Why crypto could face its first September test as U.S. labor data looms

The 15th of September could already be turning into another momentous day for the market.

On the macro front, the much-anticipated FOMC meeting is scheduled for this day, where the market is currently divided on the rate cut scenario. With twelve votes on the board, the market is currently pricing in a 7-5 Fed decision, favoring dovish rate policy. And although the meeting is still two weeks away, this week’s critical economic data release could be decisive in influencing the outcome of the vote.

As the post shows, the final month of Q3 is set to see key jobs data out with eyes on the labor market. Notably, the labor market is a key focus for investors, with any sign of cooling reducing the chance of rate hikes, while a strong reading would limit rate cut hopes. Either way, the crypto market looks set for volatility.

Interestingly enough, the data shows a scenario that fits the setup discussed earlier.

According to FedWatch data, markets are already pricing in almost a 60% chance of a rate hike. This is a jump of almost 46% in expected hikes this week. To top it off, the vote on the CLARITY Act is also on the 15th of September, which is added to the list of catalysts for the day of the FOMC statement.

Considering the importance of both rate hikes and regulation, the 15th of September, therefore, may prove to be a critical day. Notably, the “timing” of the events poses another threat to the crypto market.

Macro headwinds put the crypto rally to the test

Despite the strong close for August, it seems like the market is bearish on September.

According to CryptoQuant’s data, Bitcoin’s Coinbase Premium Index has turned negative again, while the ETF inflows have turned negative in the latest recorded session. This has already triggered some bearish sentiments about a potential bull trap surrounding Bitcoin’s current technical setup.

Meanwhile, the timing of these macro releases coincides with the XAU/BTC ratio approaching a critical support level on the weekly timeframe. As the chart below demonstrates, the ratio bounced off this level in mid-May as funds rotated out of Bitcoin and into gold.

Should this weekly support hold firm, the resulting rotation into gold could very well see the entire crypto market fall under further selling pressure.

If this scenario plays out, Bitcoin’s recently regained value of $75k could face additional pressure from growing expectations of higher rates, which would draw money away to more traditional safe-haven assets. Moreover, the vote on the CLARITY Act adds another layer of uncertainty to an already even-heavy day.

With macro policy, capital rotation, and crypto regulation all converging on the 15th of September, the day could set the tone for Bitcoin [BTC] and the broader crypto market heading into the final stretch of Q3.

Final Summary

• Rate-hike expectations and key jobs data could increase crypto volatility.
• Negative ETF flows, gold/BTC strength, and the CLARITY Act vote could add pressure to Bitcoin.