"The U.S. unemployment rate data in July triggers Sam's Law, which indicates an economic recession. Does the market use the news to create panic selling? 》
August is typically a poor month for the cryptocurrency market. Based on historical data, market activity in August was relatively sluggish. For example, compared with June 2023, Bitcoin spot trading volume fell by 19% in August 2023, and Bitcoin futures trading volume on global centralized exchanges also dropped by 30%. Analysts noted that over the past five years, Bitcoin’s average decline in August was 2.8%. This is primarily due to reduced liquidity and trading volumes, which may lead to increased market volatility. Market performance in August this year may also see a similar downturn.
The U.S. unemployment rate recorded 4.3% in July, the highest level since October 2021. European, Asian and U.S. stocks fell sharply on Friday as worries that the U.S. could slip into recession triggered a sell-off in global stocks and poor gains in technology stocks.
[Sam's Rule] is a tool used to predict economic recessions. Specifically, when the three-month moving average of the unemployment rate is 0.5 percentage points higher than the lowest point in the past year, an economic recession is considered to have occurred. start.
This law is widely recognized in economics because the unemployment rate is often a lagging indicator of changes in economic activity. However, Claudia Sahm, the inventor of Sahm's rule and a former Federal Reserve economist, pointed out that triggering this rule does not necessarily mean that the U.S. economy has actually entered a recession. The recession and recovery patterns of the U.S. economy have changed since the epidemic, and the recent increase in unemployment has been mainly affected by increased immigration and labor market expansion, which may lead to biased interpretation of this indicator.
💡From a personal point of view, market panic is often an opportunity for investors to gain opportunities. While current data and market reactions are concerning, these moments can also present potential buying opportunities. Rising unemployment and market sell-offs may have a negative impact in the short term, but in the long term, markets often return to growth after panics. It would be a good choice if DCA can invest in spot during this downturn.
