As Crypto Recovers on Solid Jobs Data, Analysts Speculate on Powell’s Next Move

  • July jobs data crushed expectations
  • Additional increases of 75 basis points, or more, are likely, according to analysts.

Employment data released on Friday showed strong growth in the labor force and a decline in unemployment, suggesting that a Federal Reserve policy shift may not come in September.

The US 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 dipped 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 will likely validate Fed Chairman Powell’s recent rate-hike moves, analysts said.

“These figures are a strong rejection of the idea that we are close to peak inflation or peak warmongering,” Tom Essaye, founder of Sevens Report Research, wrote in a note Friday. “The upcoming CPI report could prevent the market fallout from being too intense (as hopes of a soft CPI should support assets), but we still expect moderate declines.”

Stocks traded sideways on Friday, while cryptocurrencies extended recent gains. The S&P 500 was trading down 0.5% and the tech-heavy Nasdaq lost about 1% on Friday at the end of the trading session. Bitcoin and ether gained 0.8% and 4.2%, respectively.

Friday’s employment data comes a day after asset manager BlackRock said it would begin facilitating institutional trading of cryptocurrencies through major brokerage service Coinbase. The stock’s shares rose more than 30% on Thursday before paring gains.

“There was, what has become, a rare good news headline for bitcoin on Thursday after Coinbase was chosen to provide crypto services to Blackrock 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 clearly, there is still strong demand for crypto, which bodes 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 overall, it shows the industry is moving in a positive direction.

“While small and retail investors have been pretty much wiped out of the space in recent months, institutions are now making a comeback,” said Mikkel Mørch, chief executive of digital asset investment fund ARK36. “Evidently, the big players like BlackRock don’t see either the recent price decline or waves of bankruptcies among crypto firms as evidence that it’s over for crypto or that there is something fundamentally wrong with the asset class.”

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  • Casey Wagner


    senior reporter

    Casey Wagner is a New York-based business journalist who covers regulation, legislation, digital asset investment firms, market structure, central banks and governments, and CBDCs. Before joining Blockworks, she reported on markets at Bloomberg News. She graduated from the University of Virginia with a bachelor’s degree in Media Studies. Contact Casey by email at [email protected]

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