The price of bitcoin (BTC) hit $17,000 for the first time in 2023, rallying in stocks and bonds on the hope that the US Federal Reserve may slow down the pace of inflation.
The big economic event of the day was supposed to be the Bureau of Labor Statistics (BLS) reporting nonfarm payrolls at 8:30 a.m. ET, but the session actually started 90 minutes later when the ISM non-index output (also known as known). according to ISM services) for December fell sharply to 49.6 from 56.5 previously. Any number below 50 for this survey indicates economic contraction, and this is the first time the employment index has dipped below 50 since May 2020.
Digging deeper into the December report, we – ensure that the sub-index function of the new command – is assumed to be leading. indicator – fell 45.2 from the previous 56. Last week, the ISM manufacturing index for December came in at 48.4 for the second month in a row and in contraction territory.
The headline numbers from the December BLS jobs report beat expectations, with 223,000 jobs added more than the 200,000 expected and the unemployment rate of 3.5% more than the 3.7% expected.
US Job Growth Slows in December, Boosting Crypto Prices
This gain of 223,000 jobs, however, is a significant drop from the 300,000 forecast seen in the first half of 2022 and is the lowest number of jobs added since April 2021.
In addition, wage growth was weaker than expected, with average wages rising 0.3% in December versus forecasts of 0.4%. Annually, wages rose 4.6% over the forecast of 5.0%.
Stock and bond prices started to rise immediately after the ISM report and have not looked back. Within minutes of the close, the Nasdaq was down nearly 3% and the 10-year yield was down 16 points at 3.56%. Having been aggressive on rate hikes for most of 2022, the Fed backed off a bit in December, raising the benchmark federal funds rate by 50 basis points, from the previous move of 75 points.
Traders are raising bets now that the US central bank could raise rates by 25 basis points at its next monetary policy meeting in February.
Bitcoin’s rally took a while to start on Friday but it wasn’t dramatic, but the crypto managed to hit $17,000 for the first time in three weeks. Aside from the many problems facing bitcoin and the broader cryptocurrency industry, perhaps the most important headwind for the price is the aggressive Fed. To the extent that the Fed can tighten it, the bullish trend for crypto is likely to continue.