The low expectations for the U.S. employment market data have become an important trigger for this sharp decline. The persistent strength of the employment market means that wage growth pressures are difficult to alleviate, which may make the 'last mile' of inflation control more challenging. The market had generally expected the Federal Reserve to begin the interest rate cut cycle in the first half of 2025, but the reality may be far more complex than anticipated. Currently, the core PCE inflation in the U.S. remains above 3%, still far from the 2% target, coupled with a resilient employment market, the Federal Reserve may have to maintain a high-interest-rate environment for a longer period.
Against this backdrop, the adjustments in the cryptocurrency market and their chain reactions are particularly noteworthy. In a 24-hour period, the liquidation scale reached $385 million, with long positions losing $212 million, reflecting that the market may have accumulated excessive speculative positions after breaking historical highs. Any negative news could trigger a cascading decline, leading to further market turmoil.
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