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Bitcoin Dips as U.S. November Job Growth of 199K Tops Estimates
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This episode was hosted by Noelle Acheson. “Markets Daily” is executive produced by Jared Schwartz and produced and edited by Eleanor Pahl. All original music by Doc Blust and Colin Mealey.
Audio Transcript: This transcript has not been edited and may contain errors.
It’s Friday, December 8th, 2023 and this is Markets Daily from CoinDesk. My name is Noelle Acheson, CoinDesk collaborator and author of the Crypto is Macro Now newsletter on Substack. On today’s show we’re talking about market moves, employment data, retail interest and more. So you don’t miss an episode, be sure to follow the podcast on your platform of choice, and turn on notifications. And just a reminder, CoinDesk is a news source and does not provide investment advice.
Now, a markets roundup.
Crypto markets seem to be holding range-bound, despite sharp moves in macro markets – I’ll get to those in a moment. According to CoinDesk Indices, a 9 a.m. Eastern time this morning, bitcoin was trading up seven tenths of a percent over past 24 hours, at 43,600 dollars. Ether is outperforming today – earlier, it was up 4.3%, trading at 2,345 dollars.
Elsewhere, there are some crazy moves. Cardano is up almost 20%, Solana and Chainlink are up 14%, and Polkadot is up 8%.
In macro matters, I said on Monday that it was going to be a big week for jobs market data, and sure enough, today we got the official employment growth and unemployment rate. This is a key data point that the Federal Reserve watches, because consumption is about 70% of the U.S. economy, and consumption and jobs are very closely tied. Also, remember that the Fed’s second mandate, after stable prices, is maximum employment.
Anyway, to set the stage. On Tuesday, we got job opening numbers in the U.S. for October. These came in much lower than expected, and lower than September’s figures. On Wednesday, we got the ADP non-farm employment change for November. Forecasts were for a notably higher jump than in October. But in the end the increase was lower than that of the previous month. Jobs were created, but not nearly as much as expected.
Yesterday, we got data on U.S. job cuts. This showed that many more people were laid off in November than in October. And the four-week average of jobless claims ticked up slightly. All that suggested that, today, we would get further signs that the jobs market was easing.
We didn’t get that.
Forecasts were for 180,000 jobs to be added to the non-farm payrolls, up from 150,000 in October. The actual number came in at almost 200,000. The month-on-month increase in average hourly earnings actually doubled in November – from 0.2% in October to 0.4%. And the unemployment rate for the month of November dropped, from 3.9% to 3.7%.
This is sending markets into a bit of a tailspin as it pretty much takes a rate cut in the U.S. within the next few months off the table. You may remember that markets have been pricing in the first cut in or before May. Yet the Fed has often said that it needs signs of a cooling jobs market to feel confident that the battle against inflation has been won.
It is likely to take this month’s readings as a sign that the cooling is not yet here, and so next week when the FOMC meets to decide on interest rates, we are likely to get more language stressing that the Fed will hike again if necessary.
Unsurprisingly, bond yields jumped when the news came out, with the U.S. 10-year yield back above 4.2%.
In stocks, U.S. markets were feeling good yesterday. The S&P 500 climbed eight tenths of a percent, Nasdaq jumped 1.4% and the Dow Jones added 0.2%. Futures today are pointing to the market opening lower.
In Europe, yesterday the main indices were flat to slightly down. So far today, sentiment looks more positive, with the Eurostoxx 600 up half a percent earlier this morning.
In Asia, Japan’s Nikkei index dropped 1.7% as Bank of Japan Governor Kazuo Ueda hinted at an exit from the negative interest rate policy. This would mean that Japan would be raising rates while the rest of the developed world is lowering. The Shanghai Composite and the Hang Seng were flat.
In commodities, oil prices are climbing, but are on course for the longest weekly losing streak since 2018. This morning, the Brent crude benchmark was up 1.7%, trading at 76 dollars a barrel. Over the week, it is down over 10%.
Gold is heading lower after the employment data as yields rise – earlier today, it was trading down four tenths of a percent, at 2,020 dollars.
Stay with us – after the break we look signs of retail interest in crypto markets.
Welcome back!
As usual on Fridays, today I’m going to pick a reader question to address – thanks again for sending them in, I do love knowing what you’re interested in hearing more about.
Today’s question is to do with retail interest in crypto – are there signs it is picking up?
The short answer is, no, not really. There are no indications that we are in the retail interest phase of this crypto rally, and plenty of indications that suggest it hasn’t started yet.
You’re probably wondering what indicators one would even look for to detect the beginning of a retail interest surge, and that’s an excellent question – there isn’t any one metric that would say “now”, but here are some of the clues I keep an eye on.
One is a series of on-chain indicators.
For instance, bitcoin’s on-chain volume, in other words the number of transactions, relative to address growth. If volume is going up, and the number of addresses is also growing fast, that’s a sign retail interest is picking up.
We’re not seeing that. Bitcoin’s on-chain volume is growing fast, while the number of daily new addresses isn’t, nor is the number of daily active addresses.
I also watch Google search activity – you can monitor this through their Google trends function. In previous cycles, when the upswing was really getting under way and retail investors were getting interested, you saw spikes in Google searches for “bitcoin”.
We’re not seeing that now.
There are signs that interest has picked up over the past week, but it’s still roughly at October levels, and below where it was in March, according to the Google Trends index.
Another fun indicator to watch is where the Coinbase app ranks in the IOS app store. As market peaks approached in 2017 and 2021, Coinbase climbed to the number one position.
Now, it is climbing, and has reportedly jumped 130 positions over the past three weeks. But it’s still only at rank 316.
Why is this significant? Why do we care about whether or not retail is piling into crypto?
Because usually, and unfortunately, when retail excitement reaches a fever pitch, when all your friends are starting to invest in any cryptocurrency they can think of, and when on the subway or in the coffee bar you hear people around you talking about how much profit they made the day before…
Generally, that suggests the peak of the cycle is near.
This is not just in crypto, it applies to stocks as well. An old-fashioned adage in stock market investing is that, when your shoe shine boy is giving you stock tips, it’s time to sell. Now, of course, this adage can be self-fulfilling. When large investors hear a lot of chatter about crypto or stocks or whatever, they take that as a sell signal, that the asset’s price is getting beyond its fundamentals, and they sell, which brings prices down.
In sum, it looks like retail interest in crypto markets is starting to pick up. But it is far from hectic yet. Things can change fast, though, and I hope I’ve given you an idea of some things to keep an eye on.
Stepping back for a moment, it’s worth remembering that crypto was created for retail participants - it was not designed for the type of investor that can decide market tops and bottoms. But another beautiful feature of crypto markets is that they are open to anyone, anywhere. Large investor or small. And any pick-up in retail interest, whether it’s timed well or not, is a sign that market awareness is spreading - let’s just hope that investors don’t get too hurt when the cycle eventually turns.
