- Weak U.S. jobs data reignited expectations for three Fed rate cuts in 2025.
- Bitcoin and Ethereum both struggled despite renewed dovish sentiment, with large ETF outflows weighing on prices.
- Inflation data due this week (PPI, CPI) could decide whether crypto gets another rally or stays under pressure.
Markets got a jolt last week after fresh U.S. jobs data turned out worse than expected. Traders quickly leaned back toward expecting three interest rate cuts before the end of the year, and stocks reacted with a strong bounce. Bitcoin, though, didn’t share much of the enthusiasm—its rally was short-lived and relatively quiet compared to equities.
The big story came Friday with the release of August’s non-farm payrolls. Only 22,000 jobs were added, far weaker than July’s disappointing 73,000. On top of that, June’s numbers were revised lower to show a loss of 13,000 jobs, the worst labor reading since 2021. Unemployment nudged up to 4.3%, not panic-level, but still pointing to a fragile labor market. Treasury Secretary Scott Bessent even floated the idea of a 100 bps rate cut, which earlier had helped push Bitcoin to $123,000.
Crypto Markets React Unevenly
Despite the Fed rate-cut chatter, Bitcoin’s response was muted. It climbed back toward $113,000, but the move faded as AI-linked stocks slumped, dragging down the Nasdaq and BTC along with it. By the weekend, Bitcoin hovered in the low $110,000s, weighed further by disappointment that MicroStrategy wasn’t added to the S&P 500. Spot ETFs didn’t provide much of a cushion either. Nearly $160 million flowed out of BTC spot ETFs on Friday alone, with BlackRock’s IBIT posting its first outflow in 10 days.
Ethereum looked even weaker. Over $780 million flowed out of ETH spot ETFs last week, including a brutal $446 million on Friday after the jobs report. ETH’s price held somewhat better thanks to steady buying from corporate treasuries—firms like Bitmine, SharpLink, and The Ether Machine continued to accumulate sizable ETH positions. Still, sentiment around Ethereum feels heavy, and without ETF demand, downside pressure lingers.
Looking Ahead to Inflation Data
This week could prove critical. Investors are watching two key inflation reports: Wednesday’s Producer Price Index and Thursday’s Consumer Price Index. Economists see PPI rising 0.3% month-over-month, while CPI is expected to hit 2.9% year-over-year, with core CPI ticking up to 3.1%. Weekly jobless claims will also be closely monitored.
If inflation data doesn’t surprise to the upside, markets will likely grow more confident about multiple rate cuts this year. That could set the stage for a fresh rally across stocks and crypto. But if CPI or PPI overshoot, it might spoil the party again, just like last month when a hot PPI reading knocked Bitcoin down from the $120Ks to the $110Ks.
The Bottom Line
Jobs data is flashing weakness, rate-cut bets are climbing, and crypto markets remain shaky. Altcoins outside of Ethereum showed decent rebounds last week, but their strength depends on Bitcoin’s ability to hold. For now, investors are left balancing two forces: fading economic growth and the Fed’s potential to step in with looser policy. This week’s inflation numbers might be the tie-breaker.
