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| By Sam Blumenfeld |
Bitcoin (BTC, Tech/Adoption Grade “A-”) and other cryptos are trading mostly flat today after December’s jobs report showed that nonfarm payrolls rose by 223,000 for the month.
Job growth was greater than expected, but the market was pleased to see wage growth come in lower than predicted. Lower wage growth could point to lower inflation in the future, which is the Federal Reserve’s top priority.
While stocks responded positively, the crypto market has mostly traded sideways since mid-November. The market could continue trading in a tight range until a major development occurs.
Bitcoin is about even while it hovers near $16,800. The market leader has moved very little over the past two weeks, mostly holding between $16,300 and $16,900.
As long as it maintains itself above $15,500, it will continue trading with neutral direction and avoid establishing a new bear market low.
Bitcoin overtook its 21-day moving average during the last three trading days, but it means very little considering how trading has flattened out. The asset still lacks short-term momentum, but the important level to watch is $15,500.
On a positive note, overtaking $21,400 — where BTC traded pre-FTX collapse — could signal the end of crypto winter.
Here’s Bitcoin’s price in U.S. dollars via Coinbase Global (COIN):
Ethereum (ETH, Tech/Adoption Grade “B”) is in a similar position and has mostly traded sideways.
However, it’s tried to reestablish momentum over the past few trading days.
ETH is up about 1% during today’s trading to $1,265. The asset is almost completely flat for the month, but it’s moved 5% higher this week.
Ethereum overtook its 21-day moving average on Tuesday, but the development is less important than keeping distance from its bear market low of $880. It has a significant buffer for now, and it would bode well for altcoins if the second-largest cryptocurrency by market capitalization sustained its neutral direction.
Here’s Ethereum’s price in U.S. dollars via Coinbase:
Moving forward, in 2023, multiple exciting upgrades are expected. Ethereum developers expect to enable staked Ether withdrawals by March, which will allow investors to cash out their rewards.
Another upgrade later in the year could lead to improvements in the network’s scalability through sharding — a process that splits up the network to reduce traffic.
Notable News, Notes and Ratings
- The same eight cryptocurrencies I previously mentioned still hold “Buy" ratings of B- or better:
1. Bitcoin (BTC, Overall Grade “B”)
2. Chainlink (LINK, Overall Grade “B”)
3. OKB (OKB, Overall Grade “B-”)
4. Polygon (MATIC, Overall Grade “B”)
5. Cardano (ADA, Overall Grade “B-”)
6. Ethereum (ETH, Overall Grade “B-”)
7. Litecoin (LTC, Overall Grade “B-”)
8. Uniswap (UNI, Overall Grade “B-”)
- The FTX fallout may not be over. Clawback provisions could compel businesses and investors to pay back billions of dollars distributed by FTX before it declared bankruptcy. The sudden payback requirement could have negative impacts on crypto company liquidity.
- A judge ruled that crypto depositors on Celsius Network’s Earn program forfeited their custody and legal rights to $4.2 billion of deposited funds, thereby granting ownership to the estate instead of users.
This highlights the importance of self-custody to maintain control of crypto assets.
- A report from CoinShares found that digital asset inflows from Bitcoin and other investment products totaled $433 million last year. The figure is the lowest since the bear market in 2018, but investors were still demanding exposure to the asset class despite the downturn during crypto winter.
- The U.S. Congress resumed on Jan. 3, and over 100 crypto lobbyists are prepared to push for a constructive regulatory framework that won’t compromise innovation or adoption. Crypto is in the spotlight after the FTX collapse, but regulators will likely have to wait out court and congressional hearings.
What’s Next
The crypto market continues trading sideways as investors weigh macroeconomic developments and lawmakers’ calls for regulations.
Often, the market reacts negatively to strong jobs data because a tight labor market allows the central bank to keep rates higher for longer. However, data showing signs of cooling inflation should have a positive impact on asset prices, since investors expect the Fed to pivot when it thinks inflation is under control.
As for incoming regulations, they should have little impact on long-term crypto prices or adoption. Regulations are inevitable for the space and are required to achieve mainstream usage.
Regardless, investors should see greater regulatory clarity after FTX’s court and congressional hearings are over.
2022 was a rough year for crypto, but prices should begin reflecting the improving fundamentals once the dust settles.
We are eagerly anticipating all the innovative developments 2023 holds, and hope you are too.
Best,
Sam
