Crypto Markets Crash After Revised NFP Data Shows 818K Fewer Jobs

The crypto market today is down 2.90%, with major cryptocurrencies like Bitcoin and Ethereum experiencing declines. A major reason is the revised US Nonfarm Payrolls (NFP) data that shows 818,000 fewer jobs added. Released by the Bureau of Labor Statistics, this data is in line with financial analysts’ concerns. This data point is key and could negatively impact the risk-on assets such as Bitcoin and trigger the crypto markets to crash.

Nonfarm Payrolls Revisions Impact on Crypto Markets

The Non-Farm Payroll report is more than just a headline number. Revisions to prior months’ data can significantly impact investor sentiment and trigger sharp movements across various asset classes.

1. An upward NFP revision signals a stronger-than-anticipated labor market, fueling optimism about economic growth and a subsequent rally in risk-on assets such as Bitcoin or stocks.
2. A downward revision suggests a weaker labor market, raising concerns about an economic slowdown. It causes risk-on assets to decline as investors seek safer havens.
3. An in-line revision in Nonfarm Payrolls revision data minimizes investor sentiment as the labor market meets expectations. Risk-on assets generally remain stable in this scenario.
4. A significant downward revision can trigger a risk-off environment, as a weak labor market raises concerns about a potential recession. Resulting in a sharp decline in risk-on assets. 
5. Meanwhile, a significant upward revision reinforces a robust labor market and economic growth, sparking a surge in risk-on assets. However, investors should also be mindful that a strong labor market could prompt the Federal Reserve to raise interest rates to curb inflation. But considering the delicate state of the US economy, a hike would be unlikely.

What Should Crypto Investors Watch For?

The most crucial data point will be the number of new jobs added. If it falls short of expectations, it could signal economic trouble and trigger a sell-off in crypto. Pay close attention to the Federal Minutes. Is there any language suggesting a more aggressive approach to interest rate hikes? This would be a red flag for crypto investors.

Several experts, including Goldman Sachs, caution that the upcoming data could be misleading and may overstate the economy’s actual weakness. 

While next week’s revision could revise the pace down to 165-200k/month, we believe that a portion of that revision will be erroneous and that the ‘true’ pace of employment growth during that period was probably closer to 200-240k/month.

Despite the price dips, Bitcoin and Ethereum continue to dominate the market, suggesting a flight to safety amidst uncertainty. 

Some tokens, like BitTorrent and Wrapped eETH, are seeing gains, showcasing the dynamic nature of the crypto space. Overall, the crypto market is a mixed bag right now. There’s some downward pressure, but the resilience of Bitcoin and Ethereum, along with gains in certain tokens, point to underlying strength.