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Alex ThornHead of Firmwide ResearchGalaxyHear Alex Thorn share his take on "Bitcoin and Inflation: It’s Complicated” at Consensus 2023.Secure Your SeatAlex ThornHead of Firmwide ResearchGalaxyHear Alex Thorn share his take on "Bitcoin and Inflation: It’s Complicated” at Consensus 2023.Secure Your SeatFacebook iconLinkedin iconTwitter iconAlex ThornHead of Firmwide ResearchGalaxyHear Alex Thorn share his take on "Bitcoin and Inflation: It’s Complicated” at Consensus 2023.Secure Your SeatAlex ThornHead of Firmwide ResearchGalaxyHear Alex Thorn share his take on "Bitcoin and Inflation: It’s Complicated” at Consensus 2023.Secure Your Seat
Crypto markets were trading mostly sideways, with some major tokens up a little but others falling slightly after the latest jobs data showed labor markets remaining stubbornly tight.
Initial jobless claims for the week ending Feb. 18 fell by 3,000 to 192,000 but arrived below the consensus estimate of 200,000. Strong jobs data has been thorny for the U.S. Federal Reserve in its efforts to reduce inflation rates from 6.4% to its target rate of 2%.
Strong jobs data, which is generally an economic boom, has counterintuitively weighed against asset prices because a strong employment environment leads to higher prices as organizations ratchet up wages to recruit and retain scarce talent.
Yet, bitcoin and ether shrugged off the latest reading to trade 0.50% and 0.40% higher, respectively, during the 13:00 UTC (8 a.m. ET) hour of release. Selling pressure increased throughout the remainder of the day on average volume, although both BTC and ETH recently remained in the green.
Other relevant economic data on Thursday showed that U.S. gross domestic product (GDP) grew at an estimated 2.7% in the second quarter, versus expectations for 2.9% growth.
Personal consumption expenditures (PCE) declined from 4.3% last month to 3.7%, above the consensus estimate of a 3.9% increase. This data point underscores that while inflationary pressures has moderated, it remains elevated.
The minutes from the Federal Open Market Committee’s (FOMC) latest meeting earlier this month, released on Wednesday, emphasized the same with more than 10 separate references to either inflation or wage growth as “elevated.” Crypto markets will continue to scrutinize the Federal Reserve governors’ evolving inflation prescriptions, particularly if price increases fall outside expectations.
Currently, the CME FedWatch tool is assigning a 75% probability to the FOMC boosting interest rates by 25 basis points during the upcoming March 22 meeting. A week prior, the probability was 85%, indicating that the likelihood of a more aggressive 50 basis point hike has increased.
Fed meeting minutes indicate that “a few participants” favored raising the federal funds rate by 50 basis points at the prior meeting. The more aggressive hike would “more quickly” bring the target rate to levels facilitating price stability.
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