Cryptocurrency prices fall after the latest U.S. jobs report-Bitcoin fell below $79,500

Core Points

U.S. non-farm employment growth significantly exceeded expectations, causing Bitcoin to fall below the $80,000 mark, and Ethereum to fall back below $2,500. Strong jobs data has pushed up interest rate risk, while August's inflation data will be the decisive test.

Cryptocurrency market reverses due to surprise employment data

The latest U.S. employment report shows that market expectations of an imminent easing of monetary policy are challenged, and crypto-asset prices have given up some of their previous gains. According to CoinMarketCap data, as of the time of writing, the trading price of Bitcoin was approximately US$79,440, falling below the US$80,000 mark again; Ethereum fell to approximately US$2,454, falling below the US$2,500 level.

In the broader crypto market, assets such as XRP, Solana and Chainlink also fell in a short period of time. Among them, Zcash lost its $1,000 support level during the pullback. However, judging from the overall performance of the past 24 hours, Bitcoin, Ethereum and several other assets remain positive. This suggests that the market is absorbing some of its previous gains rather than falling into a full-blown collapse. This distinction is crucial, especially after the recent broad recovery. The key question now is whether buyers can absorb the impact of changes in U.S. interest rate expectations.

New jobs reached 162,000 in August

The U.S. Bureau of Labor Statistics (BLS) reported that non-farm payrolls increased by 162,000 in August. Economists surveyed by Reuters had expected an increase of only 56,000. In addition, early data have also been revised upward: the increase in June was revised upward to 31,000 from 20,000, and in July it was revised upward to an increase of 21,000 from a previously reported decrease of 23,000. The revisions added a combined 55,000 jobs in the first two months.

The unemployment rate remained at 4.1%, and the labor participation rate rose slightly from 61.4% to 61.6%. These data suggest that the labor market is performing far better than investors expected. Wage data provides the main easing details in the report: Average hourly wages rose 0.3% month-on-month in August and 3.1% year-on-year. This means that strong hiring has not been accompanied by a new acceleration in annual wage growth.

Why are employment data surprises putting pressure on cryptocurrencies?

Employment data affects the cryptocurrency market through monetary policy rather than Bitcoin's underlying network or adoption rates. A still-resilient labor market gives the Fed more room to focus on curbing inflation without having to keep interest rates low to support employment. That possibility could push up short-term Treasury yields as traders demand higher returns when future policy decisions come due. Higher yields make government debt more competitive with risky assets, while tighter borrowing conditions increase the cost of maintaining leveraged positions.

The dollar tends to strengthen when investors expect U.S. interest rates to remain high. Since cryptocurrencies are denominated in U.S. dollars globally, a strong U.S. dollar reduces purchasing power outside the United States and makes liquidity conditions unfavorable. Therefore, the initial decline is not a unique sign of failure for crypto assets, but rather the possibility that traders adjust prices to reflect the possibility that U.S. financial conditions may remain restrictive or even tighten further.

Wash and Waller did not reach a clear consensus on the September resolution

This repricing is important because Fed officials were divided at the time of the jobs report about whether continued high inflation was enough to justify another rate hike. Chairman Kevin Warsh made it clear in his Jackson Hole speech that a September rate hike was already under serious consideration. He said policymakers must be confident that inflation is returning to the 2% target quickly enough, otherwise the Fed still has "work to do."

Commissioner Christopher Waller took a more patient stance in his speech on September 3. He noted that recent inflation readings showed signs of improvement and that he would tend to support keeping rates unchanged if the trend persisted. Still, Waller also left room for a vote to raise interest rates if August inflation data showed that the improvement was only temporary. He also said that given that economic activity and the labor market are already in satisfactory conditions, inflation rather than employment will have a significant impact on his decisions.

Reasons for supporting interest rate hikes

• The economy has created jobs far exceeding expectations, the unemployment rate remains low, and early employment estimates have been revised upward.

Reasons for keeping interest rates unchanged

• Wage growth has not accelerated, and recent inflation readings may give policymakers room to wait for clearer evidence.

The jobs report provides additional support for officials who support austerity policies, but does not fully determine the outcome of the meeting. However, futures markets are still leaning towards raising interest rates. When capturing data, the CME FedWatch tool gave a probability of a 25 basis point rate hike on September 16 a 60.2%, which would increase the target interest rate range from 3.50%-3.75% to 3.75%-4.00%. The remaining 39.8% points to no change, with no probability allocated to a rate cut.

CME FedWatch calculates the probabilities based on 30-day federal funds futures, so these data reflect market positioning rather than Fed forecasts. The reading of 60.2% is based on market benchmarks before the August Consumer Price Index (CPI) report and is subject to significant changes.

August CPI becomes final major test

The next two key dates:

• September 11: The Bureau of Labor Statistics releases the August Consumer Price Index (CPI).
• September 16: The Federal Reserve announced its decision after a two-day policy meeting.

Solid CPI readings will combine continued price pressure and strong employment data to give policymakers room to respond. This combination will strengthen interest rate hikes expectations and may continue to put pressure on cryptocurrencies through higher yields, a stronger dollar and more expensive leverage. Conversely, weaker inflation data would weaken this interpretation, allowing officials such as Waller to argue that even if employment remains stable, price pressures are easing and can be achieved without another rate hike.

For Bitcoin, the immediate test is whether buyers can recover and hold the $80,000 mark after the first wave of reactions to the employment report subsides. The surprises in the jobs data have raised the cost of continuing the previous rebound, but the August CPI report will provide a clearer signal on whether this change in interest rate expectations can be sustained.