TLDR
- U.S. stocks and crypto rebounded Monday with tech leading gains, though Bitcoin posted a modest 0.74% increase
- Downward revision of May and June jobs data has boosted expectations for a Fed rate cut in September to over 90%
- Analyst Alex Krüger believes the weekend sell-off marked a tradable low, comparing it to the 2024 “August crash”
- Political uncertainty continues with President Trump’s dismissal of the Bureau of Labor Statistics Commissioner
- Options contracts for Bitcoin show increased “put demand” in the $105,000-$110,000 range as investors seek downside protection
The cryptocurrency market bounced back alongside U.S. stocks on Monday, although analysts remain cautious about the sustainability of this recovery. This rebound comes after a weekend sell-off that some experts believe may have marked a market bottom.
U.S. stocks led the way with tech-focused indices showing strong performance. The Nasdaq jumped 1.84% while the Russell 2000 surged even higher with a 2.35% gain. Bitcoin, however, showed a more modest increase of 0.74% according to CoinGecko data.
The uptick in market performance follows a major revision to employment data. May and June jobs figures were revised downward by a combined 258,000 jobs. This significant adjustment has dramatically shifted expectations regarding Federal Reserve monetary policy.
The CME’s FedWatch Tool now shows the probability of a 25 basis point rate cut in September has climbed to over 90%. Just one week earlier, that figure stood at only 63.1%.
Jake Ostrovskis, an OTC trader at Wintermute, described Monday’s bounce as “fairly machine-driven” in comments to Decrypt. He warned of “plenty of signs of froth” and “high levels of risk taking” across both traditional finance and cryptocurrency markets.
Market Analysis Points to Caution
Despite the recovery, several factors suggest caution is warranted. The issues that triggered last week’s sell-off largely remain unresolved, particularly those centered around U.S. economic policy.
President Donald Trump’s sudden dismissal of Bureau of Labor Statistics Commissioner Erika McEntarfer has added to the uncertainty. Some view this move as political interference in economic data reporting.
The presidential action has compounded investor unease. This comes amid ongoing tensions regarding tariff policies and general unpredictability in the administration’s economic approach.
Options contracts for Bitcoin reflect this cautious outlook. Ostrovskis noted increased “put demand” in the $105,000 to $110,000 range. This suggests investors are seeking downside protection rather than actively betting on a market correction.
Other warning signs include soaring U.S. stock prices, high levels of CTA (Commodity Trading Advisor) exposure, and crowded short positions on the U.S. dollar. Ostrovskis cautioned that if U.S. stocks reverse course, “crypto will follow suit.”
Has The Crypto Market Found Its Bottom?
In contrast to these cautionary signals, macro analyst Alex Krüger offers a more optimistic view. He believes the weekend’s sell-off has likely established a tradable low for the cryptocurrency market.
Krüger draws parallels to the 2024 “August crash,” which similarly bottomed on a Monday. “I see the current move as a smaller scale replay of last year’s August crash,” he wrote on X (formerly Twitter).
The analyst indicated he would be “looking to add to longs on Monday, ideally before the U.S. cash open,” if overnight trading remained panicky. He characterized the decline as a typical shakeout rather than the beginning of a new downtrend.
Krüger’s analysis prioritizes macroeconomic factors over crypto-specific developments. He notes that 2024’s August break came after a sequence of events: Bank of Japan tightening, a hawkish Federal Open Market Committee meeting, and weak payrolls data.
The current sequence appears similar in his view. Markets have recently processed a moderately hawkish Fed, mixed earnings reports from technology giants, hotter-than-expected PCE inflation data, and finally a disappointing U.S. payrolls report.
The latest Personal Consumption Expenditures (PCE) data showed headline inflation accelerating to 2.6% year over year. Core PCE reached 2.8%, slightly above forecasts, which Krüger described as “slightly hot.”
Recent earnings reports from major tech companies have also influenced market sentiment. While Microsoft and Meta beat estimates initially, Apple received a cooler reception. Amazon’s results were “very poorly received” with the stock dropping approximately 7-8%.
Coinbase’s earnings report further dampened crypto market sentiment. The company missed revenue expectations, creating what Krüger called a “dreadful” backdrop for investor confidence.
The Bureau of Labor Statistics’ substantial downward revision of employment data created additional market stress. The White House’s decision to reposition two U.S. nuclear submarines amid tensions with Moscow further contributed to uncertainty.
Despite these challenges, Krüger remains optimistic about longer-term crypto prospects. He highlighted the SEC’s new “Project Crypto” as “an extremely bullish development that should drive inflows later in the year.” This initiative aims to modernize securities rules and move more market infrastructure on-chain.
The SEC chair recently outlined a vision for “American Leadership in the Digital Finance Revolution,” positioning tokenization and on-chain market infrastructure as regulatory priorities.
