A mild crypto rally is underway, with Bitcoin hovering around $109,000 and top altcoins like MemeCore, Virtuals Protocol, OKB, Cronos, and Ethena being some of the top gainers.
Crypto Rally Happens Ahead of NFP Data
The main reason behind the ongoing crypto market rally is that traders are anticipating the August non-farm payrolls (NFP) data scheduled for Friday this week.
These are important macro numbers because they will shed light on the state of the American economy and provide the clearest hint on what the Federal Reserve will do in the next meeting later this month.
There are signs that the labor market will be weak as a vacancies report showed on Tuesday. This report showed that job vacancies or openings plunged in July, confirming the view that the labor market is softening.
Economists expect the report to show that the economy created fewer than 100,000 jobs in August, while the unemployment rate climbed to 4.3% or 4.4% in August.
A weak jobs report would be beneficial for the crypto market, as it would increase the likelihood that the bank will cut interest rates in the upcoming meeting.
In a CNBC interview, Christopher Waller, Fed governor and potential chair, noted that the bank should consider delivering more cuts this year. Cryptocurrencies thrive when the Fed is cutting interest rates.
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Crypto Surge Happens Amid Threats to Fed Independence
Bitcoin, altcoins, and gold are going up amid threats to the Federal Reserve’s independence. Donald Trump has considered firing Jerome Powell several times this year.
And recently, he found a low-hanging fruit on Lisa Cook, a Fed Governor appointed by Joe Biden. He has fired her, accusing her of mortgage crimes in a bid to fill her seat with an ally. She has filed a lawsuit to stop her firing. In a statement, a JP Morgan analyst said:
“We believe any potential weakening of the US Federal Reserve’s independence could have significant implications for long-term gold prices.”
While his view was on gold prices, the same may apply to the crypto market since Bitcoin is seen as digital gold.
However, as we have seen in the past, the ongoing crypto market rally could turn out to be a dead cat bounce (DCB). A DCB is a brief crypto comeback that often results in a downward trend.
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