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Market Wrap: Bitcoin Falls Initially on US Jobs Report, Grinds Higher Later

·5 min read

Bitcoin’s (BTC) price increased 2% on Friday, average volume. Currently near $23,000, the largest cryptocurrency by market capitalization was on track to close out the week down 2%.

BTC’s price move came on the heels of a surprisingly strong U.S. jobs report, spoken about in greater depth and detail in CoinDesk’s coverage of the announcement.

This article originally appeared in Market Wrap, CoinDesk’s daily newsletter diving into what happened in today's crypto markets. Subscribe to get it in your inbox every day.

Bitcoin’s immediate response to the positive data was to sell off briefly, before recovering throughout the day.

Given the strength of the report, bitcoin investors may anticipate that the Federal Open Market Committee – the Federal Reserve’s monetary-policy panel – will maintain its elevated pace of interest rate increases, which could have a negative impact on asset prices.

In traditional markets, the S&P 500 declined 0.2%, while the tech-laden Nasdaq composite fell 0.5%. The Dow Jones Industrial Average finished 0.2% higher.

Altcoins pushed higher as well, as Polkadot’s DOT advanced 6.3%, while Avalanche’s AVAX increased 4.4%.

Bitcoin (BTC): $22,898 +2.0%

Ether (ETH): $1,677 +5.6%

S&P 500 daily close: 4,145.19 −0.2%

Gold: $1,791 per troy ounce +0.2%

Ten-year Treasury yield daily close: 2.84% +0.2

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.

BTC Initial Reaction to Positive Jobs Data Was Negative

Where the July 29 Market Wrap took a step out to the weekly chart time frame, today’s chart zooms into a narrower hourly chart range. Doing so can provide increased line of sight into the intra-day reaction to economic data.

Friday morning’s U.S. jobs report for July massively surpassed expectations, as employment rose by 528,000 compared to a consensus forecast of a 250,000 increase. The unemployment rate decreased to 3.5% versus expectations for 3.6%.

This, by most accounts, was a strong jobs report. Bitcoin’s hourly chart, however, implies a different interpretation.

Bitcoin/U.S. dollar hourly chart (Glenn Williams Jr./TradingView)
Bitcoin/U.S. dollar hourly chart (Glenn Williams Jr./TradingView)

BTC prices declined close to 2% on above-average volume not long after the employment report was released at 8:30 a.m. ET. Prices have since recovered, with BTC currently trading above $23,000.

That might signal at least a brief departure from the market realm where “good news = bad news” for markets, and vice versa. Specifically, positive economic data gives the Federal Reserve's Federal Open Market Committee room to take a more aggressive approach to future rate increases.

Notably, the probabilities for a 75 basis point increase in interest rates in September have increased from 34% to 65%, following the report. A glance at the daily chart (below) shows a recovery in prices throughout the remainder of the day.

The ATR (average true range) indicator illustrates a continued reduction in volatility, while the relative strength index (RSI) shows an uptick to 53, which (while higher) is generally interpreted as neutral.

The RSI indicator, for context, is often used as a proxy for momentum, with a reading of 30 indicating oversold levels and 70 indicating overbought levels.

Bitcoin/U.S. dollar daily chart, along with RSI and average true range metrics (Glenn Williams Jr./TradingView)
Bitcoin/U.S. dollar daily chart, along with RSI and average true range metrics (Glenn Williams Jr./TradingView)

BTC’s seven-day performance shows relatively little movement overall

Market performance (Glenn Williams Jr./TradingView)
Market performance (Glenn Williams Jr./TradingView)

Overall, the seven-day movement in the price of BTC was relatively flat. Price action stalled substantially from the double-digit gains for both BTC and ETH in the week prior.

The same can be said for traditional risk assets and equities indexes. The largest movement in prices over the most recent seven days occurred in energy markets, with crude oil declining by 8%. Thirty-day correlations between BTC and traditional stock indexes remain fairly tight.

Altcoin roundup

  • FLOW Rallies 38% Powered By Meta’s NFT Outreach: The token of the Flow blockchain surged in the wake of Meta Platform's (META) decision to leverage the blockchain to expand its non-fungible tokens (NFT) initiative. Read more here.

  • Justin Sun Backs Ethereum Hard Fork: The Tron founder has emerged as one of the most prominent investors supporting a hard fork of Ethereum after the blockchain switches to a proof-of-stake (PoS) mechanism in September. Sun said he will support development on the existing Ethereum network following the expected Merge. Read more here.

  • Citi: Ethereum’s Merge Will Have Several Consequences for the Blockchain: Ethereum will probably become deflationary as token issuance decreases while the burn mechanism is maintained, the bank said. Read more here.

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