CoinLoan Weekly: Growth on US jobs data, 7-week highs, CBDCs as FX speed boosters

Price dynamics

BTC price

After fluctuating around $20,500, BTC slid to a 7-day low of $20,064.63 on Thursday, November 3. Growth resumed the next day, culminating in a peak of $21,417.69 on Saturday, November 5. The price held firmly above $21,000 through the weekend until sinking again on Monday, November 7.

Wednesday's drop came in the wake of the fourth aggressive interest rate hike — the Fed had added 75 basis points to its benchmark indicator. Subsequently, the coin rose on US jobs figures indicating a robust labor market with unemployment just above the pre-pandemic low. Following the price surge, The Fear and Greed Index reached 40 over the weekend, remaining in the Fear zone.

As of this writing, BTC is trading at $20,712.01, with a 24-hour slip of -2.3% and a 7-day uptick of +0.4%.

BTC price chart. Source: CoinGecko
BTC price chart. Source: CoinGecko

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ETH price

ETH briefly reached over $1,600 on Monday, October 31, and traded above $1,550 until dipping on Wednesday, November 2. The next day brought a 7-day low of $1,508.91, and the price topped out at $1,659.61 on Friday, November 4. Then, in sync with BTC, ETH stayed above $1,600 until Monday, November 7.

The US jobs report pushed ETH to its highest level since mid-September. It has outperformed BTC over the past 30 days, with a 3x difference in the past two weeks. The absence of selling pressure from miners, deflation (negative supply growth), and a 99.9% drop in energy consumption have improved its fundamentals. Vitalik Buterin's tweet unveiling a new Ethereum roadmap stage — The Scourge — did not seem to impact the price.

As of now, ETH is trading at $1,590.49, with a 24-hour loss of -1.1% and no 7-day change.

ETH price chart. Source: CoinGecko
ETH price chart. Source: CoinGecko

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XRP price

XRP spent four days trading tightly with a few jumps above $0.46 and a 7-day low of $0.449949 on Thursday, November 3. On Friday, November 4, it rocketed to $0.50 and stayed above $0.48 through the weekend, with a 7-day high of $0.502058 on Saturday, November 5. Monday, November 7, brought it down along with BTC and ETH.

Last week, the SEC filed a motion to extend the deadline for filing all reply briefs to November 30. On Friday, November 4, CEO Brad Garlinghouse announced that twelve firms, including Coinbase, had joined Ripple's legal fight via a process that lets parties not directly involved in the case testify and offer feedback. According to the SEC's motion, the deadline for filing additional amicus briefs is November 11.

As of now, XRP is trading at $0.472140, with a 24-hour drop of -3.1% and a 7-day climb of 3.2%.

XRP price chart. Source: CoinGecko
XRP price chart. Source: CoinGecko

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Cryptocurrency news

US jobs report pushes BTC and ETH to seven-week highs

On Friday, November 4, new data from the US Labor Department drove crypto and stocks up. BTC and ETH surged past $21,000 and $1,600, respectively, for the first time since September. While BTC hit a seven-week high of $21,287, Ether forged ahead, gaining roughly 7% in one day.

The jobs growth data had a positive effect on the crypto top 20. All digital assets were in the green with the only exception. The news of Twitter's changing crypto plans cut DOGE's rally. Yet the meme coin is still 65% up over the past seven days.

Meanwhile, MATIC reached a 6-month high of $1.15 as its rally gathered speed. Friday's hike followed Meta's decision to provide Instagrammers with its first-ever end-to-end NFT toolkit. It will allow them to mint digital collectibles and sell them on or off the platform.

Although crypto continued to trail US stocks, digital assets jumped higher than equities — on Friday, the Nasdaq, the S&P 500, and the Dow Jones Industrial Average closed less than 1.5% higher. Meanwhile, The CoinDesk Market Index showed a nearly 5% boost in the market cap-weighted performance.

Interpreting new jobs data

The jobs report was a mixed bag — the 261,000 jobs added in October contrasted with a higher-than-expected unemployment increase (by 0.2% to 3.7%). Nevertheless, this data stoked interest in riskier assets and hopes of a softer Fed rate hike in December and.

Danny Blanchflower, Bruce V. Rauner Professor of Economics at Dartmouth, predicted rate cuts as "We are now in a position... to expect the Fed to go into full  gear as the labor market is set to crash." In the same vein, Oanda's senior market analyst Edward Moya, wrote, "a slower pace of tightening still seems in the cards for the Fed, and that should provide some short-term support for cryptos."

On November 2, the Fed implemented another 75-basis point increase, resulting in a benchmark rate between 3.75% and 4%. However, the FOMC (Federal Open Market Committee (FOMC) has hinted at easing, saying it would monitor "lags" in the effects of its "cumulative tightening" on economic activity and inflation.

CBDCs may reduce FX transaction times to under 10 seconds

The Federal Reserve Bank of New York has completed an experiment to establish the benefits of wholesale CBDCs (central bank digital currencies) in terms of scalability and risk. According to its results, distributed ledger technology may substantially accelerate exchange transactions.

This research effort — Project Cedar — was launched by the institution's New York Innovation Center (NYIC). It has shown a dramatic potential change to FX transaction times — from two days to under ten seconds.

The official report published on Friday, November 4, provides some general facts without detailing the methodology.

  • The test involved an undisclosed permissioned blockchain network and Rust-based programming.
  • The participants used individual homogenous ledgers instead of a single distributed ledger.
  • Both sides of the transactions were settled simultaneously.
  • In the future, participants will run different networks to test for cross-chain compatibility.

Michelle Neal, the head of the markets group at the NY Fed, commented on the results in a speech at the Singapore Fintech Festival. "This indicates that a modular ecosystem of ledgers has the potential for continued scalability, and that distributed ledger technology could enable settlement times well below the current industry standard of two days, with the added guarantee of atomic settlement," she said.

Prospects of CBDCs in North America

The Fed is still hesitant about launching a CBDC — the officials have made it clear they want to wait until Congress authorizes a digital dollar. Meanwhile, the government of America's neighbor to the North intends to consult stakeholders on crypto, stablecoins, and CBDCs. The "2022 Fall Economic Statement," a fiscal update to Canada's yearly budget published on November 3, comes with a series of targeted consultations on "addressing the digitalization of money." The public may also submit their comments.

The consultations will address concerns about the risks of cryptoassets and monetary digitization, which are "transforming financial systems in Canada and around the world," while Canada's financial system regulation "needs to keep pace." The 2022 budget mentions a "financial sector legislative review" focused on digital money, the stability and security of the financial sector, and the "potential need" for a Canadian CBDC.

The new statement highlights illicit uses of crypto, including sanctions avoidance, suggesting that digitalization "poses a challenge to democratic institutions around the world." In early 2022, protesters against COVID-19 restrictions turned to crypto fundraising after getting blocked on conventional platforms. Invoking the Emergencies Act, Prime Minister Justin Trudeau ordered a freeze on the protesters' bank accounts and cryptoassets.