Crypto Markets Analysis: Bitcoin, Ether Continue Surge Into February, but Jobs Data Raises Questions

The Federal Reserve must weigh the U.S.’ debt obligations while trying to tame inflation without sending the economy into a deep recession. Its next steps could have an impact on crypto markets.

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Bitcoin and ether finished another positive week, even as the stubbornly strong jobs market raised questions about the U.S. Federal Reserve’s next interest rate move.

The U.S. added a whopping 517,000 jobs in January, 98 higher than the prior month, and 172 higher than expectations. The unemployment rate fell to 3.4, while the labor force participation rate rose to 3.4.

Investors may view the robust job market negatively as it suggests the economy is not cooling as much as other economic data indicates, and may prompt the U.S. central bank to extend its current series of rate increases. Fed Chair Jerome Powell has repeatedly said taming inflation, which topped 9 at one point in 2022, remains a priority.

Central bankers must weigh the United States’ own interest obligations, along with recessionary concerns, as they mull additional changes to monetary policy that would staunch rising prices. The United States interest payments have increased 41 since the first quarter of 2022.

The options traditionally available to governments to manage debt obligations include raising taxes, reducing spending or increasing borrowing. The combination of these factors can send markets downward.

Traditional markets have been mixed, with the Dow Jones Industrial Average (DJIA) trading higher while the S&P 500 and tech-heavy Nasdaq composite declined today.

Fixed income markets appear cautious because the yield on the two-year Treasury note also rose on the day.

Derivatives markets appear to be pricing in higher interest rates for the first two quarters of 2023.

Crypto markets at least momentarily appear to be shrugging off the unsettling jobs numbers because many of the top names by market capitalization posted solid weekly gains.

Bitcoin (BTC) and ether (ETH) finished near the middle of the pack, rising 2 and 4, respectively, over the last seven days. ATOM and litecoin (LTC) led the way, up 12.3 and 11.5, respectively, while XMR and APT lagged the pack, down 3.9 and 4.3.