Was the September rate cut already priced in, and what's next for the market? | Trader's Insight

On September 5, the US Department of Labor released the August non-farm payroll data once again disappointing the market—only 22,000 jobs were added, far below the estimated 75,000. Thus far, non-farm data has been weak for four consecutive months, with August also dragging the average monthly job gains for the past four months down to only 27,000. The weak data directly prompted a repricing of the market's expectations for the Fed's policy path: expectations for rate cuts in September, October, and December all surged. According to CME data, the probability of a Fed rate cut skyrocketed from 86.4% before the announcement to 100%, with a 90% probability of a 25 basis point cut and 10% even betting on a 50 basis point cut.

However, the favorable policy expectations failed to boost risk appetite. The US stock market saw a slight decline, indicating that traders are more concerned about the recession risk brought about by the slowdown in economic momentum. The "rate cut bullish" narrative is being overshadowed by the "recession trade."

Next, BlockBeats has compiled traders' views on the upcoming market conditions to provide some directional reference for your trading this week.

@fundstrat

Bitmine CEO Tom Lee expects the Fed to start cutting rates in September, similar to the situations in 1998 and 2024. In both of these historical contexts, the market subsequently saw a strong rebound, especially in the run-up to the year-end. Therefore, Tom Lee has given a contrarian view contrary to the market consensus: September 2025 may see a bullish trend.

@0xENAS

The trader Dove briefly went long on SOL last Thursday and stopped out on Friday. They stated that BTC successfully reclaimed $110,000 and is currently the strongest mainstream currency. However, ETH has lost momentum, and mNAV has shrunk (BMNR <1.1, SBET <1), leading to an expectation that the market will shift towards newer, lower-positioned coins. If BTC falls below $110,000, the strategy will fail.

@qinbafrank

Enterprises are producing more orders with fewer people, repeating the logic of worrying about a recession first and then gradually regaining confidence a month later. The significant shortfall in non-farm data initially led to recession concerns; however, after a few days, people will come to realize that the economy is actually fine.

Looking back, the logic from a month ago still holds, with the addition of two more pieces of logic this week: 1. The manufacturing and services PMI released this week were both quite good. More notably, both the manufacturing and services order indices significantly exceeded expectations. The chart below displays the services sector on top and the manufacturing sector below. With industrial orders greatly surpassing expectations, this does not appear to be a sign of a downturn. However, despite this, companies are reducing their workforce. How can this be explained? The only explanation is that the structural shift in the labor market due to the technological revolution we have been discussing is becoming a reality. With increased productivity, companies are now able to achieve more output with fewer employees. This may very well become the norm in the AI era, where labor productivity increases and companies will continue to streamline their workforce.

@Phyrex_Ni

These two instances are similar to the previous Jackson Hole Symposium. Although there is a possibility of a rate cut, the cost is an economic slowdown. Markets tend to first react with excitement and then calm down, just like the US stock market. The economic impact will be more significant this time around. While bad data can sometimes be construed as good data ("celebrating a funeral"), bad data is inherently bad. Economic issues may very likely point towards a recession. If a recession does occur, it could be the "final fall," and if it doesn't materialize, then a prolonged decline is highly probable.

Therefore, the economic issues may be more severe than the rate cut itself. In simple terms, not all rate cuts are necessarily good news; one must consider the overall economic situation. If a rate cut is made out of concern for the economy, then it may not be a positive development. A rate cut is just one factor; more crucial is the policy response following an economic downturn. Historically, the recession in 2020 only lasted for two months, and the S&P 500 recovered its losses within six months, hitting a new high after seven months. This indicates that a recession does not inevitably lead to a long-term decline.

My personal strategy remains unchanged: preparing to divest from small-cap coins, holding onto mainstream coins, and keeping cash on hand to await buying opportunities at lower prices. If the market declines, I will consider increasing positions at the right timing; otherwise, I will continue to benefit from the rise of mainstream coins. Based on the data, there has been a significant decrease in BTC turnover rate, indicating that most investors are opting to wait and see. Until the situation between Trump and the Fed becomes clearer, more investors are choosing to remain cautious.

@Cato_CryptoM

Although the unemployment rate did not increase significantly, the non-farm payroll data for August saw a substantial decline. As mentioned in my previous analysis, this was a result of a decrease in labor market supply.

Therefore, the current situation is such that the weakness in employment is not only a result of a decrease in demand but also a significant reduction in supply from the enterprise side. This indicates that companies are cautiously expanding, a reaction stemming from insufficient economic confidence.

After the data was released, Trump once again stated that the Fed needs to cut interest rates, while Besent stated that the Fed's ability to manage the economy has failed. The market then interpreted this situation as deteriorating employment and the Fed's failure in managing employment

This situation confirms my previous concerns. Once confidence in the economy is lacking, a 25BP rate cut at this point, or even a more aggressive 50BP cut, is considered a "poison." If economic risks such as stagflation or recession are expected, a more aggressive rate cut in September or later this year indicates even lower confidence by the Fed in the economy, spreading panic and worsening expectations

At this point, the probability of a 50BP rate cut in September has once again increased to 11.8%, although it has only slightly increased since the release of the employment data earlier. However, if confidence in the economy cannot be restored and market concerns about a potential economic crisis are not alleviated, a higher 50BP rate cut would have a more negative impact.

However, the current situation shows short-term concerns but not yet panic, which will depend on next week's sentiment.

@biupa

The altcoin market is still in consolidation without experiencing a significant drop, mainly because Ethereum has not broken down, thus maintaining its range-bound movement between 280-310b

The current consolidation here is similar to September and October 2024. Overall, there is not much long-term analysis-worthy content, and short-term trading involves profiting within the range through swings

Yesterday's sharp decline in non-farm payroll makes a September rate cut a certainty, which should theoretically be positive. As for the risk of a recession, I believe it is still relatively small as the unemployment rate has not increased significantly. However, there is an overall expectation of a U.S. stock market correction in September (statistically unrelated to a recession), so there may be a situation where Bitcoin adjusts along with the U.S. stock market. If this occurs and it falls below 10k, then I still believe the major bottom will be between 93k-98k

If the U.S. stock correction does not occur or does not lead to a major Bitcoin drop, then 107k may have already bottomed. From a technical perspective, the short-term focus is on the 110k range

Due to the widespread expectation of subsequent rate cuts, the market in October and November should be positive, aligning with the prediction that the unspeakable may occur between October and November

@Rachael Lucas

BTC Markets analyst Rachael Lucas stated that the weak US jobs report did trigger expectations of a more dovish stance from the Federal Reserve, which typically provides support for risk assets like Bitcoin. However, the market has already priced in a certain level of policy easing. Meanwhile, we are seeing institutional investors taking profits, while ETF flows remain relatively stable. Bitcoin faces resistance at $113,400, with further resistance at $115,400 and $117,100. Breaking through these resistance levels would indicate that the market has absorbed recent selling pressure and is ready to retest highs.

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