Market Turmoil: Why Crypto Traders Are Fleeing Risk Assets

Crypto Market Tumbles as U.S. Jobs Miss, Geopolitical Tensions and Recession Fears Shake Confidence

A wave of risk aversion swept through crypto markets on Friday, as investors reacted to a mix of disappointing U.S. employment data, rising geopolitical uncertainty, and renewed fears of a recession — sending both digital assets and equities into a broad sell-off.

Bitcoin (BTC) fell 1.4% over the past 24 hours to $113,648, while altcoins saw steeper losses: Ethereum (ETH) dropped 3.7% to $3,503, XRP declined 1.5% to $2.94, Solana (SOL) slid 2.7% to $164.13, and Dogecoin (DOGE) tumbled 3.7% to $0.1993, according to CoinDesk data.

Traditional markets were similarly rattled. The Dow closed 1.23% lower, the S&P 500 lost 1.6%, and the Nasdaq plunged 2.24% as Friday’s economic and political headlines stoked volatility across risk assets.

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Weak Jobs Report Surprises Markets

The U.S. Bureau of Labor Statistics reported only 73,000 jobs added in July — a figure that came in well below expectations. In a further blow to sentiment, previously reported gains for May and June were revised down by a combined 258,000 jobs, effectively wiping out much of Q2’s perceived strength.

While the unemployment rate held steady at 4.2%, long-term unemployment rose to 1.8 million. The number of new job seekers increased by 275,000, signaling that more Americans are re-entering the labor force but struggling to find employment. Participation held at 62.2%, and the employment-to-population ratio declined slightly year-over-year.

Job growth remained concentrated in healthcare and social services, while most other sectors — including manufacturing, construction, finance, and tech — showed minimal movement.

Markets took the report as an indication that the labor market is weakening more quickly than anticipated, adding to macroeconomic uncertainty.

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Trump Fires Back at BLS, Escalates Political Tensions

President Donald Trump reacted swiftly, taking to Truth Social to accuse Bureau of Labor Statistics Commissioner Erika McEntarfer — a Biden-era appointee — of manipulating jobs data during the 2024 election cycle. Trump pointed to previously inflated figures and said he had instructed his team to remove McEntarfer “immediately.”

The politicization of a key federal data agency unsettled investors. Traders viewed the abrupt call for dismissal as a threat to the perceived independence of government institutions — a red flag for markets already on edge.

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Trump Submarine Post Heightens Russia Concerns

Later in the day, Trump intensified global tensions by publicly revealing he had ordered two U.S. nuclear submarines repositioned in response to comments from Dmitry Medvedev, deputy chairman of Russia’s Security Council.

The message, issued without Pentagon backing, raised eyebrows. Some interpreted it as calculated posturing to pressure Moscow toward a ceasefire in Ukraine. Others feared the public disclosure could signal deeper instability in U.S.-Russia relations.

The timing and tone of the announcement added further stress to already jittery markets, prompting investors to seek safety in Treasurys and cash.

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Rate Cut Expectations Grow — But So Do Recession Fears

Friday’s soft labor data sharply increased the likelihood of a Federal Reserve rate cut in September, with odds rising for a 50-basis-point reduction. But rather than lift sentiment, the expected policy shift deepened recession concerns.

Investors increasingly view potential rate cuts not as proactive measures to stimulate growth, but as reactive responses to economic deterioration already underway. In that context, monetary easing was seen more as a warning sign than a market booster.

For crypto, the implications were bearish. Though lower interest rates can favor risk assets over time, the overriding fear of recession overshadowed any benefit from lower yields. Selling intensified across the digital asset space as traders braced for continued volatility in August.

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