The highly awaited employment data revealed that the labour market is still tight, which might put the Federal Reserve on path to hike rates rapidly. The cryptocurrency market dropped along with stocks as a result.
According to the Labor Department’s report released on Friday, the U.S. economy added 263,000 jobs in September, less than the 275,000 jobs predicted by the Dow Jones, and the unemployment rate decreased from 3.7% to 3.5%.
According to Coin Metrics, the cost of one bitcoin dropped by 3.3% to $19,380.74. To reach $1,322.40, ether fell 2.7%.
According to Yung-Yu Ma, chief investment strategist at BMO Wealth Management, “the jobs report speaks to no change of tune on the horizon for the Fed, so we continue to expect firm interest rates which also puts pressure on crypto markets.”
Crypto appears to be at a crucial technical crossroads right now where it appears to be attempting to carve out a bottom but feeling heavy, he continued. “Given rising interest rates and a risk-off attitude, I still think it breaks to the downside more frequently than not, but so far it’s been a surprising effort to hold the line,”
The relationship between cryptocurrencies and stocks has diminished recently but is still strong.
Due to the Federal Reserve’s unwavering commitment to reducing inflation, the market has been stuck in a good news is bad news holding pattern. While investors are expecting for a halt or a pivot, the Fed may continue with its aggressive rate hike plan despite the recent data showing strength in the U.S. economy, which would put pressure on stocks and hurt cryptocurrency.
The threat of rate hikes has affected cryptocurrency the most this year, according to Callie Cox, a U.S. investment analyst at eToro. It makes sense because many cryptocurrency projects don’t generate cashflows, so investors buy them for potential rather than for actual value. The worth of a dollar in the future decreases as rates climb.
Cox also emphasised the durability of crypto assets in the second half of the year, saying that bitcoin and ether haven’t fallen to new lows in the same way that stocks did with the rise in bond yields. Since hitting its yearly lows in June, the price of bitcoin has been tightly ranged between $18,000 and $25,000. Cox remarked, “To me, that’s progress in this weak market.” Cryptocurrency prices may be indicating that rate anxiety is about to change. The strength of cryptocurrencies is another reliable sign of market froth. The severe growth selloff appears to have finally eliminated all the weak hands.
News Summary:
- Bitcoin decreases following the jobs news, but cryptocurrency values remain largely stable
- Check all news and articles from the latest Business news updates.