Is the bear market coming or the beginning of a bull market? Is this a normal washout before a rate cut?

At 20:30 on September 6, the U.S. Department of Labor released non-farm data. The seasonally adjusted non-farm payrolls in the United States in August were lower than expected. BTC rose accordingly, rising from 55,900 USDT to about 57,000 USDT in a short period of time. However, one hour after the data was released, BTC began to lead the entire crypto market to fall. It fell to 52,550 in the early morning and has now rebounded to above 54,000.

Affected by the decline of BTC, the total market value of cryptocurrencies has also fallen sharply. The total market value of cryptocurrencies has now fallen below $2 trillion.

In the past 24 hours, the entire network has liquidated $160 million, most of which are long orders, amounting to $124 million. In terms of currency, BTC liquidated $74.87 million and ETH liquidated $28.62 million.

Looking back at the last rate cut cycle, Bitcoin completed its gains ahead of the rate cut, and began to plummet and decline overall one month before the rate cut. It was not until the unlimited QE in March 2020 that liquidity was completely released, ushering in the bull market of 2020-2021.

Currently, Bitcoin has also completed a similar early rise, but the subsequent improvement in liquidity is still unknown. The current priority is to stay alive and wait for this moment to come.

The following content comes from Crypto_Painter

Why did the market plummet again due to the positive non-agricultural data?

Looking back at last night's breakout and decline, from the perspective of the spot premium index, we can find that the main selling pressure does come from the spot, and most of it comes from Coinbase! The opening and closing time nodes of the US stock market are marked in the figure. It can be found that the deterioration of the negative premium of the spot started from the opening time of the US stock market, and gradually returned to normal levels after the closing of the US stock market;

This shows that the main supply of yesterday's decline came from Coinbase's selling at all costs. What exactly caused American investors to suddenly and continuously sell ETFs?

Divergence in macro data on expected guidance

The current situation is actually somewhat similar to that at the beginning of 2023. The macroeconomic background of the former is that no matter what the data is, it is expected to trade "the end of interest rate hikes" + "interest rate cut cycle". At that time, all bad economic data means that interest rate cuts will come faster, and the liquidity tightening environment will ease; that is, "celebration of funerals".

However, due to the rebound in unemployment data and the slowdown in economic growth, in the expectation of macro data, the buyer demand for "trading rate cuts" has gradually turned into the seller supply of "trading recession" or "trading forced rate cuts"; the positive impact of bad employment data on the former is far less than the negative impact on the latter, which is to say, "the funeral is the funeral".

Japanese yen CarryTrade is once again facing upward pressure on the exchange rate;

Yesterday, the Japanese yen exchange rate once hit the long-term pressure level of 0.007. The market arbitrage funds were full of fear for the breakthrough of this key price level, so we can see that the Nikkei 225 fell by nearly 5% in this process;

This shows that the arbitrage trading funds that started in 2022 were not fully closed on August 5, and there is still a considerable amount of funds in the market that are struggling with whether to close the arbitrage positions and repay the loans before the yen appreciates further.

Combining the above two reasons, we can make a simple inference about the future trend: Will the above situation improve in the future? The answer is simple. The former requires a substantial interest rate cut and liquidity release for a period of time. When the employment data fully recovers and people’s expectations of a "trading recession" are dispelled, the market will regain its enthusiasm, and this process may take 3 to 6 months;

The latter will be faster. Once the arbitrage funds have closed their positions, they will not bring downward pressure to the market. The only uncertainty is how much of this part of funds there is and how much is left.

The data given by Morgan is close to 1 trillion US dollars, and more than 50% of the positions have been closed. However, some people think that this data is impossible to estimate because it is difficult to count. The majority of yen arbitrage funds actually come from South America, not North America. In other words, the impact on the yen exchange rate is still an unknown.

In any case, the crisis will be resolved when we see the yen return to its downward trend.