Bitcoin and other major cryptocurrencies are likely to follow the stock market’s reaction to a crucial US jobs report expected later on Friday. The growing short-term correlation between digital assets and equities suggests that movements in crypto may mirror those of traditional markets.
Strong Link Between Crypto and Stocks
Recent data indicates that a 30-day correlation coefficient between the top 100 digital assets and MSCI’s world share index has risen to 0.60, one of the highest levels in the past two years. A coefficient of 1 signifies that the assets move in perfect sync, while -1 indicates they move in opposite directions.
Investors are eagerly awaiting the employment data, as it may shed light on whether the US economy is facing a slowdown. The report is also crucial for gauging the Federal Reserve’s future interest-rate cuts. A weaker-than-expected jobs report last month triggered global market volatility, causing a downturn in the crypto market.
Bitcoin’s Sensitivity to Macroeconomic Events
“Bitcoin has been reacting to macroeconomic events in a manner highly correlated with equities,” noted Benjamin Celermajer, co-chief investment officer at Magnet Capital. He added that market sentiment has been “quite poor” over the last two weeks, and identified $55,000 as a key support level for Bitcoin.
Bitcoin’s Current Position
As of 12:30 p.m. in Singapore on Friday, Bitcoin had edged up 1% to $56,653, still about $17,000 below its record high from March. Other digital assets, including Ether and Solana, also saw slight increases. Meanwhile, US equity futures fluctuated, signaling a cautious mood ahead of the August payroll data.
Earlier in the year, Bitcoin saw a record-breaking rally driven by inflows into US spot-Bitcoin exchange-traded funds (ETFs). However, the rally fizzled out, and recent days have seen ETF outflows, reflecting a cooling of the bullish sentiment.
Market Expectations for the Jobs Report
“The key will lie in the details of tonight’s jobs report,” said Cici Lu McCalman, founder of blockchain consultancy Venn Link Partners. She cautioned that strong data could weaken expectations for Fed rate cuts.
Looser monetary policy generally supports speculative assets like cryptocurrencies. Economists predict that the upcoming jobs report will show an increase in hiring and a slight drop in unemployment, signaling stabilization after the July report spurred growth concerns.
