Asset prices reflected an optimistic mood on Wednesday, as Bitcoin (BTC) regained the $112,000 level, trading at $112,366.98, while European stocks opened higher, with analysts increasingly emphasizing that the odds of recession or stagflation raised by the shocking US jobs data are receding.
The US Bureau of Labor Statistics (BLS) published a striking update on Tuesday, showing that the economy likely added 911,000 fewer jobs than previously reported over the 12 months through March 2025.
For much of last year, equity and crypto investors bet that a strong labor market would keep the economy on track despite persistent inflation. That optimism was shaken on Tuesday, as Bitcoin quickly dropped from $113,000 to $110,800.
Some market participants viewed the BLS revision as evidence of an imminent recession, but Michael Englund, Chief Economist at Action Economics, said the data revealed little about the business cycle or the health of the economy.
Englund wrote in an email to CoinDesk: “These revisions tell us more about the structural path of the US labor force than about where we are in the business cycle. They did not raise our assessment of recession risks, even if they indicate that the long-term trend for monthly job growth has shifted from hundreds of thousands into the tens of thousands. We now assume structural labor force growth of 90,000 jobs per month, compared with 150,000–200,000 jobs during most of the current expansion.”
He explained that the sharp post-COVID growth in the US labor force, which exceeded economists’ expectations, was driven largely by net annual immigration of about one million people. But the trend has now reversed into negative net migration estimated between one and two million people.
Englund added: “This shift toward a lower and more stable labor force growth path means slower growth in civilian employment as measured by household surveys or nonfarm payrolls.”
Financial markets appear to be adopting this view, as European equities opened higher today while Bitcoin regained the $112,000 level. Alternative tokens such as Ether (ETH), Ripple (XRP $2.9722), and Dogecoin (DOGE $0.2401) also recovered much of Tuesday’s losses. Solana (SOL) surged to $222, its highest since February 1. S&P 500 futures traded 0.3% higher, and European equities posted early-session gains.
Stagflation Fears “Overdone”
The BLS revisions and upcoming US consumer price index (CPI) data, expected to show inflation holding near 3% (well above the Fed’s 2% target), reignited discussion of stagflation — the mix of high inflation, high unemployment, and weak growth that is considered the worst scenario for high-risk assets like Bitcoin.
But those fears look overstated, according to Marc Chandler, Managing Partner and Chief Market Strategist at Bannockburn Global Forex, who noted that US GDP is still growing above the Fed’s estimates for the “non-inflationary path.”
Chandler told CoinDesk: “I think stagflation talk remains exaggerated. The Atlanta Fed GDP tracker is still showing growth well above the Fed’s non-inflationary path.”
He added: “Yes, inflation is a bit high and may rise with Thursday’s CPI data, but Fed officials like Waller and Bowman want to look through tariff-related increases. It seems clear to me the Fed will resume easing next week.”
Traders are now pricing a 91% chance of a 25-basis-point Fed rate cut to 4% at the September 17 meeting, according to the CME FedWatch tool. Some investment banks and market participants are also expecting a larger 50-basis-point cut.
Focus on US CPI Data
Easing expectations may strengthen if Wednesday’s producer price index (PPI) and Thursday’s consumer price index (CPI) show surprise signs of cooling inflation, supporting high-risk assets at elevated levels in the near term.
But these elevated expectations could set markets up for disappointment.
Greg Magadini, Director of Derivatives at Amberdata, said: “I think this week’s CPI data will give us more context… If markets expect a 50-basis-point cut but the Fed delivers only 25 at the September 17 meeting, we’ll see broad-based selling.”
