Why Did Bitcoin’s Price Rise?
BTC Hovers Over $27K as Investors Shrug Off Hot Jobs Data
On Friday, Bitcoin showed a minor increase, yet remained mostly indifferent to the unexpectedly strong jobs report, alongside a turbulent week characterized by discussions surrounding the U.S. debt ceiling, end-stage negotiations, and revived worries about inflation. The dominant cryptocurrency by market capitalization traded roughly around $27,180, marking an increase of 1.2%. Before the opening of U.S. equity markets on Friday, BTC managed to surpass the $27,000 mark, after languishing below it for much of the previous two days. This was largely due to the inflation-related concerns that have been negatively impacting prices for the past year and a half.
Edward Moya, a senior market analyst at foreign exchange market maker Oanda, indicated in an email that Bitcoin has maintained its position following a hectic week characterized by a debt limit deal, a multifaceted jobs report showing a combination of strong employment and increasing layoffs, and continuing efforts by lawmakers to regulate crypto. He further pointed out the ongoing debate around a Securities Clarity Act, which could potentially determine if certain tokens qualify as unregistered securities.
Ether, the second-largest cryptocurrency by market cap, traded slightly above $1,905, marking an almost 2% rise from Thursday at the same time. This cryptocurrency spent much of the previous week below this level as Ether investors grappled with wider economic pressures.
Virtually all other major cryptocurrencies were on an upward trend, with ADA and SOL (tokens from the Cardano and Solana smart contract platforms) recently showing gains of more than 4% and 3.5% respectively. In the meantime, a handful of DeFi-focused smaller protocols emerged as the biggest winners over the past week according to the CoinDesk Market Index, a performance measure of the overall crypto market. Lido (LDO), Synapse (SYN), and PancakeSwap (CAKE) surged 15%, 13%, and 12% respectively. The CMI showed a recent increase of 1.6%.
Stocks saw a significant increase following the robust U.S. Labor Department report, which indicated the addition of 339,000 jobs in May, approximately 75% more than the economists' prediction and a notable rise compared to the 294,000 jobs added in April. The positive jobs data signified that the employment market is still strong, suggesting that the economy is still on the path of growth and inflation remains a challenge. However, the unemployment rate of 3.7% in May, higher than the projected 3.5%, hints at a potential halt in the continuous interest rate hikes by the U.S. central bank, a move that has been a source of trouble for crypto markets.
The tech-centric Nasdaq Composite and S&P 500, known for its substantial technology component, surged 1.4% and 1% respectively. Conversely, the safe-haven gold, which approached a record high just under a month ago, fell by 1.5% to trade at $1,965.
According to Oanda’s Moya, the U.S. central bank may face a tough choice regarding an interest rate hike in June, after hinting at a potential halt and indicating that they could be swayed by upcoming releases from the Institute for Supply Management (ISM) and the May Consumer Price Index. Moya also wrote, "The Fed seems to have painted themselves into a corner with skipping the June meeting, but it's important to note that they're far from finished with raising rates." He further added that "halfway through the year, there are no strong indicators suggesting a recession in the second half of the year."