The cryptocurrency market on Tuesday experienced a notable downturn as U.S. trading commenced following the Labor Day holiday.

This decline coincided with a broader selloff in traditional financial markets, highlighting the increasing correlation between digital assets and conventional equities.

Bitcoin (CRYPTO: BTC) saw its value decrease by 1.5% to $57,800, while Ethereum (CRYPTO: ETH), the second-largest digital asset, experienced a more pronounced drop of 3%, reaching $2,442 — its lowest point since early February.

The cryptocurrency market’s movement appears to be influenced by macroeconomic factors, as evidenced by the release of the August ISM Manufacturing PMI report.

The report indicated ongoing contraction in the manufacturing sector, with the index coming in at 47.2, slightly below expectations.

Notably, the report’s details suggested a concerning combination of declining new orders and rising prices, potentially signaling stagflationary pressures.

Also Read: Qatar Unveils Crypto Rules As Middle East Embraces Digital Assets

In response to these economic indicators, market participants have adjusted their expectations regarding the Federal Reserve’s upcoming monetary policy decisions.

The CME Group‘s FedWatch tool now shows a 39% probability of a 50-basis-point rate cut in September, up from 30% just a day prior.

A 25-basis point cut remains the favored outcome at 61%.

As the market digests these developments, all eyes are turning to the upcoming August employment report scheduled for release on Friday.

This report is widely considered to be a crucial factor in determining the Fed’s next move, with economists projecting a rebound in job gains to 160,000 and a slight dip in the unemployment rate to 4.2%.

For those seeking deeper insights into the future of cryptocurrencies and their place in the broader financial landscape, Benzinga’s Future of Digital Assets event on Nov. 19 promises to be a key forum for discussion and analysis.

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