What to know:

By Omkar Godbole (All times ET unless indicated otherwise)

Just 10 days after the U.S. Department of Commerce started posting economic data on a selection of blockchains, the reliability of its data is being questioned by some observers.

On Tuesday, the U.S. Bureau of Labor Statistics disclosed a startling figure: The economy created nearly 1 million fewer jobs than reported in the year ended March. The record revision calls into question earlier optimism about the strength of the labor market, casting doubt on all risk-on positions traders took in the past year or so.

Markets interpreted the downward revisions as another sign the Fed will introduce aggressive easing in the coming months. One popular Polymarket trader is betting that the Fed will cut rates by 50 basis points on Sept. 17.

Bitcoin (BTC) is trading above $112,000, having reached lows of around $110,800 during North American trading hours yesterday. European stocks are higher with the S&P 500 futures pointing to a positive open later Wednesday.

Still, caution may be warranted for two reasons: The U.S. producer price and consumer price indices due in the next 24 hours are likely to show that inflation remains elevated and well above the Fed's 2% target. Stagflation concerns may grip the market, weakening the case for aggressive Fed easing, if these data sets blow past expectations.

The second reason is that the liquidity tightening is underway.

"Liquidity is tightening as the Treasury General Account rises and the reverse repo facility drains, pushing reserve balances lower," Mott Capital Management said. "With SOFR climbing, spreads widening, and credit stress showing up, the market may soon face renewed pressure on risk assets."

This is probably the reason why put options tied to bitcoin and ether continue to trade pricier than calls on Deribit, reflecting downside concerns.

In other news, crypto staking platform Kiln said it is exiting its Ethereum validators due to an exploit incident that affected SwissBorg.

Real-world asset protocols continue to grow, with a total value locked of now over $15 billion.

Lastly, a single entity earned $200 million from the MYX airdrop. Talk about windfall gain. Stay alert!

 What to Watch

Crypto

• Sept. 10, 9:15 a.m.: Comptroller of the Currency Jonathan V. Gould will talk about digital assets at the CoinDesk: Policy & Regulation Conference in Washington.

• Sept. 11: REX Shares and Osprey Funds’ Dogecoin ETF shares to start trading on Cboe BZX Exchange under ticker DOJE.

Macro

• Sept. 10, 8 a.m.: Brazil August CPI. Inflation rate YoY Est. 5.1%, MoM Est. -0.15%.

• Sept. 10, 8:30 a.m.: U.S. August PPI YoY Est. 3.3%, MoM Est. 0.3%. Core YoY Est. 3.5%, MoM Est. 0.3%.

Earnings (Estimates based on FactSet data)

• None scheduled.

CoinDesk Disclosure: The information contained in this newsletter, and any information linked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. You should seek additional information regarding the merits and risks of investing in any cryptocurrency or digital assets.

L1.co Disclosure: This material is for informational purposes only, and the content contained herein should not be considered investment advice or a solicitation, offer, or recommendation to sell or buy any asset, strategy, or product. Investing in digital assets involves a high degree of risk, including the loss of principal.