As investors flocked to digital assets in the aftermath of positive US jobs statistics on Monday, Bitcoin served as the catalyst for a rally in other crypto tokens.
By mid-morning trading in London, the largest cryptocurrency by market value increased by as much as 4% above $24,000, and Ether increased by as much as 3% to around $1,770. After the robust payrolls data showed the world’s largest economy may avoid a severe landing even as the Federal Reserve tightens rapidly, the sector was boosted along with similar gains in European markets and US share futures.
Altcoins added to the sea of green, Bloomberg pricing data showed, with Solana’s SOL, Polkadot’s DOT and Avalanche’s AVAX all gaining more than 3% in the past 24 hours.
“Sentiment across the markets looks a little fragile this morning and yet crypto appears to have shrugged off Friday’s shock much more quickly,” said Craig Erlam, senior markets analyst at Oanda, in note to clients.
Bitcoin has its “sights set on $25,000 it seems”, he said, following its rally last week after a few difficult months of trading. “The momentum indicators will be fascinating here as the recovery appeared to be losing steam during the last ascent in late July.”
Bitcoin has lost more than 47% of its value so far this year due to a protracted bear market in cryptoassets, and it is still around 65% below its all-time high of $68,991 that it reached in November last year. The crypto market has struggled to make significant gains this summer after being knocked by a wave of business failures and the demise of the significant decentralized finance project Terra in May.
Despite crypto’s pitch to investors as a useful hedge against inflation, the prices of Bitcoin and other cryptocurrencies have become increasingly affected by traditional market drivers like monetary policy. Bitcoin maintains a strong relationship with indexes like the S&P 500 and the Nasdaq 100, with a correlation above 0.6 on Monday. A level of 1 would mean the two are trading in lock step, while 0 would mean they are not linked at all.
“With another 75 basis-point rate hike next month now the favoured outcome, although a lot can change in that time, it could be a nervy couple of days for investors ahead of Wednesday’s inflation report,” Erlam said.
