Bitcoin, Ether Hold Steady as Investors Shrug Off Upbeat Economic Data, Rekindled Inflationary Concerns

• Initial jobless claims drop sharply, spurring inflationary concerns.
• Bitcoin, Ether, and other risk markets were relatively unfazed by the continued strength of the jobs market..

Crypto markets were unfazed by economic data showing stubbornly tight labor markets and unexpectedly strong, quarterly economic growth.

Bitcoin was trading at about $30,500, up more than 1% over the past 24 hours. Ether and most other major cryptos were slightly in positive territory. Inflationary concerns have weighed heavily on investors who fret that central banks will have to raise interest rates again, casting the economy into recession.

Today’s data serves as the front-end rationale to what the FOMC has already stated, but simply delivered after the fact.

Economic growth

The U.S. economy expanded 2% in the first quarter, surpassing expectations of 1.4% growth. Meanwhile, initial jobless claims for the week ending June 24 fell by 26,000 to 239,000, the largest decline since October 2021 and below expectations of 265,000.

The data seemed to offer the latest evidence for the Federal Open Market Committee (FOMC) to renew its monetary hawkishness next month after halting rate hikes in early June.

The FOMC increased its peak 2023 interest rate projection to 5.6% from 5.1%, suggesting the group will boost rates two more times this year. And in recent remarks, Fed Chair Jerome Powell has stated that the FOMC may hike interest rates further.

Also, while initial jobless claims were lower than expected, the four-week average of 257,500 was above consensus forecasts of 251,270. Moving averages often serve to smooth out fluctuations that may occur with individual observations.

Initial jobless claims have generally been pushing higher, which suggests the type of loosening in labor markets for which the FOMC has been yearning.

Asset markets unfazed

Risk markets across the board appear to be confirming what they’ve already baked into their projections. The Dow Jones Industrial Average (DJIA), Nasdaq Composite and S&P 500 were all trading slightly higher on Thursday, shrugging off the news as well.

Bitcoin has settled into a sideways trading pattern for the past week, teetering above $30,000 support.

BTC’s Visible Range Volume Profile with an April 2023 start shows the formation of a “high volume node” near $30,000. High volume nodes indicate areas of significant price agreement, often coinciding with strong support and/or resistance levels.

Ether has settled into a similar flat trading pattern, but with less momentum than BTC. Where BTC is riding support, ETH appears to be meeting resistance near $1,900. The difference in performance indicates increased rotation into BTC relative to ETH, spurred largely by the potential for greater institutional involvement.