Key Takeaways:
- The U.S. jobless claims were reported lower than expected.
- Other economic data, including U.S. GDP growth and PCE inflation, came in hotter than expected.
- These macroeconomic factors could weigh on the already fragile crypto market.
The crypto market suffered another volatile day on Thursday, whereby traders absorbed robust-than-anticipated U.S. jobless claims data, GDP growth, PCE inflation, and comments by Fed Chairman Jerome Powell. Meanwhile, CoinGlass data demonstrated that over $542 million leveraged positions were realized in 24 hours, with Ethereum, Bitcoin, and Solana topping the list of losers.
U.S. Economic Data Effect on Crypto Market
The initial jobless claims, which were posted to be made through the week ending September 20, declined to 218,000, compared to 235,000 forecasts. The report revealed that the labor market is quite resilient, and this strengthened the opinion that the U.S. economy is not decelerating as fast as may be desired.
For the crypto market, the decreasing number of jobless claims will lower the probability of forceful rate cuts, which is the element that usually restricts the inflows of speculative assets, including Bitcoin and Ethereum. Bureau of Economic Analysis validated that U.S. real GDP increased by 3.8% in the second quarter on an annualized basis, as compared to the anticipated growth rate of 3.3%, which is also the previous rate.
The argument of keeping the financial conditions tight is further complicated by the strength of growth. In the case of cryptocurrencies, where the liquidity level is high, more growth expectations usually imply a stronger dollar and less risk appetite, exerting pressure on the digital assets downward.
In the meantime, the Federal Reserve’s favorite measure of inflation, the core Personal Consumption Expenditures (PCE) price index, was marked to 2.6% as compared to the 2.5% figure. Even an upward surprise of a small magnitude indicates that the market is not yet reducing inflation as fast as it had already postulated in the pricing of the market, leading to a higher-for-longer view that can deactivate excitement over high-beta markets, including crypto.
Put up collectively, the most recent numbers indicate an American economy that is still very strong, with inflation levels that are still painful. In the case of Bitcoin and altcoins, this background is an indication of fewer tailwinds of a policy nature. Bettors who had bet on an imminent reprieve due to the fact that the financial environment was less challenging were surprised, and this resulted in a series of liquidations on the derivatives markets.
The Warning and Market Reaction of Powell
In an address at an economic forum, Powell indicated that policymakers have the dual risks of a possible increase in inflation and the labor market slowing down. He also mentioned that tariffs would cause a single-time rise in consumer prices and emphasized that there is high uncertainty on the direction taken by inflation. His comments, along with the new economic data, added to his caution in crypto markets.
Amid this uncertainty, CoinGlass also stated that 163,045 traders were liquidated throughout the day, although the long positions were affected more. Ether recorded the largest liquidations of $215.1 million out of the digital assets. Solana was recorded at $46.39 million, and the category of “Other,” which consists of tokens of smaller capital, amounted to $56.59 million. More than $12 million was wiped off Dogecoin and Aster each.
Total crypto liquidations reached $542.18 million today. Long liquidations hit $475.23 million in 24 hours as opposed to $66.95 million in shorts. On Hyperliquid, the biggest single liquidation was an ETH-USD order of $29.12 million.
ETF Flows Show a Mixed Picture
The division between Ethereum and Bitcoin was further noted by ETF flows. On September 24, inflows into Spot Bitcoin ETFs reached a new high of up to $241 million, including the largest inflows of up to $129 million in the iShares Bitcoin Trust by BlackRock. In comparison, spot Ethereum ETFs recorded outflows of 79.36 million in their third consecutive day of redemptions.
The strong U.S. data, moderate tones by Powell, and the continued ETF split kept the crypto markets flattened, with Bitcoin trading below $112,000 and Ethereum at less than $4,000.
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