Cryptocurrencies Moved Higher Today after a Somewhat Perplexing Jobs Report

This morning's jobs report ultimately led to a slight increase in Treasury yields. Bitcoin, the world's largest cryptocurrency, hovered around $98,400

Bitcoin and other major cryptocurrencies moved higher on Friday after a somewhat perplexing jobs report this morning that ultimately led to a slight increase in Treasury yields.

As of 11 a.m. ET, a few of the largest gainers among the top 10 tokens included XRP, which rose nearly 8.5%, followed by Ethereum, which gained about 3.5% from the late afternoon yesterday. Dogecoin and Avalanche also traded higher, up 4.5% and 3%, respectively. Bitcoin, the world's largest cryptocurrency, hovered around $98,400.

The monthly jobs report often can impact the entire market, including stocks and cryptocurrencies, because it provides investors with important data about the health of the economy and offers clues about inflation and how the Federal Reserve might proceed with interest rates.

In January, the U.S. economy added 143,000 jobs on a seasonally adjusted basis, below the Dow Jones estimate of 169,000. However, the unemployment rate ticked lower to 4% and average hourly earnings rose 0.5% from the prior month, compared to 0.3% expected by economists. The U.S. Bureau of Labor Statistics also revised down the number of jobs added to the economy in the 12 months ending in March of 2024 by 589,000, a reminder that the data often changes, which is why investors should be cautious about reading too much into one report.

At first glance, the 143,000 jobs added to the economy suggested some softening in the labor market, which could be perceived as bullish by investors looking for the Federal Reserve to cut rates. However, the lower unemployment number and strong average hourly earnings growth says the opposite.

"The foundation of the labor market remains incredibly sturdy. Revisions to the past year's data may have rearranged a few rooms in the house, but they did not fundamentally change the structure," Cory Stahle, an economist at the Indeed Hiring Lab, wrote in a blog post after the report. "The data continue to give the Federal Reserve ample flexibility to take a measured approach to cutting rates as it engineers an economic soft landing."

The report didn't seem to change investors' minds about the trajectory of rate cuts. The majority of traders using 30-day futures to bet on the Fed's benchmark federal funds rate still see the earliest chance of a rate cut happening in June, with a slight majority only expecting one more rate cut in 2025. Keep in mind that these probabilities change daily.

In more token-specific news, Chicago's CBOE Exchange yesterday filed four applications to the Securities and Exchange Commission asking for permission to trade spot crypto exchange-traded funds (ETFs) for XRP. The four ETFs would come from WisdomTree, Bitwise, 21Shares, and Canary.

I find most of this recent jobs data to support a healthy labor market and Treasury yields are higher, so it's a bit confusing to see crypto reacting so positively. Usually, the sector benefits from lower yields. Perhaps the prior revisions are seen as reason to believe that the economy is not as strong as the numbers show, and that there could be more rate cuts on the horizon.

Ultimately, I like Ethereum as a long-term hold due to the widespread use of its network. XRP is intriguing due to its work with cross-border payments and several catalysts that could boost the token higher such as its own spot-crypto ETFs. However, due to its volatility, I'd recommend XRP as a smaller, speculative position. I currently have no interest in Dogecoin.