## Non-Farm Data Hidden Mysteries, Cryptocurrency Market Faces "Double Dilemma"

The release of the US September employment data was like a sudden attack. On the surface, both sides seem to have gained, but in reality, it has plunged the entire financial market into unprecedented difficulties.

**Market Reaction More Intense Than Expected**

Once the data was out, crypto assets bore the brunt. BTC dropped below $87,000 within just 24 hours, currently oscillating around $86,460, with a decline of over 6%; Ethereum also took a hit, falling to the $2,840 range, down 6%; Solana decreased by 0.3%, and Binance Coin dropped by 1.53%. More disheartening is that nine out of the top 200 cryptocurrencies by market cap are in decline. The derivatives market is even more brutal, with over $800 million in liquidations across the network within 24 hours, including over $400 million in BTC liquidations.

Traditional financial markets are not immune either. The three major US stock indices all plummeted—Dow down 0.84%, S&P 500 down 1.56%, and NASDAQ falling 2.15%. Tech giant NVIDIA also followed suit, dropping 3%. US Treasury yields declined across the board, from 2-year to 30-year maturities, with decreases ranging from 2.98 to 5.84 basis points.

**Why Has Employment Data Become a "Double-Edged Sword"?**

What exactly did the non-farm report reveal? In September, seasonally adjusted non-farm employment increased by 119,000 jobs, far exceeding the expected 50,000. Notably, the healthcare sector added 43,000 jobs, and the hospitality and food service industries also performed actively, adding 37,000 jobs. This data seemingly indicates that the US labor market remains resilient, and economic growth momentum has not diminished.

But the other side of the story is completely opposite. The US September unemployment rate reached 4.4%, the highest since October 2021, higher than the market expectation of 4.3%. This suggests that although jobs are increasing, the number of unemployed people is also rising, reflecting a softening labor market.

Why does such a seemingly contradictory situation occur? The answer lies in differences in statistical methods. Non-farm employment counts the number of new jobs added by companies, including short-term part-time work, and one person can hold multiple jobs simultaneously. Conversely, the unemployment rate measures the number of unemployed individuals. When the job market begins to improve, people who had previously exited the workforce may return to seek employment, which can actually push up the unemployment rate.

**Federal Reserve's December Rate Cut Faces Dilemma**

This "complex signal" directly impacts market expectations for the Federal Reserve's December policy. According to CME's "Fed Watch" data, the probability of a 25 bps rate cut in December is only 35.6%, while the chance of holding rates steady is as high as 64.4%. Polymarket's predictions are similar, with a 65% bet against a rate cut.

Among analysts, the voice supporting "pause" in rate hikes is dominant. Morgan Stanley believes that strong employment data dispels the need for a rate cut, expecting the Fed to only consider easing in January, April, and June next year. B. Riley Wealth points out that the delayed release of the September non-farm data means the next set of data will only come after the December Fed decision, leaving policymakers in a data vacuum. Canadian Imperial Bank of Commerce (CIBC) suggests that the most prudent choice for the Fed might be to pause and wait for more complete data before making a decision.

However, some institutions remain optimistic about a rate cut in December. Goldman Sachs' fixed income head emphasized that rising unemployment indicates a weakening labor market, providing sufficient reason for a rate cut. Woori Bank analyst Sarah House also advocates for a 25 bps cut, as inflation is easing, though she admits this decision is "50-50."

**Investor Sentiment Has Collapsed**

Even more concerning is that the Crypto fear and greed index has fallen to 11, hitting a new low in 2023. In a market heavily betting on rate cuts, any ambiguous signals can trigger panic selling.

It is worth noting that before the Fed makes its December decision, the September non-farm report is currently the only macroeconomic indicator available. The next non-farm data will only be released after December, meaning the decision-making process for over a month will be entirely based on guesswork.

Currently, the market's plunge is more driven by emotion than deteriorating fundamentals. But this also serves as a reminder to investors that when uncertainty shrouds the market, exercising caution is far more important than blindly chasing bottoms.