Bitcoin falls after jobs report, but crypto prices show relative stability

The crypto market fell with stocks after the highly anticipated jobs report showed that the labor market remains tight and could keep the Federal Reserve on course to raise interest rates aggressively.

The price of bitcoin fell 3.3% to $19,380.74, according to Coin Metrics. Ether fell 2.7% to $1,322.40.

On Friday, the Labor Department reported that the U.S. economy added 263,000 jobs in September, compared with the Dow Jones estimate of 275,000, and that the unemployment rate fell to 3.5% from 3.7% the previous month.

“The jobs report points to no change on the horizon for the Fed, so we continue to expect steady interest rates which also puts pressure on the crypto markets,” said Yung-Yu Ma, investment strategist at BMO Wealth Management.

Cryptocurrencies’ correlation with stocks has weakened in recent weeks, but remains high.

“Crypto seems to be in an important technical juncture here where it looks like it’s trying to carve out a bottom but feels heavy,” he added. “I still think it, more likely than not, breaks to the downside given rising interest rates and risk-off sentiment, but so far it’s a surprising effort to hold the line.”

The market has been in a good-news-is-bad-news holding pattern with the Federal Reserve laser focused on bringing down inflation. While the new data shows strength in the US economy, it could make the Fed more likely to continue with its aggressive rate hike plan (while investors hope for a pause or a pivot), putting pressure on stocks and weighing on crypto.

“Crypto has been the hardest hit by interest rate hike fears this year,” said Callie Cox, US investment analyst at eToro. “It makes sense – a lot of crypto projects don’t have cash flow, so people invest in them for what they can be, not necessarily what value they provide right now. When prices go up, the future value of a dollar goes down.”

Cox also highlighted the resilience of cryptoassets in the second half of the year, noting that while stocks have returned to new lows with the rise in bond yields, bitcoin and ether have not. Bitcoin has been trading in a tight range between $18,000 and $25,000 since falling to its lowest level of the year in June.

“To me, that’s progress in this bear market,” Cox said. “Crypto prices can tell us that rate anxiety may be at a turning point. Crypto’s strength is also a good indicator of skittishness in the market. It seems the brutal bull selloff has finally washed out all the weak hands.”

“Bitcoin is also well below the peaks as well,” she added. “But stability is a step in the right direction.”