Today, the US Bureau of Labor Statistics (BLS) released disappointing figures for employment growth in November, a development that could potentially affect spending cut decisions made by Reserve policymakers. federal.
The BLS reported that the non-farm payroll in the United States increased by 210,000 in November, a figure well below the increase of 573,000 jobs predicted by a Dow Jones survey.
If these government officials choose to cut stimulus more slowly due to poor economic data, could those actions provide favorable winds for bitcoin prices?
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
They might, according to Ben McMillan, CIO at IDX Digital Assets, who stressed the key importance of central bank policy.
“Especially since bitcoin is emerging from a recent rally on the back of a broader enthusiasm around adoption (namely the launch of Bitcoin futures ETFs), all eyes are now on the Fed and in particular how aggressive the decrease in asset purchases could be, ”he said. .
“Additionally, bitcoin is increasingly competing for asset flows in Ethereum, DeFi, and Metaverse related investments, so a less aggressive reduction in the stimulus would likely provide a welcome tailwind for the price of bitcoin.”
Peter C. Earle, who is an economist at the American Institute for Economic Research and also writes for Bitcoin Magazine, also weighed in on the situation.
“Tapering is the gateway to the normalization of interest rates,” he noted.
“The Fed cannot start raising rates (a contractionary policy move), either to gain political space or to fight inflation, until it ends the purchase of securities on the open market (an expansionary policy measure). “
“If the Fed decided to postpone the cut in order to continue supporting a weakening recovery, that would be a boon to crypto assets,” Earle said.
“In many ways, Bitcoin and other cryptocurrencies have become complements to gold, silver, and other traditional inflation hedges rather than a substitute medium of exchange.”
“Further quantitative easing would likely exacerbate the already sizable inflationary project, drawing more investors and institutions into the crypto space,” he said.
Dylan LeClair, head of market research for Bitcoin Magazine, also offered his take on the matter.
“Markets responded positively at all levels after the jobs report this morning, but the rally was very short lived,” he noted.
“Stocks and Bitcoin quickly resumed selling, and the VIX (S&P 500 Volatility Index) hit its highest level since January.”
“Liquidity in all asset classes is being withdrawn as investors prepare for a possible Fed slowdown,” LeClair said.
“During liquidity events, correlations between asset classes tend towards 1.0, and recent market movements are what the start of a deleveraging event looks like.”
He also explained how global economic conditions could prove beneficial for the world’s most valuable digital currency in terms of market value.
“It is important to remember that with very negative real rates, every asset on the planet is functionally part of the global ‘everything bubble’ and every investor seeks to protect and increase their purchasing power against degradation. central bank monetary policy as well as against the counterattack. party risk associated with the deflationary deleveraging that accompanies a debt-engulfed financial system, ”noted LeClair.
“In that sense, Bitcoin is the best asset to own either way. This is due to the absolute scarcity associated with the property rights built into the protocol to eliminate the threat of counterparty risk, ”he said.
Disclosure: I own bitcoin, bitcoin cash, litecoin, ether, EOS, and soil.