Friday saw a resilient display from Bitcoin, with the leading cryptocurrency bouncing nearly 1% to regain some of the ground lost during Thursday’s market turbulence. The crypto giant saw its market value touch $30,300, reflecting optimism despite a somewhat gloomy backdrop.
Meanwhile, Asia-Pacific stocks (excluding Japan) shed some weight sliding to a five-week low, indicating continued investor caution in the face of uncertainty. Shares on Wall Street also had a tough day, shrinking in response to the ADP private-sector jobs report for June, which signalled potential interest rate hikes.
On another front, the precious yellow metal, gold, commanded a steady $1,914 per ounce, revealing investors’ quest for safe-haven assets. The 10-year Treasury note yield softened a bit standing at 4.02%, shedding 6 basis points from its previous four-month high. BTC‘s traditional rival, the US dollar, consolidated on overnight losses, resting near 103.00.
Up next, investors await the Bureau of Labor Statistics’ release of the nonfarm payrolls for June, with anticipation palpable across the spectrum. Current estimates posit an addition of 205,000 jobs in the previous month, with minor drops in unemployment and an expected 0.3% rise in average hourly earnings.
Equally compelling is the associated chatter around the Federal Reserve raising interest rates. Despite a minor dip, traders still estimate an 89% chance for a 25 basis point raise to a 5.25%-5.5% range. Some even predict another 25 basis point hike later this year.
Analyst Adam Button suggested, “If I had to estimate what the market is really trying to place as a baseline, it’s a high to 5.25-5.50%, and then holding there for about ten months.”
Given these hawkish expectations, missing the NFP and wage growth data might push a positive mood back to cryptos and other risk assets. It will be interesting to monitor how the Treasury yield curve responds to these developments. If destabilization occurs and the curve begins to flatten or de-invert, cryptocurrencies like Bitcoin could potentially face a downward pressure.
Historically, an inverted yield curve, a scenario where yields on longer-duration bonds dip below short-duration bonds, has preceded economic recessions. Given this reality, crypto enthusiasts would be wise to keep an eye on these traditional economic indicators while betting on the future of digital currencies.
Source: Coindesk
