(Bloomberg) — Bitcoin and other cryptocurrencies turned sharply lower, erasing earlier gains, as digital assets got swept up in a volatile trading session across markets following a disappointing US jobs report.
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Bitcoin rose as much as 1.6% after the August employment report Friday morning in New York, only to turn decidedly lower about an hour later. The original crypto asset was down 4.5% at about $53,555, its lowest price since Aug. 5, as of 2:54 p.m. in New York. Ether, the second-biggest cryptocurrency, was down almost 6%.
US payrolls grew by 142,000 jobs in August, less than the average of 165,000 expected by economists in a Bloomberg survey, and the prior two months’ figures were revised lower by 86,000. Swaps traders had pushed higher the probability that the US central bank will reduce rates by a half percentage point, or 50 basis points, when they gather later this month to announce what is widely expected to be the first cut in more than four years. However, traders later reassessed whether the report was bad enough to inspire that big of a cut.
Looser monetary policy is often viewed as favorable for speculative assets like crypto.
“Today it’s more of a risk-asset selloff,” said Cosmo Jiang, portfolio manager at Pantera Capital. “I think expectations for a 50 basis-point cut in September got too high, and my view is it is super unlikely to happen. Mixed employment data this morning, or in other words not obviously bad, lowers the probability of a 50 basis-point cut. And risk assets — equities, crypto — are all down on that.”
Stocks also sank, with the S&P 500 opening higher only to drop 1.8% about an hour before the close of trading. Bitcoin and other major tokens have been tracking global equities very closely in recent weeks. A 30-day correlation coefficient for a gauge of the largest 100 digital assets and MSCI’s index of world shares is near 0.60, one of the highest levels in the past two years, data compiled by Bloomberg show. A reading of 1 indicates assets are moving in lockstep, while minus 1 signals an inverse tie.
“Bitcoin has been responding to macro events in a highly correlated manner to equities,” said Benjamin Celermajer, co-chief investment officer at Magnet Capital.
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Inflows into US spot-Bitcoin exchange-traded funds spurred the record-breaking rally in the largest digital asset earlier in the year. But the bull run then fizzled and the ETFs have suffered a spell of outflows in recent days.
–With assistance from Sidhartha Shukla.
(Updates market action)
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