jakiro
Shaw, Bitcoin Vision
On the evening of November 20, the U.S. non-farm employment data for September was released. New jobs exceeded expectations but the unemployment rate rose.Although the three major U.S. stock indexes opened sharply higher, they turned sharply lower during the session, performing an epic “open high and move low.”Affected by this, the cryptocurrency suddenly fell sharply again early this morning, and rebounded slightly in the morning..Bitcoin fell below US$87,000, briefly touching US$86,100, with a drop of more than 3% in 24 hours; Ethereum fell below US$2,800 in a short time, once touching US$2,790, with a 24-hour drop of more than 3.3%.Data shows that in the past 24 hours, the entire network has liquidated positions of US$823 million, including US$695 million of long positions and US$128 million of short positions.
Instead, U.S. stocks and crypto markets fell again, triggering a sell-off in risk assets.What are the reasons for this?How to interpret?How to predict the market trend by the end of the year?
1. The crypto market suffered another heavy setback and panic selling continued.
Cryptocurrencies fell sharply again in the early hours of this morning and rebounded slightly in the morning.Bitcoin fell below US$87,000 for the first time in seven months, briefly touching US$86,100, with a drop of more than 3% in 24 hours; Ethereum briefly fell below US$2,800, once touching US$2,790, with a 24-hour drop of more than 3.3%.Other cryptocurrencies such as Solana and BNB all experienced significant declines.Coinglass data shows that in the past 24 hours, the entire network has been liquidated to US$823 million, and more than 226,000 people have been liquidated. Among them, long orders have been liquidated for US$695 million, short orders have been liquidated for US$128 million, BTC has been liquidated for US$404 million, ETH has been liquidated for US$173 million, and Solana has been liquidated for US$35,566,800.
The sharp decline in the crypto market has been affected by the shock of mainstream assets such as U.S. stocks.The recent continuous decline has triggered continuous selling of risk assets. Market panic has not been effectively alleviated, and the slightest fluctuation will be infinitely amplified..
2. U.S. stocks staged an epic “diving”, affecting risky assets
After the release of non-agricultural data for September last night, the three major U.S. stock indexes opened sharply higher. The S&P 500 index rose by 1.44% and the Nasdaq index soared by 2.18%. However, they turned sharply lower during the session and staged an epic “high open and low move”.U.S. stocks fell sharply across the board in late trading, with the S&P 500 index closing down 1.56% and the Nasdaq index plunging 2.16%.Nvidia’s better-than-expected financial report and “Goldilocks”-style better-than-expected non-agricultural data should have been a double benefit. However, the rapid decline of the crypto market interacted with the U.S. stock market and continued to trigger a sell-off in risk assets., while the market turned to hawkish comments from Federal Reserve officials and concerns about private credit risks.
Some market analysts believe thatWhen good news fails to push the market higher, this in itself becomes a strong bearish signal, triggering large-scale profit-taking and technical selling in U.S. stocks..
3. Non-agricultural employment data exceeded expectations, but it is difficult to benefit the market
Last night, the US non-farm employment data for September was released. The US non-farm employment population increased by 119,000 in September, more than double the expected 51,000. However, at the same time, the number of new jobs in August was revised down from an increase of 22,000 to 26,000 to a decrease of 4,000. The total number of non-farm employment in July and August was revised down by 33,000, which also continued this year’s “continuous downward revision” pattern.The U.S. unemployment rate in September was 4.4%, higher than expected and the previous value of 4.3%, the highest since October 2021, mainly due to the increase in black unemployment.U.S. Treasury yields and the U.S. dollar index both fell after the data was released.
The report is the first indicator of economic health released by the U.S. Bureau of Labor Statistics since the record shutdown of the U.S. federal government halted the release of official data.Market analysts said the employment data released contradictory signals:On the one hand, employment growth exceeded expectations, and on the other hand, the unemployment rate unexpectedly rose to the highest level in four years.Surprisingly positive data will strengthen stance of hawkish members of the FOMC.
4. Expectations for the Federal Reserve to cut interest rates have plummeted, and market concerns have intensified.
Financial market stability concerns, including the risk that asset prices could fall sharply, are becoming a new theme as Fed officials discuss the timing and even whether to cut interest rates.The release of non-agricultural data further strengthened the cautious stance of the “hawkish” directors of the Federal Reserve.Fed Hammaker said the employment data looked mixed.The jobs report was “slightly stable” but in line with expectations; high inflation remains a real problem for the U.S. economy.Hammaker also said cutting interest rates could prolong high inflation.Cutting interest rates may also encourage risk-taking behavior in financial markets.Federal Reserve Governor Barr expressed concern that inflation is still at 3%.He believes that monetary policy needs to be carefully formulated to balance risks and the labor market needs to be supported, but the inflation rate needs to be restored to 2%.
Separately, Fed Governor Cook said officials should monitor how unexpected losses in private credit could spread to the broader U.S. financial system, given the “increased complexity and interconnectedness” of leveraged companies.She sees hedge funds’ expanding footprint in the U.S. Treasury market and asset valuation levels as potential vulnerabilities.
According to CME’s “Fed Watch”: the probability that the Federal Reserve will cut interest rates by 25 basis points in December is 39.6%, and the probability of keeping interest rates unchanged is 60.4%.The probability that the Fed will cut interest rates by 25 basis points cumulatively by January next year is 50.2%, the probability of keeping interest rates unchanged is 29.7%, and the probability of cumulative interest rate cuts by 50 basis points is 20.2%.In addition, Polymarket data shows that the probability of “the Federal Reserve cutting interest rates by 25 basis points in December” fell to 34%, and the probability of keeping interest rates unchanged rose to 64%.
Many “hawkish” members of the Federal Reserve have been vocal recently, continuously lowering market expectations for an interest rate cut in December.The just-released September employment data also provides a basis for the Federal Reserve’s more cautious policy formulation.
5. ETF and other funds have not yet recovered significantly, and liquidity is insufficient.
Farside Investors data shows that U.S. spot Bitcoin ETFs have accumulated net outflows this week.US$1.099 billion, the US spot Ethereum ETF has accumulated net outflows this week.$433 million.In addition, BlackRock’s Bitcoin ETF IBIT has experienced net outflows for five consecutive days as of the 19th.A total of US$1.43 billion.On November 18 (Tuesday), IBIT experienced a capital outflow of US$523.15 million, recording the largest single-day net outflow since its establishment in January 2024..
ETF funds continue to record net outflows, indicating that institutional funds, the main driver of the previous bull market, have not been able to effectively recover. The crypto market is still insufficient in liquidity and lacks sufficient momentum to rebound.
6. Market Analysis and Interpretation
Recently, NVIDIA’s better-than-expected earnings report, non-farm employment data, and policy regulation have been fundamentally positive, which should have been positive factors for the market. However, why has assets continued to sell off and panic has not been effectively alleviated?How to predict market trends by the end of the year?Let’s take a look at the main market interpretations.
1. JP Morgan analysts said, retail investors have sold off about $4 billion in spot Bitcoin and Ethereum ETFs in November, which has been the main driver of the recent cryptocurrency market correction.Meanwhile, retail investors are buying stock ETFs, adding about $96 billion to their holdings this month, suggesting the cryptocurrency sell-off is not part of a broader risk-off sentiment.
2. VanEck report stated that, Bitcoin has fallen 13% under strong selling pressure in the past 30 days, and the market selling behavior is concentrated on mid-term hoarders, rather than the earliest wallet addresses; while long-term whales are still holding BTC, the total amount of BTC held for more than 5 years continues to grow, and the net increase in BTC for more than 5 years has increased by 278,000 bitcoins compared with two years ago; the futures market has shown a state of exhaustion, with funding rates and open positions at oversold levels.
3. BitMine Chairman Tom Lee said, the current weak trend of the encryption market is highly similar to the plunge on October 10, when the mispricing of stablecoins triggered the largest liquidation in history. Nearly 2 million accounts were washed out and liquidity dried up instantly.Lee pointed out that this type of deleveraging cycle usually lasts about eight weeks, and it has now entered its sixth week, and the market may be at the end of an adjustment.
4. CryptoQuant CEO Ki Young JuPublished multiple Bitcoin realized cost distribution charts and said: The current main selling force is short-term Bitcoin holders, while miners and long-term holders are relatively restrained.
5. Matt Hougan, Chief Investment Officer, BitwiseRefuting market concerns that Bitcoin may enter a bear market.He said the value of Bitcoin is that it serves as a digital wealth storage “service” without relying on governments, banks or other third parties.Hougan believes that despite the recent market correction, growing institutional demand for the service supports Bitcoin’s long-term development trajectory.
6. Michael Saylor, executive chairman of Strategy, said, Bitcoin’s volatility and growth both dropped from 80 to 50.He said BTC could reach 1.5 times the S&P in terms of volatility and performance.
7. Glassnode observation article said, Bitcoin fell below the short-term holder cost benchmark and the negative one standard deviation range, and buyers have been under pressure recently; the $95,000-$97,000 area is now a key resistance level. If this range can be recovered, it will be an initial signal to repair the market structure. Spot demand remains weak: U.S. spot ETF capital flows are deeply in the negative range, and traditional financial (TradFi) allocation institutions have not seen new buying.Speculative leverage continues to be unwound, a trend reflected in falling futures open interest (OI) and funding rates falling to cycle lows across the top 500 assets.
8. CryptoQuant.com analyst XWIN GROUP said, the capitulation sentiment of short-term holders continues to intensify, “Volatility may still continue, but the purge of ‘weak position holders’ is already progressing smoothly – judging from historical data, this process marks that the correction has entered a later stage, rather than just beginning.”
9. Capital.com senior analyst Kyle Rodda said: “There are many positive factors in the market. Nvidia’s excellent quarterly earnings report once gave Wall Street a hot start. U.S. employment data was also ideal. However, the market lacks the momentum to continue rising. Although two key risk events (and the results were positive) have passed, it is still not enough to eliminate the pessimism currently gripping the market.”
10. Seema Shah, analyst at Principal Asset Management commented:, market reactions to the non-farm payrolls report varied.Stock markets welcomed the stronger-than-expected payrolls showing that the economy remains solid, while bond markets were more focused on rising unemployment and slowing wage growth, which could keep the possibility of the Federal Reserve cutting interest rates in December.The latest jobs data is unlikely to tip the Fed toward a rate cut in December.Even so, standing still in December would not be a serious mistake.While sluggish consumer confidence highlights concerns about job security, labor market conditions, while soft, are by no means a recession, providing the Fed with breathing space to take decisive action when it has enough convincing data.
11. Morgan Stanley analyst Michael Gapen said, strong employment reduces the risk of rising unemployment, and the Federal Reserve is no longer expected to cut interest rates in December. Three interest rate cuts are now expected in January, April and June next year, thus maintaining the final interest rate expectation at 3-3.25%.
12. Goldman Sachs Client InstructionsThe S&P 500 fell below a closely watched level, giving hedge funds that trade stocks on trend a green light to potentially sell off nearly $40 billion in stocks in the coming week, Zhong said.The S&P 500 fell below 6,725 on Wednesday.Goldman Sachs calculations show that $39 billion in equities could be sold globally in the following week after share prices fall below that figure.If stock prices continue to fall, the bank estimates that systemic trend hedge funds could sell up to about $65 billion in stocks.
