Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), and Dogecoin (CRYPTO: DOGE) witnessed a notable uptrend in trading on Friday following a week of downward trends.
By 3 p.m. ET, Bitcoin had surged by 4.1% compared to the previous day’s stock market close, Ethereum had risen by 2.6%, and Dogecoin had recorded a 5.6% increase. This positive momentum was largely attributed to a singular piece of information.
Impact of Unemployment Data on Crypto Market The surge in cryptocurrency values coincided with the release of the U.S. Labor Department’s April 2024 jobs report. According to the report, the U.S. added 175,000 jobs in the previous month, resulting in a slight increase in the unemployment rate to 3.9%.
Crypto Bitcoin (Ethereum, and Dogecoin) Market
Economists had anticipated the addition of 235,000 new jobs and an unemployment rate of 3.8%. Despite the possibility of data revisions, market reactions often hinge on the initial report, as was evident in the crypto market’s response mere seconds after the report’s release.
Does Unemployment Affect Crypto? Many market participants speculate that a deteriorating economy could prompt the Federal Reserve to expedite rate cuts. While current projections suggest a rate cut in September, this may not materialize if inflation remains high.
Maintaining higher rates during economic downturns is a balancing act, as lower rates can stimulate economic activity. However, the impact of rates on cryptocurrencies remains questionable, with lower rates generally not having a fundamental impact on the crypto market.
Potential Impact of Higher Rates on Dogecoin While Bitcoin and Ethereum are established as digital gold and a utility blockchain, respectively, Dogecoin’s status as a meme coin could be severely impacted by stagnant rates and a weakening economy. As a meme coin with limited utility, Dogecoin’s appeal may diminish if investors have fewer funds for speculative assets.
This volatility is characteristic of the crypto market, underscoring the notion that the meme that propelled Dogecoin in 2020 may not hold much relevance in the future.
Crypto Performance in 2024
Exercise Caution in the Crypto Market Despite the crypto market’s impressive performance in 2024 amid rising interest rates and economic uncertainties, recent developments indicate a potential slowdown. Factors such as the approval of Bitcoin exchange-traded funds (ETFs) in the U.S. have provided tailwinds for the market, but these may be waning.
Considering the diminishing utility of cryptocurrencies, particularly in light of Bitcoin’s increasing cost post-halving and Ethereum’s questionable cost-effectiveness, it may be prudent to exercise caution in the market. Dogecoin, with its limited utility and reliance on meme status, could be particularly vulnerable to market corrections.
In conclusion, the current economic climate and actions of the Federal Reserve continue to exert significant influence on the crypto market, emphasizing the need for a nuanced approach to investing in digital assets.
