Financial and crypto markets are quiet, awaiting the jobs report. Although the report shows a stalling in employment, which could pressure the Fed to cut interest rates, Bitcoin continues to be compared to the M2 money supply and gold.

Market Overview

On Thursday (September 4th, US), US equities closed with gains across all three indices, each rising over 0.7%. The Nasdaq led with a 0.98% increase. Stock futures were also trending upwards. Oil saw a slight decrease to around $63.3 per barrel. Gold rose to $3606 per ounce.

Bitcoin saw a slight increase to $111,000. Most major altcoins were trading sideways or saw minor corrections. The overall crypto market capitalization is at $3.92 trillion.

US BTC spot ETFs saw outflows of $222.9 million on Thursday. Similarly, ETH ETFs also saw outflows of $167.3 million. However, SOL saw inflows of $3.1 million.

US Jobs Report Stalls, Fed Faces Rate Cut Pressure

The latest report shows that the US labor market is beginning to stall. Specifically, the August ADP non-farm payroll report came in at only 54,000, much lower than the 73,000 forecast and a sharp decrease from the previous period's 104,000. Weekly jobless claims also increased to 237,000, higher than the 230,000 forecast and the previous figure of 229,000. These data points reinforce the likelihood that the Federal Reserve (Fed) will have to consider cutting interest rates, but they also raise concerns that such a policy adjustment might come too late, increasing the risk of a recession. Investors are now focused on waiting for the official jobs report from the US Bureau of Labor Statistics and the CPI index next week for more signals on how the Fed will decide. However, the CME FedWatch Tool shows that investors believe the probability of a rate cut has increased to 99.4%.

Concurrently, political developments are also attracting attention, as President Donald Trump officially requested the Supreme Court to fast-track the review of his appeal regarding tariffs. A decisive ruling is considered necessary to reduce the uncertainty that is making markets more sensitive to economic and political risks. The market wants clarity and will adapt regardless of whether conditions are favorable or not. Since the tariff situation remains unclear, the market will continue to react with a degree of uncertainty.

Bitcoin's Correlation with M2 Money Supply and Gold

A shared chart shows a correlation between the price of Bitcoin and the global M2 money supply, where M2 is understood as the total amount of cash and short-term deposits. When compared, the price of Bitcoin has a lag of about 102 days relative to the expansion trend of international M2, supporting the hypothesis that when the amount of circulating money increases, Bitcoin's price will rise, but with a delay. In fact, even though the US Fed maintains a quantitative tightening policy, many other central banks in Europe and Canada have eased their policies, contributing to the expansion of global M2. If this correlation continues, Bitcoin could sustain its growth momentum from now until the end of the year.

However, in previous cycles, investors did not rely heavily on M2 charts or direct comparisons with gold to analyze Bitcoin. The common logical understanding was that when a lot of money is printed, fiat currency loses value, and consequently, scarce assets (like gold, real estate, Bitcoin, and crypto) appreciate. But in this cycle, many people are, for the first time, beginning to compare the M2 money supply and Bitcoin's price chart and are finding a real correlation. However, this is only data from the beginning of the year, which is not a long enough period to make a definitive conclusion.

Additionally, another chart comparing Bitcoin to gold shows that Bitcoin's price also tends to follow gold with a lag of about 200 days. Although this connection is not always clear, in the long run, when gold rises, Bitcoin often follows. This reinforces the view that Bitcoin is increasingly seen as "digital gold," benefiting from the trend of fiat currency devaluation and the need for inflation hedging. While in the short term, BTC may correlate with M2, gold, or even stocks at certain points, in the long run, BTC has its own path. This is what makes BTC so attractive. Furthermore, as fiat currencies are always subject to inflation and devaluation, assets like BTC will always appreciate in the long run.

In addition, data from River shows that an increasing number of companies across various sectors are accumulating Bitcoin as a reserve asset, most notably in real estate, Bitcoin-related services, and tourism-hospitality. This shows that Bitcoin is not just being considered by companies within the crypto industry but is gradually becoming part of the financial strategy of businesses in many sectors, thereby solidifying its position in the global financial system.

Other Key Crypto & Market Updates

Tom Lee is well-known for his long-term perspective on the market, although he has been criticized for making optimistic forecasts during market corrections. Currently, Lee is very optimistic about Ethereum and believes it is the core platform for asset tokenization and DeFi applications due to its ability to eliminate intermediaries, reduce costs, and increase transaction speed. He suggests that if Bitcoin reaches $250,000, Ethereum could hit $16,000 based on the ETH/BTC ratio seen in 2021. However, Lee admits that competition from other blockchains like Solana or Cosmos still exists. His forecasts are often correct but typically have a delay of several years.

Bloomberg reports that Michael Saylor's Strategy company "has fully met the criteria and more" to be added to the S&P 500 index. If added to the S&P 500, the stock would likely see a short-term price boost due to demand from index funds, increased investor attention, improved liquidity, and a market perception that the company is more stable, as many fund and portfolio managers would be required to buy it to track the S&P 500.

Mike Novogratz, CEO of Galaxy Digital, predicts that AI agents will become the largest user group for stablecoins, triggering a massive wave of transactions. An AI agent is automated software that makes decisions and executes transactions without human intervention, for example, autonomously shopping and paying with a stablecoin. Novogratz believes that the use of AI will drive demand for stablecoins, although the timing of this boom is still unclear.

Crypto is expanding not only in finance but also in politics, as the relationship between President Trump and his cabinet shows significant support. Recently, California Governor Gavin Newsom mentioned issuing a memecoin to compete with the Trump-related memecoins, showing a trend of political figures directly engaging with crypto. However, for sustainable development, crypto needs support from both major US parties and clear laws for the industry.

The Ukrainian Parliament has taken the first step in legalizing and taxing crypto, with 246 votes in favor out of 321. If implemented, the regulations would apply an 18% income tax and a 5% military tax on crypto profits, while offering a 5% tax incentive in the first year for converting crypto to fiat currency, for a total of approximately 23% tax on profits. The bill still needs to be passed in a second reading, and it's unclear which agency will be responsible for regulating crypto, between the Central Bank and the National Securities and Stock Market Commission.

Solana's validators have approved the Alpenglow upgrade, which promises to reduce transaction confirmation time from over 12 seconds to just 150 milliseconds—a 100-fold increase in speed—providing a Web2-like experience while maintaining security and decentralization. With this speed improvement, Solana can support real-time financial applications, opening up opportunities for DeFi and services that require instant transactions. The official deployment timeline will be announced after the upgrade process is completed.

Sources

• Bloomberg
• CoinDesk
• U.S. Treasury
• TradingView
• Reuters
• SEC
• White House Press Office
• CryptoQuant
• The Block
• Coingecko
• Dune Analytics
• Truth Social
• The Committee for a Responsible Federal Budget
• ADP Employment Report
• CME FedWatch Tool
• Tom Lee (Fundstrat Global Advisors)
• Mike Novogratz (Galaxy Digital)
• Solana Official Announcements
• The New York Times
• Fox Business

Disclaimer

This article is for informational purposes only and should not be considered financial advice. Please do your own research before making investment decisions.