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The crypto market fell along with stocks after the highly anticipated jobs report showed that the labor market is still tight and could keep the Federal Reserve on track to aggressively hike rates.
The price of bitcoins fell 3.3% to $19,380.74, according to Coin Metrics. Ether fell 2.7% to $1,322.40.
On Friday, the Labor Department reported that the US economy added 263,000 jobs in September, down from 275,000 according to the Dow Jones estimate, and the unemployment rate fell to 3.5% from 3.7% the preceding month.
“The jobs report does not indicate any change in tone on the horizon for the Fed, so we continue to expect firm interest rates, which also adds pressure to crypto markets,” said Yung-Yu Ma, chief investment strategist at BMO Wealth Management.
The correlation of cryptocurrencies with stocks has weakened in recent weeks but remains high.
“Crypto seems to be at a significant technical moment here where it looks like it’s trying to carve out a bottom, but feels heavy,” he added. “I still think it’s more likely than not to crash given rising interest rates and risk sentiment, but so far it’s been a surprising effort to keep the line.”
The market has been in a holding pattern where good news is bad, with the Federal Reserve’s laser focused on reducing inflation. As the new data shows the strength of the US economy, this could make the Fed more likely to continue with its aggressive rate hike plan (as investors hope for a pause or pivot), putting pressure on investors. shares and weighs on the crypto.
“Crypto has been hit the hardest by rate hike fears this year,” said Callie Cox, US investment analyst at eToro. “That makes sense – many crypto projects don’t have cash flow, so people invest in them for what they might be, not necessarily for the value they provide right now. When rates go up , the future value of a dollar falls.”
Cox also pointed to the resilience of crypto assets in the second half, noting that while equities revisited new lows as bond yields soared, bitcoin and ether did not. Bitcoin has been trading in a narrow range between $18,000 and $25,000 since dropping to its lowest for the year in June.
“To me, that’s progress in this bear market,” Cox said. “Crypto prices could be telling us that rate anxiety could be at a turning point. Crypto strength is also a good indicator of moss in the market. all weak hands.”
“Bitcoin is also well below its highs,” she added. “But stability is a step in the right direction.”