends to flow into high volatility periods, and once it enters a 'policy vacuum,' trading momentum weakens.
Political risk + economic slowdown = the 'double torment' for the cryptocurrency market.
Additionally, what affects the current sentiment in the cryptocurrency market is not just the economic data itself.
Currently, political uncertainty in the United States is heating up, especially with the high-profile 'tear' between Trump and Musk, as well as the tussle over trade policies and government spending, all of which make the market worry about the chain reaction of U.S. political situations on the macro economy. This geopolitical and policy anxiety also permeates the cryptocurrency market.
On one hand, the direction of regulatory policies is becoming unclear; on the other hand, if the Federal Reserve is forced to stabilize the dollar and tighten expectations, cryptocurrency assets will face pressure from safe-haven funds flowing back into traditional financial markets.
Summary: When will the market stabilize?
From this non-farm data, the Federal Reserve is unlikely to aggressively cut rates in the short term, nor will it suddenly turn hawkish. After experiencing a short-term correction due to 'failed expectations,' the cryptocurrency market will enter a transition period of 'data observation—expectation revision—sideways volatility.'
Investors should pay attention to the following points:
1. The Federal Reserve's interest rate meeting in mid-June: The dot plot and policy statement will directly affect the sentiment in the cryptocurrency market;
2. U.S. June CPI and PPI data: Whether inflation retreats will determine the timing of easing;
3. Large holders' on-chain movements: Are there signs of chip re-accumulation or concentrated outflows;
4. Stablecoin fund flows: The issuance volume and on-chain activity of USDT/USDC reflect the true intentions of hot money.
The non-farm data is just the appetizer; what truly impacts the cryptocurrency market is: the Federal Reserve's next move and whether the market still has confidence in the 'rate cut path.'
