Bitcoin briefly rallied into the $22,000s on Friday, while Ethereum is eyeing a break higher towards $1,700 pre-US jobs data.
Crypto bulls will be hoping for evidence of a softening jobs market/lower wage pressures to discourage aggressive Fed rate hikes.
The US Treasury outlined a framework for international cooperation on crypto regulations.
Bitcoin Briefly Breaks Above $22,000, Ethereum Eyes Rally Back to $1,700
Bitcoin hit its highest level since 16 June on Friday, defying broad strength in the US dollar amid pre-US jobs data resilience in global stock markets. Having traded as high as $22,400, Bitcoin has since fallen back to the $21,750 area, where it trades with gains of around 6.5% over the past 24 hours, as per CoinMarketCap.
Technical momentum has helped Bitcoin since Thursday. The cryptocurrency broke to the north of a pennant structure and its 21-Day Moving Average. Cryptocurrency traders now await the upcoming US jobs report at 1230GMT for further direction.
BTC/USD rallies after pennant breakout. Source: FX Empire
In terms of the major altcoins, the second-largest cryptocurrency by market capitalization Ethereum is trading in the $1,230s. ETH/USD is up about 5.5% in the last 24 hours, as per CoinMarketCap. The pair has so far been unable to break above its late June highs as traders keep their powder dry ahead of upcoming US jobs data.
But some technicians are bullish on the cryptocurrency, given its formation into an ascending triangle over the past few weeks. A break above resistance in the $1,275 area could trigger a swift rally back to the key long-term resistance area at $1,700.
ETH/USD eyes ascending triangle breakout towards $1,700. Source: FX Empire
In terms of the crypto top 20, Polygon and Ripple are the best performers, up nearly 10 and over 7.0% respectively.
How Might US NFP Data Impact Crypto?
According to a poll conducted by Reuters, the median expectation is for non-farm payrolls (NFP) in the US to have risen by just under 300,000 in June. That would mark a slight slowdown in the pace of job gains after NFP rose by closer to 400,000 in May.
The unemployment rate is seen remaining unchanged at 3.6%, roughly in line with pre-pandemic levels. The participation rate is expected to remain about 1.0% below pre-pandemic levels. Growth in Average Hourly Earnings is seen easing slightly to 5.0% YoY in June versus 5.2% last month. That leaves it still well above the Fed’s 2.0% inflation target.
If Friday’s US jobs data comes out in line with the above-noted expectations, that would signal that the US labor market remains a source of strength for the US economy. This would underpin confidence at the US Federal Reserve that the economy can “handle” the aggressive rate hikes it has signaled in the coming quarters.
In that sense, a strong jobs report could weigh on risk assets like stocks and crypto, which would most likely prefer to see data that encourages the Fed to tighten monetary policy less aggressively. Wage growth numbers will also be important in the context of high inflation, with any upside surprise set to add to Fed fears that elevated inflation may get embedded.
Conversely, a significantly worse than expected jobs report that also contains evidence of a larger than expected decline in US wage pressures would argue for the Fed to go with a smaller 50 bps rate hike later this month and be less aggressive going forward. This could be bullish for stocks and crypto.
Ultimately, against the backdrop of a Fed that is primarily determined to get multi-decade high inflation under control, next week’s US Consumer Price Inflation figures for June will overshadow Friday’s jobs report. While the NFP data could trigger some intra-day choppiness, the big moves will likely have to wait for next week.
US Treasury Outlines Framework for International Cooperation on Crypto Regulations
The US Treasury Department on Thursday published a report in which it outlined a potential framework for international cooperation on crypto regulation. The report, which was produced in response to an executive order by US President Joe Biden earlier this year, said the framework for international cooperation ensures that “America’s core democratic values are respected”.
“The US must continue to work with international partners on standards for the development of digital payment architectures and CBDCs (central bank digital currencies) to reduce payment inefficiencies and ensure that any new payment systems are consistent with US values and legal requirements,” the report noted. “Additionally, the US will promote the adoption and implementation of international standards through bilateral and regional engagements”.
Bitcoin Miner Troubles
US-based Bitcoin mining & hosting firm Compass Mining announced on Thursday that it plans to let go of 15% of its staff and cut executive compensation amid the ongoing crypto winter. The company admitted to having grown too quickly. “Given recent market downturn and anticipated future market conditions, we had to take a hard look at our spend and recalibrate for the future of the business,” Compass cofounders Thomas Heller and Paul Gosker said in a statement.
In June, Compass Mining was embroiled in controversy related to crypto-miner hosting firm Dynamics Mining, with the latter accusing Compass of failing to pay power consumption charges. The debacle, which resulted in Dynamics terminated a hosting agreement with Compass in Maine, was quickly followed by the resignation of Compass’ CEO and CFO.
Elsewhere, Bitcoin mining firm Marathon Digital Holdings released its latest mining operation update on Thursday. The company revealed that its Bitcoin production had fallen nearly 44% in Q2 2022 amid an ongoing outage in its Montana facility due to a storm.
“We have already been expanding in Texas at different facilities to reduce the reliance on a single major facility,” said Marathon’s CEO Fred Thiel. “Getting geographic diversity will help protect us in the future”.
Celsius Sends $500M wBTC to FTX
Troubled crypto lending platform Celsius Network, which halted user withdrawals back in June, sent $500 million worth of wrapped Bitcoin to crypto exchange FTX on Thursday, on-chain data analytics form Nansen reported. Wrapped Bitcoin is a Bitcoin derivative that runs on the Ethereum blockchain.
The move comes after Celsius repaid $450 million in debt on Decentralised Finance (DeFi) protocol Maker, a move analysts said was done to free up collateral. “De-leveraging activity on-chain will add sell-side pressure to assets that have been used as collateral,” Fundstrat analyst Walter Teng told CoinDesk on Thursday. Wrapped Bitcoin is, for now, holding its 1:1 peg with Bitcoin.
