Strategists from Kraken and CF Benchmarks believe the most significant US jobs data revision in 26 years will prompt the Fed to cut interest rates, creating a favorable environment for digital assets.
Strategists from Kraken and CF Benchmarks suggest that a recent, historic US labor market downturn may give the Federal Reserve enough reason to lower interest rates.
Moving toward monetary easing could create a positive environment for assets like Bitcoin BTC $87 808 24h volatility: 0.5% Market cap: $1.75 T Vol. 24h: $39.30 B .
During a monthly strategy call on Sept. 12, analysts pointed to the most considerable negative revision to US jobs data in 26 years.
According to the institutional report from Kraken, the revision was more severe than what was observed during the 2008 financial crisis, signaling notable weakness in the labor market.
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The strategists believe this justifies the Fed shifting its focus from its inflation mandate to its employment mandate. The team projects that three expected Fed rate cuts could occur before the end of the year, a move that would likely increase investor appetite for risk assets.
A Shift in Crypto Market Dynamics
A rotation in institutional capital is becoming evident. Recent data shows significant fund flows moving into spot Ether ETFs, while Bitcoin funds experienced minor outflows.
The shift in capital suggests a growing investor confidence in the broader digital asset ecosystem beyond Bitcoin.
Interest is also expanding on derivatives platforms. On the CME, futures contracts for XRP XRP $1.89 24h volatility: 0.9% Market cap: $114.85 B Vol. 24h: $2.12 B and Solana SOL $124.2 24h volatility: 0.5% Market cap: $70.30 B Vol. 24h: $3.67 B have seen rising volumes.
XRP notably exceeded $1 billion in open interest quickly, demonstrating strong institutional demand even without a US spot ETF product.
This potential policy pivot comes after a period of low market participation. Analysts noted that even as Bitcoin reached new highs over the summer, market breadth declined, with few other tokens participating in the rally. A move toward lower rates could encourage a broader market recovery.
At the same time, Bitcoin’s realized volatility has declined to record lows. This compression is partly attributed to the launch of spot ETFs and the rise of related strategies like covered calls, which indicates a maturing market structure with more diverse participants.
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