Bitcoin Pumps, Then Dumps Below $54K as Market Awaits Fed Rate Cuts Following Jobs Report

Bitcoin (BTC) experienced a dramatic price swing, following the release of the U.S. jobs report, as volatile trading wiped out nearly $50 million of leveraged crypto positions in just one hour, according to data from CoinGlass. Bitcoin initially surged to $57,000 but quickly reversed, plunging below $54,000, marking its lowest point since August 5. This sharp move has left the cryptocurrency down nearly 3% over the past 24 hours.

Major altcoins mirrored Bitcoin’s performance, with Ether (ETH), Solana (SOL), Ripple’s XRP (XRP), and Cardano (ADA) all posting losses between 2%-4%. The $3,000 spread between Bitcoin’s daily high and low was the widest since August 28, further highlighting the unpredictability of the market.

The cryptocurrency sell-off coincided with losses in U.S. equities, with key indexes also turning lower early in the trading session. The Nasdaq Composite Index dropped 2.5%, while the S&P 500 fell 1.6%. Traders were rattled by mixed signals from both the crypto and stock markets, leading to a broader risk-off sentiment.

Eyes on Fed Rate Cuts After Jobs Report

The U.S. jobs report for August revealed that 142,000 jobs were added, slightly below analyst forecasts. The unemployment rate dropped to 4.2% from July’s 4.3%. This data has shifted market focus toward the Federal Reserve’s upcoming decision on interest rate cuts, with the central bank widely expected to announce its move at the Federal Open Market Committee (FOMC) meeting on September 18.

Currently, market participants are assigning a 70% probability to a smaller 25 basis-point rate cut and a 30% chance for a larger 50 basis-point cut, according to the CME FedWatch Tool. The Fed’s decision could have a significant impact on asset prices, with many traders hoping that a smaller cut would provide a more favorable environment for risk assets like cryptocurrencies.

Fed Governor Christopher Waller added to the speculation, stating in a speech at Notre Dame University that the “time has come” to reduce interest rates. He indicated that he would support “front-loading” rate cuts if necessary. Some market observers believe a smaller 25 bps cut would be more beneficial for crypto and other risk assets, as a larger 50 bps cut might suggest increasing concerns about a potential recession in the U.S. economy.

As the market braces for the Fed’s next move, volatility is expected to remain elevated, with Bitcoin and other cryptocurrencies caught in the crosshairs of economic uncertainty and monetary policy shifts.