Friday's release of U.S. labor market data triggered a powerful sell-off momentum across markets. Bitcoin (BTC) and gold, which had shown steady gains throughout the week, lost a significant portion of their value within minutes. The cause was the August employment report, which came in nearly three times stronger than the consensus forecast of analysts.
According to my analysis of the macroeconomic picture, this event has once again brought the scenario of tightening monetary policy by the Federal Reserve (Fed) in September to the forefront. The market was forced to urgently reassess its positions, which had been built on expectations of keeping the rate unchanged.
Labor market shows unexpected resilience
The key figure was the creation of 162,000 new jobs in the U.S. non-farm sector in August, while forecasts were limited to just 56,000. It is important to note that the average monthly increase over the past 12 months is only 31,000, which underscores the anomaly of the current surge.
The main drivers of growth were the leisure and hospitality sector (+62,000), as well as public-sector education (+42,000). However, an even more significant factor for the market was the revised data for previous months. The July figure was revised from a decline of 23,000 to an increase of 21,000, and June's from 20,000 to 31,000. The cumulative correction over two months added +55,000 to the statistics. The unemployment rate remained at 4.1%, while average hourly earnings rose by 0.3% to $37.75, corresponding to an annual pace of 3.1%.
Immediate market reaction: Bitcoin and gold under pressure
The market reaction was immediate and severe. Bitcoin, which was trading around $81,340 before the data release, plunged to $79,661 in a single five-minute candle, losing 1.80% almost instantly. Gold, which many investors view as a safe-haven asset, also failed to hold its ground: its price fell from $4,473 to $4,376 per ounce, corresponding to a decline of 1.75%.
The sharp price movement led to significant liquidations in the derivatives market. Within one hour, long positions worth $202 million were liquidated, and the total daily liquidation volume reached $768.54 million. This is a classic example of how a high share of leverage amplifies volatility during moments of macroeconomic uncertainty.
Shift in the balance of power ahead of the Fed meeting
As recently as late August, the probability of a Fed rate hike was estimated at around 66%. However, this week, following statements by Governor Christopher Waller about a possible hold on rates, those expectations were cut in half, which had been supporting gains in both bitcoin and gold.
Now, strong employment data and upward revisions to the statistics give Fed Chair Kevin Warsh solid arguments for a rate hike. The labor market remains tight, which is a classic pro-inflationary factor. The inflation data release is scheduled for September 11 — just five days before the Fed meeting. If inflationary pressure comes in below expectations, the market may reassess its Friday estimates, but for now, bears are in full control of the situation.
My view: The current dynamics demonstrate that the market is in a phase of high sensitivity to macroeconomic data. Investors should prepare for increased volatility until the Fed meeting, and support levels around $79,500 for bitcoin and $4,350 for gold will be key in determining the short-term trend.