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The Hash Insider: US job market resiliency continues to signal more pain ahead for risk assets

The Hash Insider

The NCI closed Sunday (10/09/22) 1.9% above last week’s closing. The index’s neutral performance was influenced by ether (ETH), up 2.4 %, while bitcoin (BTC) rose 1.6%.

After an uneventful week to close out September, BTC and ETH traded at $19,205 and $1,295, respectively. Crypto markets entered the new week on a slight upward trend that began around market opening hours in North America despite unusually low trading volume.

Lower-than-expected US manufacturing figures (ISM) for September may have been responsible for the headwind that sustained the trajectory of crypto asset prices throughout Monday, as investors continued to look for signs of a faltering economy that could cast doubt on the Fed’s restrictive monetary stance. Traditional markets also registered gains on Monday, lifted by energy companies whose stocks rose as OPEC announced oil cuts.

Tuesday brought another positive day for crypto markets and stock markets. Negative economic data—this time showing job openings in the US declined to 10.1 million (expected: 10.8 million) in August—continued the early-week narrative of “bad macro news is good crypto news.”

Crypto asset prices moved sideways through choppy waters on Wednesday, a trend in place since early September whenever BTC surpasses the $20,000 mark. Nevertheless, as Wednesday drew to a close, both BTC and ETH registered their respective weekly highs of $20,420 and $1,383 despite a day in the red for traditional markets.

Thursday brought an end to the tide that had lifted crypto assets during the first half of the week, with both BTC and ETH registering modest losses in line with traditional markets. 

On Friday, however, non-farm payrolls, which showed the US job market had cooled less than expected (263,000 vs. an expected 250,000), would erase virtually all of the week’s gains, reaffirming market expectations of a 75 bp hike announcement for the FOMC meeting in November. 

Friday’s sharp selloff was followed by another uneventful weekend for crypto markets where BTC sticking close to $19,500 and ETH struggling to stay above $1,325.


Looking ahead


Thursday's CPI reading will headline this week’s macro calendar. It's unlikely that the result will be surprising enough to influence November’s FOMC meeting, but if inflation is lower than the projected 8.1% on year-over-year basis crypto markets should react positively. The week will also feature the release of the German CPI (Thursday), which markets have been monitoring with close attention in recent months as a barometer of the Ukraine war’s impact on the Eurozone economy. 


Other News 


Morgan Stanley sees continued growth of crypto ETPs


Morgan Stanley published (10/07) a report highlighting the continued global growth of crypto exchange traded products (ETP). According to the investment bank, there are over 180 active crypto ETPs being traded around the world, half of which were launched since the start of the crypto bear market. According to the report, the launch of these ETPs has accelerated in 2022, with an average of eight monthly launches.  Morgan Stanley believes the “bear market hasn’t deterred asset managers and financial companies from launching ways for their clients to get access to digital assets'' and predicted the number of these financial products will continue to grow.


Barclays remains optimistic about BTC and BTC miners


Barclays published (10/04) a report maintaining a Buy rating for Core Scientific (CORZ), a crypto hosting and mining company, where they noted they remain positive about the long-term viability of bitcoin (BTC). The British bank’s bullish outlook on the crypto mining company is shared by most market analysts, as evidenced by the average price target of at $5.58 (current share price: $1.30) for the crypto miner’s stock. Positive price targets for “crypto equities” are generally a sign that analysts are hopeful about the crypto market as a whole. 


McDonald's stores in Lugano Switzerland to start accepting Bitcoin and USDT


Fast food lovers in Switzerland can now purchase burgers with BTC and the stablecoin Tether (USDT) as of last week. The Swiss city of Lugano and Tether have partnered, through the Plan ₿ Foundation, to allow purchases at McDonald’s and other retailers with crypto currencies. The Plan ₿ Foundation hopes to enable crypto payments at 2,500 merchants in Lugano by the end of 2023.



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