Crypto Holds Steady After Favorable Jobs Report
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| By Sam Blumenfeld |
Bitcoin (BTC, Tech/Adoption Grade “A-”) and the broader crypto market are trading sideways after a blowout jobs report in November.
Non-farm payrolls rose 263,000 for the month, coming in well above economists’ estimates of 200,000 jobs created. Additionally, average hourly earnings growth of 0.6% in November doubled expectations.
Markets would normally respond well to positive economic news … but not when investors are clamoring for a Federal Reserve pivot.
Thankfully, the market finally got what it was looking for when Fed Chair Jerome Powell delivered his speech on Wednesday, saying, “The time for moderating the pace of rate increases may come as soon as the December meeting.”
Cryptocurrencies and traditional equities both jumped after the address.
However, a robust labor market could change central bankers’ minds about slowing down. The top priority remains fighting inflation, so the Fed could decide it still has more room to hike rates.
Currently, Bitcoin is down less than a percentage point as it fights to overtake $17,000 again.
The asset jumped past its 21-day moving average of around $16,500 after Powell’s speech, but the important level to watch is $15,500.
A close below the lower end of its recent $15,500 to $17,500 trading range could signal additional downside during crypto winter.
Here’s Bitcoin’s price in U.S. dollars via Coinbase (COIN):
In comparison, Ethereum (ETH, Tech/Adoption Grade “B”) is faring better than Bitcoin. It’s logging a slight daily gain so far as it looks to reestablish momentum.
ETH is holding steady and trading closely to where it was in mid-October, while BTC sits about 10% lower.
The second-largest crypto by market cap has plenty of leeway above its bear market low of about $880. Considering ETH’s resilient price action —even in the face of weakened market sentiment — it’s unlikely ETH will test this level without a serious market pullback.
Like Bitcoin, Ethereum broke through its 21-day moving average of around $1,200 during Wednesday’s rally. It will look to build on that momentum despite broader challenges caused by the FTX contagion.
If Ethereum manages to establish $880 as its 52-week low, it would bode well for the broader market as it approaches the end of crypto winter.
Here’s Ethereum’s price in U.S. dollars via Coinbase:
Index Roundup
The crypto market logged a positive week after the bump from Jerome Powell’s speech. Most cryptos managed to finish higher despite experiencing mid-week volatility.
The Weiss 50 Crypto Index (W50) rose 2.89%, as most assets ended slightly in the green.
The Weiss 50 Ex-BTC Index (W50X) gained 3.28%, highlighting how Bitcoin performed largely in line with most altcoins.
Breaking down performance this week by market capitalization, there were minimal differences between the groups. Still, the mid-caps slightly underperformed their smaller and larger counterparts.
The large-caps narrowly took the top spot, with the Weiss Large-Cap Crypto Index (WLC) increasing 5.13%.
Mid-cap cryptocurrencies gained the least ground, as the Weiss Mid-Cap Crypto Index (WMC) grew 3.56%.
The smallest cryptos came up just short of large-cap performance, with the Weiss Small-Cap Crypto Index (WSC) increasing 5.11%.
Most cryptos are still trying to stabilize after the FTX turbulence, but the most crucial factor is to hold above critical support levels.
As the market prices in a greater likelihood of a Fed pivot, much will depend on the spillover effects from FTX’s collapse. For now, the market will likely look to Bitcoin and Ethereum for direction.
Notable News, Notes & Tweets
• Hong Kong is developing crypto regulations to protect investors.
• After initially establishing a waitlist, Fidelity (FNF) has opened crypto trading accounts for retail investors. The platform will charge a 1% spread for all transactions.
• The total crypto market capitalization is back above $850 billion again after a 2% weekly gain. Bitcoin dominance holds near 40%, while Ethereum makes up about 18% of the total crypto market cap.
What’s Next
The crypto market continues swinging back and forth as investors weigh the potential cascading damages from FTX versus growing hopes for a Fed pivot.
But even without a short-term policy reversal, the outlook for crypto continues improving as adoption ramps up.
Lower-than-expected inflation readings — including Thursday’s positive personal consumption expenditures data — could convince the Fed to slow down. However, the strong jobs report adds doubt, considering inflation is nowhere near the historical 2% target and unemployment remains low at 3.7%.
Crypto sentiment has suffered amid high-profile bankruptcies and calls for regulations … but improving macroeconomic conditions could lay the groundwork for the next rally.
Best,
Sam
