Macro Perspective: U.S. Employment Market Data Below Expectations Triggers Cryptocurrency Market Crash
From a macroeconomic perspective, the underwhelming performance of the U.S. employment market data has become a significant trigger for the recent crash in the cryptocurrency market. The continued strength of the employment market implies that wage growth pressures are difficult to alleviate effectively, undoubtedly posing greater challenges for inflation management, making the 'last mile' to achieve inflation targets even more challenging. The market had generally anticipated that the Federal Reserve would begin its interest rate cut cycle in the first half of 2025; however, the reality is far more complex than expected. Currently, the core Personal Consumption Expenditures (PCE) inflation rate in the U.S. remains above 3%, still significantly distant from the 2% inflation target set by the Federal Reserve. Coupled with the strong resilience displayed by the employment market, the Federal Reserve may have to maintain a high interest rate environment for an extended period to combat inflationary pressures.
In this macro context, the chain reaction triggered by the adjustment in the cryptocurrency market is particularly noteworthy. According to statistics, within just 24 hours, the market liquidation scale reached $385 million, with long positions suffering losses of up to $212 million. This data reflects that after the cryptocurrency market broke historical highs, it may have accumulated excessive speculative positions. Therefore, any negative news could trigger panic selling by investors, leading to a stampede-like decline in the market and further turmoil. Even more concerning is that on-chain data analysis shows that the current market leverage ratio is nearing the levels seen at the peak of the 2021 bull market. This high-leverage environment significantly increases the market's fragility, making it more susceptible to external shocks. Once any disturbance occurs in the market, investors may quickly exit, resulting in a price crash and a wave of liquidations.