Financial markets fell across the board on Friday after the U.S. jobs report for July showed an unexpected surge in the unemployment rate, raising concerns about a potential recession .
Data showed that U.S. non-farm payrolls increased by only 114,000 in July , far below economists' expectations of 175,000 , while the unemployment rate climbed to 4.3%, exceeding economists' forecast of 4.1% , reaching the highest level since October 2021.
Economists warn that the Federal Reserve is keeping interest rates high for too long, which could put the United States on a path to recession, and that a classic recession indicator - the Sahm rule - has begun to flash red.
Amid market panic, U.S. stocks , oil, gold and crypto markets all fell.
According to Bitpush data, after soaring to a high of $ 65,510 near noon on Friday, Bitcoin once fell back to below $62,000. As of writing, BTC is trading at $61,836.93, down 4.57% in 24 hours.
The Altcoin market closed the week in the red, with nearly 90% of the top 200 tokens by market cap ending the week in the red.
Among the rising coins, aelf (ELF), Golem (GLM) and NEM (XEM) rose by 21.6%, 9.3% and 8.8% respectively. Popcat (POPCAT) fell the most, down 16.9%, followed by Mog Coin (MOG) down 16.4% and Ponke (PONKE) down 13.8%.
The current overall market value of cryptocurrencies is $2.22 trillion, with Bitcoin accounting for 55.4% of the market share.
As for U.S. stocks, at the close, the S&P, Dow Jones and Nasdaq all fell, down 2.11%, 1.83% and 2.72% respectively.
Sahm rule suggests U.S. recession odds soar
The Sahm rule , created by macroeconomist and former Federal Reserve official Claudia Sahm, is triggered when the three-month moving average of the unemployment rate rises 50 basis points above its 12-month low.
According to the St. Louis Federal Reserve's real-time Sam's Rule recession indicator, the rule was triggered on Friday, with the moving average 53 basis points above its one-year low, which is an "ominous sign" for the overall U.S. economy because historical data shows that the Sam's Rule is very accurate in predicting upcoming recessions.
In addition to today’s trigger, the Sam rule has been triggered 11 times since 1953, and 10 of those times the economy went into recession. The only time the rule failed was in 1959, but even then, the economy went into recession just five months after the Sam rule was triggered.
Claudia Sahm herself gave an exclusive interview to Bloomberg on Friday. When asked "whether the Sam Rule is effective at this moment", Sahm said "it was triggered".
Sahm added that while she doesn’t think the U.S. is currently in a recession, “we’re not heading in a good direction. We’ve seen so much momentum in the unemployment rate in recent months — 4.3%, so whether we’re in a recession or not, that’s a precursor to a lot of labor market weakness.”
Sahm noted that while this is just one indicator, there are other data points that suggest economic weakness has increased in recent months, and the 4.3% unemployment rate just confirms that the economy has slowed down significantly.
Jag Kooner, head of derivatives at Bitfinex , agreed.
"Increased labor force participation (especially immigration) and a persistent mismatch between job seekers and available positions have also contributed to job losses," Kooner said. " These complexities, combined with an inverted yield curve (another recession signal), have created an atmosphere of uncertainty."
He added that while layoffs have increased, they "remain historically low. The Fed has taken a cautious approach in responding to persistent inflation by keeping interest rates high. However, as economic indicators show signs of weakness, the likelihood of a rate cut in the near term is increasing."
“If the unemployment data supports the Fed’s view that inflation is under control and we could see a rate cut in September, that would be a bullish case for bitcoin,” Kooner said .
He concluded: “As for August, we are seeing a lack of liquidity across many assets, ‘summer’ seasonality could be one reason, we are currently seeing heavy buying building at range lows for several Altcoin, we expect Bitcoin to trade between 61K and 70K, which would provide an accumulation zone.”
David Rosenberg, founder and president of Rosenberg Research & Associates Inc., also said, "The Sahm rule is causing recession calls today."
He tweeted on X platform: "The chart shows that the unemployment rate has risen by 80 basis points in the past year, which is a 100% ironclad indicator that a recession is here or is coming soon."
David Rosenberg warned: "With the Fed's actions now behind the economic curve, just as they were behind the inflation curve in 2021-2022, the tightening phase in the bond market and much of the cyclical bear market will end in dramatic fashion."
Analysts at Secure Digital Markets pointed out that Bitcoin has fallen 11% since the beginning of the week, with massive selling from major exchanges and whale wallets, coupled with recent geopolitical tensions, as the main factors. The 50-day moving average, around $63,000, is a key level to watch. If BTC breaks and closes below this level, it could signal a bearish trend and a further retracement to $60,000.
Author: BitpushNews Mary Liu
For more information, please join:
Twitter: https://twitter.com/BitpushNewsCN
BitPush TG Exchange Group: https://t.me/BitPushCommunity
Bitpush TG subscription: https://t.me/bitpush
Btok subscription: https://btok360.com/bitpush
