(Kitco News) – Bitcoin (BTC) and the broader crypto market trended lower in early trading on Thursday after the latest jobless claims report came in below expectations.
The U.S. economy saw 215,000 new claims for unemployment insurance, coming in below the 220,000 expected and 222,0000 the week prior.
While fewer people losing their jobs is considered a good thing by many, in the eyes of investors, it's a sign that the economy has gotten stronger, which diminishes the chances of an interest rate cut coming anytime soon.
Adding to the concern of ‘higher for longer interest rates’ was Wednesday's release of the minutes from the most recent Federal Open Market Committee (FOMC) meeting; multiple Fed officials indicated they were ready to keep rates elevated for as long as it takes to bring inflation down, with some even signaling a willingness to hike rates.
Both the DXY and U.S. 10-year Treasury yield spiked higher on Thursday at the threat of interest rate hikes, which put pressure on all financial markets, from cryptos to gold and silver.
“Bitcoin has pulled back by over 3% towards an intraday support level of 67,700, as anticipated,” said analysts at Secure Digital Markets. “Should the support around 67,000 fail to hold, we could see a decline towards 65,000, which aligns with the 50-day moving average.”
BTC/USD Chart by TradingView
But behind the scenes, the outlook for BTC from an exchange-traded fund (ETF) perspective continues to improve as U.S. ETF “holdings have reached a new record of over 850,000 BTC in custody, surpassing the previous high of 845,000 BTC from early April,” the analysts said. “Yesterday alone, the market saw another influx totaling $154 million.”
The main story capturing the attention of crypto watchers is spot Ethereum (ETH) ETFs, with industry experts now expecting imminent approval by the Securities and Exchange Commission (SEC) after most analysts gave the changes of approval less than 25% as recently as Monday.
“The potential approval of an Ether spot ETF would be groundbreaking, as it would mark the first non-bitcoin digital asset to be classified as a commodity,” Secure Digital Markets said. “This raises the possibility that Solana could follow a similar path. While the ETH spot ETF 19b-4 filings are likely to receive approval this week, the S-1 filings are not expected to be effective for several weeks to months, indicating no ETH spot vehicles until this summer.”
As a result of the hype and focus on Ether, “ETH has outperformed BTC by 5% over the past 24 hours,” they added.
ETHBTC Chart by TradingView
While crypto prices are struggling in the face of mounting economic headwinds, the industry has seen a streak of positive developments, with the latest being the approval of the Financial Innovation and Technology for the 21st Century Act (FIT21) in the U.S. House of Representatives.
“The crypto industry achieved its most significant U.S. policy victory on Wednesday when the House of Representatives passed a comprehensive bill to regulate digital asset markets with a 279-136 vote, gaining bipartisan support,” Secure Digital Markets said. “FIT21 marks the first major crypto bill to clear one of Congress's chambers. The bill now heads to the U.S. Senate, where its future remains uncertain due to the lack of a counterpart bill.”
As for the stock market, “stock futures rose on Thursday as Wall Street digested the latest quarterly results from market leader Nvidia,” the analysts noted. “Nvidia shares soared 6% in extended trading, surpassing $1,000 for the first time, reflecting strong AI demand as its revenue more than tripled in the fiscal first quarter, with its data center business growing by over 400% year-over-year.”
But the positive developments for Nvidia have been overshadowed by comments from JPMorgan Chase Chair and CEO Jamie Dimon, who cautioned that a "hard landing" for the U.S. economy cannot be ruled out.
“He told CNBC that the worst outcome could be a ‘stagflation’ scenario, characterized by rising inflation and slowing growth amid high unemployment,” the analyst said. “Dimon also noted that interest rates might still increase ‘a little bit.’”
At the time of writing, Bitcoin trades at $67,960, a decrease of 3.5% on the 24-hour chart. The S&P and Nasdaq are up 0.27% and 0.85%, respectively, while the Dow is down 0.64%.
