The U.S. July Employment Situation report released last Friday created a statistical shock rarely seen outside of crises, forcing traders to reassess both the macro outlook and the short-term trend of Bitcoin. Payrolls only increased by 73,000, but the shock lay in the record downward revisions: May and June were revised down a total of 258,000 jobs, bringing the average hiring rate over three months down to 35,000 and nearly erasing all reported growth in Q2. The Bureau of Labor Statistics noted that adjustments of this magnitude only occur during recessions due to Covid.
Does Bitcoin Really Have to Face a Black Swan Event?
Bloomberg Economics Chief Economist Anna Wong in the U.S. wrote: "The downward revision of payrolls in May and June in the July jobs report is a black swan event – a three-standard-deviation move with a probability of occurring under 0.2% in the past 30 years."
Adjusting for our estimates of the misreporting of jobs from the Bureau of Labor Statistics' birth-death model, the hiring rate over three months has turned completely negative.” She wrote in a note released on Friday that this data has "reversed the labor market scenario" from a rebound to a sudden cool down.
The voice of the cryptocurrency market on this issue is André Dragosch, head of research at Bitwise Europe, who spent the morning posting a series of warnings about X. First was the news, "According to Bloomberg's chief economist Anna Wong, the most recent payroll adjustments are a 'black swan event'. It may get worse before it gets better...", followed by the proverb, "Indeed – bad for payroll = good for bitcoin, at least in the medium to long term."
A few minutes later, he argued that a deeper adjustment could force emergency easing: "NOTE: There is a high likelihood that the June jobs figure will be negative after further downward revisions, which could lead to a 50 basis point rate cut in September... Plan accordingly. #Bitcoin"
By mid-afternoon, he pushed the issue to a reasonable extreme: "ATTENTION: Perhaps we just need one more negative NFP report for the Fed to significantly adjust rate cut expectations. Surprises in U.S. labor market and inflation data are still as bad as during Covid, but traders only predict two rate cuts until December 2025... The printer is coming..."
Interest rate futures are highly volatile in favor of Dragosch. On Wednesday, CME's FedWatch Tool showed a 91% chance of at least one rate cut at the FOMC meeting on September 17-18. Minneapolis Fed President Neel Kashkari acknowledged that "the underlying economy is really slowing down," while Governor Lisa Cook called the scale of the adjustments "concerning."
Bitcoin price volatility has captured the tug-of-war between recession fears and hopes for liquidity. The leading cryptocurrency fell to $111,920 on August 2, the lowest since early July, immediately after the payroll report and President Donald Trump's firing of BLS Commissioner Erika McEntarfer. Subsequently, Bitcoin's price slightly recovered to $111,500 as the odds of a rate cut surged this week. However, Bitcoin remains bound by macro headlines rather than its own cycle.
However, the first clear sign that easing policy has emerged in the capital flow. Spot Bitcoin ETFs recorded a net inflow of $91.6 million on August 7, ending a four-day withdrawal streak that had taken more than $380 million out of these funds.
Whether Bloomberg's and Dragosch's "black swan" prediction is correct will depend on some upcoming economic data and the Fed's risk appetite. Currently, the market is caught between two extremes: just one bad jobs number could trigger a comprehensive policy response, but just one more shock could lead to a broader risk-off spiral. The only certainty, as both Wong's probability calculations and Dragosch's strong warnings imply, is that the margin of error has evaporated.