The digital asset and precious metals market experienced a sharp crash within minutes of the release of fresh U.S. labor market data. The August report on new job creation came in nearly three times higher than the consensus analyst forecast, instantly shifting the balance of power across financial venues.
According to my analysis of the situation, the key trigger was not merely the beat on expectations, but the sheer scale of the divergence. In August, the U.S. economy added 162,000 new jobs, while market expectations did not exceed 56,000. This fundamentally changes the picture for monetary policy: the probability of a Federal Reserve rate hike in September has risen again, putting direct pressure on risk assets.
Labor market shows resilience
Particularly telling is the revision of data for previous months. The July report, which initially showed a decline of 23,000 jobs, was revised to growth of 21,000. June figures were also improved from 20,000 to 31,000. In total, the revision added 55,000 jobs to the prior two months.
The main growth drivers were the leisure and hospitality sector (+62,000) and government education (+42,000). The unemployment rate held at 4.1%, fully matching forecasts. Average hourly earnings rose by 0.3% to $37.75, corresponding to an annual pace of 3.1%—slightly above the expected 3.0%.
Instant market reaction
Bitcoin, which was trading around $81,340 before the report's release, plunged to $79,661 within a single five-minute candle, losing 1.80%. The latest trades were taking place near $79,860. Gold, traditionally considered a safe-haven asset, did not prove to be a "quiet harbor": the metal's price fell from $4,473 to $4,376 per ounce, corresponding to a decline of 1.75%.
The volatility triggered massive liquidations in the derivatives market. Within an hour, $202 million in long positions were liquidated, and the daily liquidation total reached $768.54 million.
Shift in market expectations
As recently as late August, the probability of a Fed rate hike was estimated at roughly 66%. However, after recent statements by Governor Christopher Waller about the possible maintenance of the rate, those expectations were cut in half, which supported gains in both bitcoin and gold. Now the situation has reversed.
Inflation data will be released on September 11—five days before the Fed meeting. If inflation readings come in low, the market may reassess its take on Friday's move. However, current dynamics show that investors are pricing in tighter monetary policy, and this pressure on cryptocurrencies and metals could persist in the near term.
My expert take: labor market resilience is a double-edged sword for bitcoin. On one hand, a strong economy supports consumer demand, but on the other, it raises the likelihood of monetary policy tightening, which historically is a bearish factor for risk assets. The key level for BTC right now is the psychological mark of $80,000, and losing it could open the door to a deeper correction.