Market Wrap: Bitcoin Trades Down After Initial Push Higher
Bitcoin (BTC) and ether (ETH) both declined slightly on Friday, as investors digested the latest U.S. jobs report that showed the unemployment rate inched up slightly but not enough to change the tenor of the still hot labor market.
- Bitcoin declined 1.1% on Friday, after popping 1% in the hour the U.S. jobs report. The largest cryptocurrency by market cap was recently trading at just below $20,000, up a few fractions of a percentage point over the last 24 hours but well within the range it has occupied for the past week. Year to date, the price of bitcoin is down 57%
- Ether, the second-largest cryptocurrency by market cap, was recently trading at just under $1,600, up about a percentage point from the previous day. ETH was initially up about 2% after the release of the employment data. Ether is up about 3% over the last seven days and down 58% year to date.
Jobs growth slowed in August, with 315,000 jobs added, compared with 526,000 jobs added in July, although the total for August beat analysts’ estimates of a gain of 300,000. The unemployment rate rose to 3.7%, versus an expected 3.5% rate, although labor-force participation ticked up to 62.4% from 62.1% in July.
The U-6 unemployment rate, arguably a more comprehensive measure of unemployment, rose to 7% from 6.7%. The U-6 rate includes the unemployed and underemployed, as well as part-time workers who are marginally attached to the labor force, and attempts to account for those individuals overlooked by other labor indexes.
Historically, the U-6 rate is higher than the headline unemployment rate, because it takes more of the eligible labor force into account.
Manufacturing payrolls exceeded expectations with 22,000 new jobs versus an expected 18,000. Government payrolls increased by 7,000, down 85% from July’s increase and 65% lower than the expected 20,000. Average hourly earnings increased 5.2%, versus expectations of a 5.1% increase.
The impact to digital asset valuations revolves around the Federal Reserve’s stance on inflation and how that is affected by the economic data.
Traditional financial markets were down, as the Dow Jones Industrial Average and S&P 500 fell 1.1% and 1%, respectively. The tech-heavy Nasdaq Composite index declined 1.3%
Crude oil prices ended a three-day slide, rising 0.38%, while natural gas declined 4.2%. Copper futures fell 0.13%, and the price of gold, a safe haven asset, rose 0.68%.
Altcoins were mixed, as solana (SOL) and Polygon’s MATIC fell 0.9% and 0.6%, respectively, and uniswap (UNI) rose 0.49%
●Bitcoin (BTC): $19,909 −0.2%
●Ether (ETH): $1,558 −1.1%
●S&P 500 daily close: 3,924.26 −1.1%
●Gold: $1,721 per troy ounce +1.4%
●Ten-year Treasury yield daily close: 3.19% −0.07
Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at coindesk.com/indices.
Bitcoin shrugs off jobs report following an initial move higher.
Bitcoin’s price bounced between positive and negative territory on Friday. Following the release of U.S. jobs data, the price rose as high as $20,400 before retracing below $20,000 by midday.
The jobs report, solid by most accounts, doesn't appear to signal any change in the prospect for a rate hike by the Fed later this month. The labor market remains resilient, despite its slower pace of growth. The U.S. central bank has been weighing the strength of the labor market heavily in its interest rate considerations.
The increased unemployment rate likely stems from the corresponding increase in labor force participation, also a sign of economic strength.
As the Fed wrestles with monetary policy that tames inflation but doesn’t cast the economy into recession, bitcoin and other risky assets have traded relatively flat.
A look at BTC’s hourly chart shows the sharp uptick in prices during the 12:00 UTC hour, followed by a decline of greater magnitude during the day.
Overlaying Bollinger Bands on the hourly chart shows that BTC breached the upper range of its Bollinger Band following the data release and subsequently reverted to the lower band during the 17:00 UTC hour.
Bollinger Bands measure an asset’s average price movement and then calculates two standard deviations above and below that average. Prices breaching the upper or lower limit of their Bollinger Bands are often viewed as a signal that prices have moved too far in one direction.
As stated in Thursday’s Market Wrap, bitcoin appears to be poised to bounce above and below the $20,000 mark until a positive (or negative) catalyst pushes the price beyond its current level.
Meanwhile, on-chain data shows that bitcoin exchange reserves have risen by about 20,300 since Monday. The movement of BTC onto exchanges may be a bearish signal. It can often indicate the movement of BTC out of cold storage and on to exchanges for the purpose of being sold.
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Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.