Bitcoin falls below $54,000 as U.S. job report stirs huge volatility

The brief surge in cryptocurrency markets after the U.S. jobs report on Friday was short-lived, as volatility quickly set in, dragging Bitcoin (BTC) to its lowest point in a month. 

While initially spiking to $57,000, Bitcoin swiftly reversed course and plummeted below $54,000 – a level not seen since August 5. BTC price has fallen nearly 4.5% over the past 24 hours to $53,800, according to the Coinmarketcap data. 

Besides, major altcoins were also not spared with Ethereum (ETH), Solana (SOL), Ripple (XRP), and Cardano (ADA) prices taking huge losses. The sharp price movements triggered nearly $50 million in liquidations within just an hour on crypto derivatives platforms, catching leveraged traders, particularly those holding long positions by surprise. 

The day's trading range, with a spread of over $3,000 between the high and low, was the widest since August 28. U.S. stock markets were also impacted, with key indexes such as the Nasdaq Composite and S&P 500 falling 2.5% and 1.6%, respectively, by midday.

U.S. Job Market Data

The U.S. nonfarm payrolls report, a key economic indicator, revealed that 142,000 jobs were added in August, slightly below analyst expectations. Meanwhile, the unemployment rate edged down to 4.2% from 4.3% in July.  This report left investors speculating about the Federal Reserve's next move regarding interest rates. 

Currently, market participants are assigning a more than 70% probability of a 25 basis-point rate cut and nearly 30% for a more aggressive 50 basis-point cut at the upcoming Federal Open Market Committee (FOMC) meeting on September 18, as per the CME FedWatch Tool.

In a speech at Notre Dame University, Federal Reserve Governor Christopher Waller expressed his support for lowering interest rates, emphasizing that "the time has come" to make such a move and that he would back "front-loading rate cuts if that is appropriate."

Rate Cuts in September

There is a growing debate among market analysts about the impact of the size of the rate cut on risk assets. Some argue that a smaller cut could be more favorable, as a 50 basis-point reduction might signal deeper concerns about the U.S. economy's health and potential recession risks. 

Sean Farrell, head of digital asset research at Fundstrat, noted, "While the ultimate effect of a rate cut—whether bullish or bearish—depends on economic data and Fed communications, a 25 basis-point cut appears more supportive for asset prices compared to a 50 basis-point cut."

As the markets continue to react to economic data and Federal Reserve signals, traders remain cautious, navigating a landscape marked by uncertainty and heightened volatility.