Bitcoin hovers around $43k on latest jobs data
The US labor market added more jobs than expected in January, leaving analysts and investors doubting that an interest rate cut will come in March
Federal Reserve Chair Jerome Powell | Paul Morigi/"Jerome H. Powell, governor of the Federal Reserve Board, and Donald Kohn, senior fellow in Economic Studies at the Brookings Institution" (CC license)
Stocks and cryptocurrencies were mixed Friday as investors grappled with new earnings and economic data.
Friday’s jobs report showed unemployment is unexpectedly low at 3.7% and 353,000 jobs were added in January. Weekly initial jobless claims have ticked higher though, keeping in line with recent reports of layoffs in the tech and media industries. Still, initial claims are averaging lower than they did over the summer, according to economic data from the Federal Reserve.
While a healthy labor market generally would be positive news, Friday’s unexpectedly strong report could mean investors need to reevaluate their expectations for when the Fed might start lowering interest rates.
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Fed Chair Jerome Powell on Wednesday noted that a weakening labor market would cause central bankers to cut rates sooner, while “stickier or higher” inflation numbers would delay the timeline. The report pushed expectations of a March rate cut from 40% to 20%, according to data from CME group.
Still, equities trended higher Friday following the release of the latest labor numbers. Ahead of the close, the S&P 500 and Nasdaq Composite indexes gained 1% and 1.6%, respectively, largely driven by a rally in big tech following positive earnings from Amazon and Meta Platforms.
Cryptocurrencies, on the other hand, slipped Friday, with bitcoin (BTC) and ether (ETH) each losing around 0.5% at the time of publication. Both were able to sustain modest gains over the week, but are still in the red year-to-date. Some analysts maintain that bitcoin’s recent headwinds might be letting up soon.
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“Many technical factors pressuring bitcoin specifically (and crypto more broadly) are starting to be exhausted, in our view,” Coinbase analysts wrote in a note Friday. “This is evidenced by the liquidations at FTX (disposing of their Grayscale Bitcoin Trust or GBTC shares, for example) as well as the emergence of some large defunct entities from bankruptcy.”
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