Bitcoin Faces a Black Swan: Bitwise Sounds the Alarm

The release of the U.S. Employment Situation for July last Friday created a statistical shock rarely seen outside of crises, forcing traders to reassess both the macroeconomic outlook and the short term trends of Bitcoin. Payrolls only increased by 73,000, but the shock lay in the record downward revisions: May and June saw a total drop of 258,000 jobs, bringing the three-month average hiring down to just 35,000 and nearly wiping out all the growth reported in Q2. The Bureau of Labor Statistics noted that adjustments of this magnitude only occur during recessions like the one caused by Covid. Does Bitcoin Really Have to Face a Black Swan Event? Bloomberg Economics chief economist Anna Wong in the U.S. wrote: "The downward adjustment of payrolls in May and June in the July jobs report is a black swan event – a three standard deviation shock with a probability of occurring of less than 0.2% over the past 30 years." "Adjusting for our estimates of the job misreporting from the Bureau of Labor Statistics' birth-death model, the hiring rate over the past three months has turned completely negative." She wrote in a note at the end of the release on Friday that this data has "reversed the labor market narrative" from a rebound to a sudden cool down. The voice of the cryptocurrency market on this issue is André Dragosch, head of research at Bitwise Europe, who spent the morning posting a series of warnings about X. First was the news, "According to Bloomberg's chief economist Anna Wong, the latest payroll adjustments are a 'black swan event'. It may get worse before it gets better...", followed by the proverb, "That's right – bad for payroll = good for bitcoin, at least in the short and long term." A few minutes later, he argued that further adjustments may necessitate emergency easing: "NOTE: There is a high likelihood that the June employment figures will be negative after the next downward adjustments, which could lead to a 50 basis points rate cut in September… Plan accordingly. #Bitcoin" By mid-afternoon, he pushed the issue to a reasonable peak: "ATTENTION: Perhaps we just need one more negative NFP report for the Fed to significantly adjust rate cut expectations. Surprises in the U.S. labor market and inflation data remain as bad as during Covid, but traders only anticipate 2 rate cuts by December 2025... The printer is on its way..." The futures contract interest rates are fluctuating strongly in favor of Dragosch. On Wednesday, CME's FedWatch tool indicated a 91% chance of at least one interest rate cut at the FOMC meeting on September 17-18. Minneapolis Fed President Neel Kashkari acknowledged that "the underlying economy is really slowing down," while Governor Lisa Cook called the scale of the adjustments "concerning." The price volatility of Bitcoin has captured the tug-of-war between recession fears and hopes for liquidity. This leading cryptocurrency fell to $111,920 on August 2, the lowest level since early July, right after the payroll report was released and President Donald Trump fired BLS Commissioner Erika McEntarfer. Subsequently, the price of Bitcoin rebounded slightly to $111,500 as the odds of an interest rate cut surged this week. However, Bitcoin remains more tied to macro headlines than its own cycle. However, the first clear sign that the easing policy has emerged in capital flows. Bitcoin spot ETF funds recorded a net inflow of $91.6 million on August 7, ending a four-day streak of outflows that had withdrawn more than $380 million from these funds. Whether Bloomberg and Dragosch's "black swan" prediction is correct will depend on a few upcoming economic data points and the Fed's risk appetite. Currently, the market is stuck between two extremes: just one bad jobs number could trigger a comprehensive policy response, but another shock could lead to a broader risk-off spiral. The only certainty, as both Wong's probability calculations and Dragosch's strong warnings imply, is that the margin of error has evaporated.