Interpretation of the specific logic behind data release: The ultimate impact on the crypto market
The 88.4% probability of maintaining the interest rate unchanged in January, as indicated, was the market consensus before the release of the weak non-farm employment data. The addition of only 50,000 jobs fell significantly short of expectations, signaling a strong indication of economic cooling.
The Federal Reserve's dual mandate is price stability and full employment. When signs of weakness appear in the labor market, the Fed's focus shifts more toward preventing economic recession than fighting inflation.
This greatly strengthens market expectations for faster and earlier rate cuts by the Fed. Although no action may be taken at the January meeting, the probability of rate cuts in March and beyond will surge significantly.
Core logic chain: Weak non-farm data → Rising concerns about economic recession → Significantly strengthened expectations of Fed rate cuts → Market expectations of looser liquidity in the future → Support and uplift for risk assets, including cryptocurrency valuations.