As crypto rallies on strong jobs data, analysts speculate on Powell’s next move

Jobs data released Friday showed strong growth in the labor force and a drop in the unemployment rate, suggesting a key central bank policy may not come in September.

The U.S. economy added 528,000 jobs in July, more than double analysts’ expectations, according to data from the Bureau of Labor Statistics. The unemployment rate also fell marginally from 3.6% to 3.5% last month.

The Fed has been keeping an eye on labor statistics in recent months in hopes of gauging the odds of a recession. Strong jobs data is likely to confirm Fed Chairman Powell’s recent rate hikes, analysts said.

“Numbers this strong push back strongly against the idea that we are near peak inflation or peak hawkishness,” Tom Essaye, founder of Sevens Report Research, wrote in a note on Friday. “The looming CPI report may prevent any market fallout from being too intense (as hopes for a soft CPI should support assets), but we still expect moderate declines.”

Stocks traded sideways on Friday, while cryptocurrencies added to the recent rally. The S&P 500 traded down 0.5% and the tech-heavy Nasdaq lost about 1% in late Friday trading. Bitcoin and ether rose 0.8% and 4.2% respectively.

Friday’s jobs data comes a day after asset manager BlackRock said it would begin facilitating institutional cryptocurrency trading through Coinbase’s prime brokerage service. The stock exchange’s stock rose more than 30% on Thursday before the rise was reduced.

“There was, what has become, a rare headline of good news for bitcoin on Thursday after Coinbase was selected to offer crypto services to Blackrock’s clients,” Craig Erlam, senior market analyst at OANDA, wrote on Friday. “This is a great show of support for an asset class that has had a frankly terrible year so far. But there is clearly still strong demand for cryptos that bode well for the future.”

It’s hard to say how long the turnaround for COIN and the broader crypto market will last, analysts agreed, but by and large it shows the industry is moving in a positive direction.

“While small and private investors have been almost shaken out of the space in recent months, institutions are now making a comeback,” said Mikkel Mørch, CEO of digital investment fund ARK36. “Obviously, big players like BlackRock don’t see either the recent drop in prices or the wave of bankruptcies among crypto companies as proof that it’s over for cryptocurrencies or that there’s something fundamentally wrong with this asset class.”

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