 |
| By Sam Blumenfeld |
A strong October jobs report from the Bureau of Labor Statistics has ushered in an optimistic market response. Bitcoin (BTC, Tech/Adoption Grade “A-”) and the broader crypto market are trading higher today as non-farm payrolls jumped by 261,000, easily beating the Dow Jones’ estimate of 205,000.
This is a welcome change in tune from the September jobs report, where investors hoped for bad news because it signaled a greater chance for a Federal Reserve pivot.
However, now that the unemployment rate increased to 3.7% and a broader jobless measure rose to 6.8%, the market may interpret this as progress pointing to a sooner Fed pivot.
The report may not have greenlit an immediate pivot, but investors are still hopeful that the central bank will change course soon. This comes despite Fed Chair Jerome Powell’s statement this week that it’s “very premature to think about pausing interest rate hikes.”
Also, while Fed Fund futures shifted slightly in favor of 50-basis-point hike during the next Federal Open Market Committee meeting in December, the odds are still close to a coin flip.
But we are keeping our fingers crossed, because a rate hike slowdown would do wonders for crypto prices and other risk assets that thrive under easy monetary policy.
As for the current state of our crypto market leader, Bitcoin is up 5% so far in today’s trading, jumping past $21,000.
BTC traded resiliently following the Fed’s rate hike announcement on Wednesday, and it’s already gained back any losses it took and then some. Bitcoin managed to hold itself above its 21-day moving average even during the Fed-induced selloff, showing that negative news couldn’t break up its momentum.
Here’s Bitcoin’s price in U.S. dollars via Coinbase (COIN):
Ethereum (ETH, Tech/Adoption Grade “B”) is performing even better today, up 8% while eclipsing $1,650 for the first time since mid-September.
In addition, ETH extended its trend of outperforming BTC. It tracks a 19% monthly jump compared to the latter’s 2% gain.
Ethereum continues to establish itself as a leader while the market presses toward the end of crypto winter. ETH has made significant strides since the last bear market cycle, and we are optimistic moving forward.
Ethereum’s successful Merge and its resulting shift to proof-of-stake consensus allows institutions to adopt the network without negative stigma. The upgrade slashed ETH’s carbon footprint by 99.99%, making it no longer a liability from an environmental, social and governance perspective. Meanwhile, burning transaction fees makes the asset more deflationary.
Like Bitcoin, Ethereum has maintained its recent positive direction despite the Fed’s best efforts to crush pivot optimism. ETH trades significantly above its 21-day moving average of $1,440 and never tested the level during the short-term pullback.
It’s a good sign to see Ethereum holding itself well above the lower end of its sideways trading range, because it signals healthy price action during a later part of the bearish cycle period.
Also, altcoins look to Ethereum for direction, so its strength should help altcoins hold their positions before the next sustainable upswing.
Here’s Ethereum’s price in U.S. dollars via Coinbase:
Notable News, Notes and Tweets
• The Internal Revenue Service is preparing to bring more crypto cases next tax season.
• Bitcoin seller exhaustion reached a four-year low, potentially signaling that the end of crypto winter is near. The data is typical during bear markets where volatility is low and on-chain losses are high.
• Goldman Sachs (GS) revealed a new crypto data service, partnering with MSCI (MSCI) and crypto data company Coin Metrics to classify and evaluate hundreds of digital assets for institutional investors.
What’s Next
The Fed poured cold water on immediate pivot hopes after its 75-bps rate hike on Wednesday, but the market may not be buying it.
Even with a strong jobs report, Fed Fund futures price in a greater than 50% chance of the Fed slowing down in December. It’s too soon to tell, but the central bank won’t be able to hike rates forever.
To add on to the good news, the crypto market saw promising institutional progress this week as JPMorgan Chase (JPM) completed its first live decentralized finance transaction on Polygon (MATIC, Tech/Adoption Grade “B-”). With the test successful, it’s only a matter of time before other institutions and governments use the technology to boost efficiency and lower transaction costs.
Each week, we see more and more positive crypto adoption headlines. With the end of crypto winter mostly likely approaching soon, institutions should continue ramping up their exposure.
Best,
Sam
