Last Friday's nonfarm payrolls report, released on September 5th, revealed a significant slowdown in the U.S. labor market. With only 22,000 positions added in August—materially undershooting the consensus forecast of 75,000—the data points to softening economic dynamics. As a result, market expectations have now firmly coalesced around the Federal Reserve enacting a policy rate reduction later this month.
The release triggered a decisive response in financial markets and a renewed appetite for risk-sensitive assets, including a momentary price surge in digital assets. This reaction is underpinned by the view that looser central bank policy enhances market liquidity and the appeal of higher-yielding investments. Consequently, a forthcoming interest rate cut is now largely priced in, with investors repositioning portfolios in anticipation of a more dovish monetary stance.
Bitcoin closed the first week of September with a robust performance, posting a cumulative gain of over 4%. This movement represents a significant recovery and a turning point for the asset, which had been emerging from a period of steep declines throughout most of August. The positive performance realigns Bitcoin with the broader risk-on sentiment seen in other markets.
The primary catalyst for this appreciation materialized following the release of much weaker-than-expected U.S. nonfarm payrolls data. Bitcoin's reaction was immediate and positive, with a 2.3% gain on the day that pushed it to the $113,220 level and solidified the week's upward trend.
Notably, for most of the week, digital assets in general had underperformed compared to other risk assets. However, Friday's jobs report served as the necessary impetus for Bitcoin to not only catch up but to stand out in the broader rally. The sudden shift in behavior demonstrates the asset's high sensitivity to macroeconomic narratives.
The fundamental thesis behind this optimism is centered on monetary policy. The weak labor market data has all but cemented expectations that the Federal Reserve will cut interest rates this month. According to the CME Group's FedWatch tool, futures markets are now pricing in a 100% probability of a cut, which provides strong fundamental support for the recent appreciation.
While also benefiting from the macroeconomic tailwinds that lifted the digital asset market, Ethereum's price action last week painted a more nuanced picture, proving less dynamic than Bitcoin's. The week began with a tone of caution, as ETH traded in a consolidation pattern between key support near $4,200 and resistance around $4,550. This technical indecision was compounded by significant and sustained institutional selling pressure. Ethereum-focused ETFs experienced consecutive days of outflows from August 29th to September 5th, culminating in a total withdrawal of nearly $1 billion.
When Friday's weak nonfarm payrolls data provided a powerful positive catalyst for risk assets, this underlying headwind became apparent. While Bitcoin posted a clear and decisive rally, Ethereum's immediate response was notably subdued, with reports indicating its price was "little changed" in the immediate aftermath. Ultimately, the sustained capital flight from institutional funds acted as a major counterweight to the positive macro news, tempering buying enthusiasm and resulting in a more muted performance for ETH.
This week's market narrative will be driven by scheduled economic data, with the U.S. Consumer Price Index (CPI) report on Thursday, September 11th, serving as the pivotal event. This inflation data is critical for validating the market's expectation of a Federal Reserve rate cut. Further influencing market dynamics will be a speech from ECB President Christine Lagarde on Wednesday, where markets will scrutinize her tone on the Eurozone's persistent inflation versus its stagnant economic growth for clues on future policy. With the Fed in its pre-meeting blackout period, these key data points and central bank signals will be the primary drivers of volatility and direction for digital assets.
The total supply of stablecoins has reached a new all-time high, with the current circulating value standing at approximately $282 billion. This record level of liquidity within the digital asset ecosystem signals a significant influx of capital and reflects robust investor demand for on-chain transactions and financial products.
This new peak represents a full recovery and major expansion from the market cycle low of around $125 billion seen in late 2023. A rising stablecoin supply is a classic bullish indicator, representing a growing pool of capital on the sidelines available to be deployed into other digital assets, which suggests a healthy and expanding market.