September 4 REX Wire Market Outlook

NFP brings cautious optimism, but crypto is still struggling to see the bright side.

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Nonfarm payroll figures came in last Friday, with the US adding 187,000 jobs in August, vs 170,000 forecast. However, that was offset by July's increase of 187,000 being revised down to 157,000. The Unemployment Rate rose to 3.8% from 3.5% in July, and average hourly earnings fell back to just 0.2%.

It will need repeating multiple times, but that's broadly what the Fed wants to see, and it strengthens the case for interest rates to remain unchanged this month. In fact, some analysts are calling it: No more interest rate rises for years. The market's odds of a rise to 550-575 bps have been slashed by two-thirds to just 7%. The S&P is just a few percent off its all-time high.

China is way ahead of the US, following persistent weakness and problems in its economy, with the government in the unenviable position of frantically pulling out the stops to boost the stock markets. "A slew of measures announced include reducing trading costs, slowing the pace of initial public offerings (IPOs), encouraging margin financing and protecting small investors." Restrictions have also been placed on large investors, preventing them from selling shares under certain circumstances. This is not the sign of a healthy market (though the Hang Seng spiked upwards). Watch this space.

Bitcoin Holds Steady

Bitcoin just about managed to cling to the $26,000 line for the weekly close. It remains below the 200 WMA and 200 DMA, but has not (yet) put in a lower low beneath the June 15 of $24,800. The Fear and Greed index is firmly in Fear territory at 40 (already below the value for the June local low), but nowhere near registering Extreme Fear.

Bitcoin 4h chart, TradingView
BTC is clinging to the $26,000 line.

The news that Grayscale had scored a victory against the SEC in court, bringing a Bitcoin ETF a step closer, failed to have lasting effect. When the SEC delayed its decision on six ETFs at the end of last week, the Grayscale gains were entirely erased. This market has an underlying wariness that means traders are more prepared to discount good news than bad news.

As a result, analysts are warning to expect some weakness going into the end of the year. September is historically a bad month for crypto. On the other hand, there are strong seasonal effects in November and December. Plus, there's the reality of where we are in the overall crypto market cycle.

Lastly, as we explored in a recent article, the SEC now has a dilemma on its hands. The clock is ticking on a number of ETF applications, and after its defeat in court, it cannot afford to be seen to be making arbitrary decisions any more.

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