When economic data gets a 'shot in the arm', the crypto circle has to take 'blood pressure medicine'! Just look, the U.S. non-farm payrolls in June exceeded expectations again, with 147,000 new jobs and the unemployment rate dropping to 4.1%. This has muddied the waters for the market, which thought a 'rate cut' was a done deal!
Plain interpretation of the data's power:
What does it mean? The non-farm data is like a 'physical examination report' for the U.S. economy. More new jobs and a lower unemployment rate indicate that the economy is still 'robust' and does not need the 'rescue pill' of a rate cut as much as imagined.
How is the market reacting? Traders took one look at this report and immediately 'changed their faces'! July rate cut? Basically no chance! September rate cut? The probability is also 'whoosh' down! Why? Because the Federal Reserve sees the economy doing so well and thinks, 'What's the rush? We can keep administering this 'fever-reducing medicine' of high interest rates for a while longer!'
What impact does this have on BTC and ETH? Simply put: bearish in the short term!
1. The dollar is more 'appealing', risk assets are 'nervous':
Not cutting rates or delaying rate cuts means borrowing costs remain high. At this time, the stable and attractive U.S. Treasuries and cash in dollars become very appealing.
Daxing's opinion: Money is the most 'realistic' thing; wherever it's stable and offers high interest, that’s where it will flow. In the crypto circle, which is 'high volatility and high risk,' it's easy to 'bleed' in the short term! Funds may take flight first, putting pressure on leaders like BTC and ETH. Think back to last January, when good non-farm data came out, BTC dropped over 5% in a week. Historical scripts can sometimes repeat.
2. Rate cut expectations are 'fuel'; without fuel, the car can't speed:
The previous rebound in the crypto circle was largely a bet that the Federal Reserve would soon unleash a huge amount of liquidity. Now that expectation has been doused with cold water.
Daxing's opinion: It's like hearing that a big year-end bonus is coming, spending in advance, only for the boss to say, 'The performance is good this year, the bonus will be delayed.' Are you nervous? The market is similar; the 'rate cut rally' that has been spent in advance may have to be given back.
3. The 'nightmare' of leveraged long positions:
Surely there are many brothers who bet on an early rate cut, opened long positions, and leveraged up. Now that expectations have fallen through, a price fluctuation can easily trigger a chain 'liquidation disaster', driving prices even lower in a short time.
Daxing's opinion: For those trading contracts, you need to be extra careful lately! The volatility triggered by this 'expectation gap' after data is released often leads to a 'double kill' for both sides; keep your hands steady and don't leverage too aggressively!
Can ETH 'stand out on its own'? It might be slightly better, but it's hard to resist the overall trend!
A glimmer of hope: ETH has a unique 'secret wish' — the spot ETF! If a few can really be approved in July, that would definitely be a shot in the arm, attracting real money into the market and maybe able to withstand macroeconomic headwinds.
Daxing's opinion: ETH's 'anti-dip buff' depends on the approval of the ETF. BUT! Remember, the ETF is 'a cherry on top', not 'lifesaving'. If the entire market is 'stormy' because the Federal Reserve doesn't cut rates, it's challenging for ETH to stand out. Looking at the recent stablecoins USDT/USDC, their market values haven't really increased, indicating insufficient new funds. Relying solely on existing market money won't drive a significant rally.
What should we focus on in the key future market? Daxing gives you the key points:
Next month's CPI inflation data: This is the 'Achilles' heel' of the Federal Reserve! If inflation (especially core inflation) clearly decreases, then expectations for a September rate cut may reignite, giving the crypto circle a chance to catch its breath or even counterattack.
The Federal Reserve's FOMC meeting at the end of July: Pay close attention to what Powell says! If he remains 'hard' about such strong employment data and hints at concerns (like wages rising too quickly?), or mentions potential rate cuts in the future, that would be 'dovish', and the market could react positively.
Can BTC miners 'hold on'? I've heard that the miners' cost line is around $53,000. If the BTC price really gets smashed down to this level or even lower, be careful of miners 'selling at a loss' to survive, which could create new selling pressure. This is an endogenous risk point!
Daxing's personal opinion
Short term: Avoid leveraged long positions; if you have positions, set strict stop losses.
Mid-term: Wait for CPI data and clear signals from the Federal Reserve; if the ETH spot ETF is approved, there may be structural opportunities.
Beware of black swans: The risk of economic 'stagflation' and slowing growth + stubborn inflation may trigger a market-wide sell-off, and cryptocurrency volatility will soar.
Brothers, this wave of non-farm data has doused the 'rate cut expectations' with cold water. The market is bound to shudder for a while, but veteran traders in the crypto circle know that opportunities often arise from declines! The key is whether you have enough ammunition ready? Is your strategy set? Stay tuned to Daxing, and in the next issue, we will discuss: 'If BTC really drops to $100,000, which potential altcoins should we target for bottom fishing?' Let's not miss it! Where do you think the bottom fishing opportunity lies in this pullback? Let’s heat up the comments section!
Remember! The market is not wrong; we are! I am Daxing, a top-tier layout team, serving only the ambitious madmen with vision!
