Welcome to Asia Pacific Morning Brief. An important digest of overnight cryptographic development that shapes regional markets and global sentiment. Monday’s edition was a summary from last week, and this week’s forecast was brought by Paul Kim. Grab some green tea and look at this space.
Expectations for three interest rate cuts this year have returned to the market following a weakening of US employment reports. While major US stock indices have gathered, there has been a relatively calm response at Bitcoin prices.
Job reports get worse and fuel compensation bets are reduced
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Last week, Bitcoin (BTC) rose 2.72% and Solana (Sol) rose 2.64%. However, Ethereum (ETH) performed poorly, down 2.07% over the same period.
The most common event in the risk assets market last week was the Friday release of the US August Non-Farm Payroll (NFP) Report. This important indicator can have a significant impact on US interest rates and overall market liquidity.
Previously, the surprising low NFP count of just 73,000 new jobs in July caused fears of the economic crisis. These concerns have prompted U.S. Treasury Secretary Scott Bescent to propose a 100 basis point rate cut this year, helping to drive Bitcoin to an all-time high of $123,000.
Data for August was weaker than data for July, with only 22,000 non-farm jobs being added. Additionally, a June revision of data revealed 13,000 job losses, marking the worst performance since 2021.
The unemployment rate rose 0.1% from the previous month to 4.3%. 4.3% is not at the level of crisis due to historical standards, but a dramatic slowdown in job growth is a concern. This suggests that the labor market may be at a turning point and could deteriorate rapidly.
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According to the FedWatch tool, the probability of a Fed rate reduction three times this year has increased again in response to insufficient numbers. Bitcoin prices quickly rebounded to the $113,000 level.
However, Bitcoin could not retain profits. The AI-related stock recession has led to a decline in Nasdaq and reduced Bitcoin’s price to a low $110,000. There was also a wave of disappointment after the S&P 500 index included Strategy (MSTR).
The US spot ETF market, which previously supported Bitcoin prices during periods of uncertainty, also showed weak response. On Friday, about $160.1 million flowed from the BTC Spot ETF market, with BlackRock’s IBIT seeing a $63.2 million spill. This is the first in 10 days.
Ethereum’s struggle highlights weakness in the market
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The situation at Ethereum is getting worse. The weekly price trend indicates that we are facing an increase in downward pressure. The largest growth engine, the Spot ETF market, saw net spills of over $780 million in the last week alone. This includes a massive $446.71 million worth of $446.71 million on Friday, when the US employment report was released.
Ethereum prices are somewhat resilient as they continue to purchase from the Department of Digital Asset Treasury (DAT) companies. Public companies with a wide range of ETH holdings, such as Bitmine (152,300 ETH), Sharplink Gaming (39,000 ETH), and Ether Machine (150,000 ETH).
Ultimately, employment data in the US has deteriorated, and expectations for rate cuts have risen. Nevertheless, cryptocurrency prices could not see any significant or sustained gatherings.
Major altcoins except ETH show relatively strong rebounds, but their profits could be limited if Bitcoin prices are not retained. This will make market direction important this week.
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Do August CPI and PPIs cause BTC rally?
This week, the US will release two major inflation reports: the Producer Price Index (PPI) and the Consumer Price Index (CPI).
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The August PPI, which will be released on Wednesday, is expected to rise 0.3% throughout the month. Last month, a PPI reading exceeded expectations of 0.9% cooling rate cut expectation was the main reason Bitcoin price fell from $120,000 to a low 110,000 seconds.
Economists expect CPI to increase by 2.9% from the previous year on Thursday. Core CPI should rise by 3.1%, slightly up from last month’s figures. The weekly unemployment claims scheduled for Thursday are another indicator to look at.
If these inflation numbers do not exceed expectations, rate cuts will be even stronger. A gathering of US risky assets could provide the momentum needed for Bitcoin and Ethereum. We look forward to the investors having a profitable week.
