The crypto market woke up to red candles, with Bitcoin leading a sharp sell-off that shaved nearly 4% off its price. By Friday morning, BTC had slipped to $108,956, extending its decline below $109K just before New York markets opened. Ethereum followed with a 3% dip, XRP fell 4%, and Solana was the hardest hit among large caps, tumbling 5% under the $200 mark. Binance Coin also gave up ground, falling to $934 after recently setting a new all-time high above $1,000.
That sea of red came after the release of U.S. jobless claims data on September 25, which painted a picture of a fragile labor market. Ironically, the weakness boosted hopes for more Federal Reserve rate cuts, pushing odds of a 25 bps cut next month up to 87%. But markets know better than to celebrate too soon—the Fed’s favorite inflation gauge, the PCE index, is due next.
Why inflation data could decide the next crypto move
The PCE, scheduled for release on September 26, now sits at the center of market attention. Analysts warn that even a slight deviation from the Fed’s 2.7%–2.9% target could jolt sentiment. Jake Kennis, Senior Research Analyst at Nansen, put it bluntly:
“Higher-than-expected inflation could signal more hawkish Fed policy and risk-off sentiment that typically pressures crypto markets”
On the other hand, a cooler read would suggest the Fed can afford to stay dovish, giving a much-needed boost to Bitcoin, Ethereum, and other risk assets. Until then, volatility remains the only certainty.
Shutdown drama piles on the pressure
As if the Fed wasn’t enough, U.S. government shutdown fears are also rattling investors. With Congress yet to agree on a funding plan, the possibility of operations grinding to a halt looms large. Prediction platform Polymarket now puts the odds of a shutdown by October 1 at 69%.
This uncertainty has only worsened liquidations. More than $1 billion in positions were wiped out on Thursday alone, bringing total liquidations this week above $3 billion. Traders are growing cautious, and the specter of a shutdown adds another layer of risk.
The crypto technical levels everyone’s watching
Despite the carnage, analysts argue the broader bull structure hasn’t broken—at least not yet. Trading desk QCP Capital pointed out that $107K remains the line in the sand. They noted,
“Q4 seasonality and expected Fed cuts keep the backdrop constructive, unless next week’s payrolls break the narrative”
Interestingly, $107K also appears as a massive liquidity pool on three-month liquidation heatmaps, making it a key battleground for bulls and bears. If BTC holds above that level, the market could stabilize into October. Lose it, and things could unravel quickly, with $104K–$100K the next likely stop.
Outlook: turbulence before clarity
Right now, the crypto market feels caught between two forces: weak labor data fueling Fed cut optimism and inflation fears that could still trigger hawkish surprises. Add in U.S. shutdown drama, and traders are in for a bumpy ride. Whether October brings a rebound or more red will depend on whether Bitcoin can hold its ground at $107K—or if the floor gives way to another wave of selling.
