CoinLoan Weekly: ‘Goldilocks’ boost, ETH’s edge, consumer interest in crypto
BTC see-sawed until the weekend. Following a steep rise and fall on Tuesday, August 30 (from $20,504.09 to $19,621.98), it approached $20,400 twice. On Friday, September 2, the August US jobs report pushed it just over $20,385, and it settled below $20,000.
Anxiety deepened as The Crypto Fear & Greed Index repeatedly sank to 20. Tuesday’s collapse coincided with the release of Germany’s harmonized inflation rate, which hit a 50-year high. Friday’s jobs report triggered a 1% gain followed by a sharp decline. Its impact on the market revolved around the influence on the Fed’s strategy.
As of this writing, BTC is trading at $19,740.72, with a 24-hour slip of -0.8% and a 7-day climb of +0.4%.
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Despite a weak start in unison with BTC (a low of $1,433.57 on Monday, August 29), ETH proved more resilient. Tuesday’s slide was mild in comparison ($1,483.35 on August 30) and followed by several jumps to $1,600, with a 7-day high of $1,639.71 on Friday, September 2. The coin held just above $1,550 over the weekend.
ETH was more susceptible to the employment data, jumping 2% after its release. The impending Merge upgrade supported the positive sentiment, helping the coin’s considerable gains. Some experts cite the risk reset in conventional markets, as ETH has followed the S&P 500 over the past two months.
As of now, ETH is trading at $1,594.37, with a 24-hour climb of +1.7% and 7-day growth of +10.8%.
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With no positive news to support it, XRP was at the mercy of the Fed’s tightening cycle, trading below $0.35. After two dips to nearly $0.32, with a 7-day high ($0.334907 on Tuesday, August 30) between them, the price approached $0.335 again. Over the weekend, it fluctuated under $0.3325.
Investors are still waiting for a new ruling in the ongoing lawsuit — the court’s decision regarding SEC’s motion to shield Hinman documents. This lack of clarity explains the price stagnancy, as it limits its upside continuation.
As of now, XRP is trading at $0.331096, with a 24-hour slip of -0.2% and a 7-day uptick of +1.8%.
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BTC price is boosted by US job data
On Friday, September 2, the price of BTC jumped on fresh data from the U.S. Bureau of Labor Statistics. According to its report, the unemployment rate in August rose slightly compared to July — from 3.5% to 3.7%, and for a positive reason — a major rise in the civilian labor force (+786,000 persons).
Jerome Powell has warned of stern rate hikes and other measures of curbing inflation. The addition of 315,000 jobs is a Goldilocks scenario that could appease the Fed, fueling hopes for a soft landing. After the release of the data, the probability of another 75-basis-point increase fell from 70% to 56%, according to CME FedWatch Tool. Both crypto and stocks went up.
The evidence of an economic slowdown is comforting for investors. Lately, the Fed’s aggressive tightening has been a dominant macro force. This year’s hikes, the most drastic in decades, have affected both equities and crypto.
Higher rates reduce the appeal of riskier investments, such as BTC, and make recession more likely. Indicators of economic strength give the Fed more room for maneuver. While hiring is still strong, the report shows a slow decline — a possible indication that the tightening is beginning to have an effect.
According to Louis Navellier, founder of Navellier & Associates, Goldilocks job report offered a balance — it “was strong enough to weaken recession fears but soft enough to raise hopes that the Fed won’t consider a 100 basis-point [rate hike] this month. Nonfarm payrolls came in at 315,000, below the 318,000 estimate, unemployment 3.7% vs. 3.5%, and wages +0.3% vs. 0.4%.”
The improved sentiment could help BTC and other cryptocurrencies hold onto key levels for longer. However, ING economist James Knightley and BlackRock's Rick Rieder still expect at least one more jumbo hike in September, followed by 50 basis points in November and 25 points in December.
Despite crypto winter, consumer interest is strong
The bear market has not dampened public enthusiasm for digital assets. Over 56% of consumers surveyed for the report “Paying With Cryptocurrency” are at least mildly interested in buying cryptocurrencies.
PYMNTS and BitPay’s collaboration, which involved 2,334 individuals and 202 merchants, reveals a broad demand for crypto as an investment and a payment method. While high-income individuals dominate ownership, economically vulnerable consumers tend to allocate a disproportionate share of their assets and savings to crypto.
Generation-wise, millennials, or Gen X, are leading the charge, with nearly 42% of respondents very or extremely likely to purchase crypto over the next 12 months. Over a quarter — 26% — of their Gen Z counterparts think the same. The chance to profit is the most common driver, while FOMO, or the fear of missing out, motivates around 15% of the respondents.
Here is how Iyandra Smith-Bryan, COO at Quantfury, explained the optimism to CNBC. “History has shown us that the market has defied all odds even during downward periods, so investors remain positive about the ability of bitcoin and cryptocurrencies to remain resilient.” Secondly, this belief is fueled by the development of blockchain technology, as it supports crypto adoption.
Furthermore, this is the survival of the fittest. According to Smith-Bryan, crypto crises “leave the best players on the field”, allowing them to focus on enhancing the technology, products, and support.
Checkout.com’s “Demystifying Crypto”, which summarizes insights from 30,000+ consumers and 3,000+ merchants in 10 countries, confirms the rising appeal of crypto purchases. This year, around 40% of respondents aged 18 to 35 intend to use them. As the transaction systems improve, we may see “hockey stick-like growth — much like the speed of growth of the internet,” in the words of Max Rothman, the company’s head of crypto and digital assets.
The volatility of major cryptocurrencies brings stablecoins to the spotlight. They may offer the best of both worlds — price stability and “all the benefits of a digital asset — transparency, decentralized data and immediate availability of funds,” Rothman says.