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- Bad news from the US unemployment data resulted in a surge in the price of the two leading digital assets.
- Institutions continue to invest in the crypto market, accounting for over 83 percent of the total trading volume on Coinbase.
Following ‘poor’ US unemployment data in the recently released report, there was a noticeable spike in the price of the top two digital assets (Bitcoin and Ethereum). The price spike further caused the total market cap of the crypto market to surpass the $1 trillion level again.
A few hours after the release of the unemployment data, BTC’s price surged by nearly 5 percent while ETH rose by 8.5 percent. According to the latest data, BTC currently trades at $21,277, up by 3.26 percent in the last 24 hours.
Similarly, ETH is up 3.77 percent and trades at $1,641, according to the same data. It is the first time the leading digital asset would surpass the $21,000 level in two months. It is often logical to expect a decline in the value of the two leading risky financial assets during a worsening economy.
However, the reverse has been the case. The two leading risky financial assets made some gains off worse economic data. The only reasonable explanation is the paradox of good “bad” news. Based on the narratives of many industry analysts, the gains happened because the market expects the US Fed to reduce the pace of the rate hikes due to the rising unemployment data.
Nevertheless, the Fed might still revise its hawkish policy based on yesterday’s speech by Jerry Powell, the US Fed chairman. According to Powell, the Fed wants to focus on curbing inflation without aggressively increasing the inflation rate. Inflation in the US continues to rise, reaching a 40-year high.
The crypto market and traditional finance
Meanwhile, the crypto market continues to be attractive to institutional investors. Hence, there is unlikely to be a break in the tie between the crypto market and traditional finance. For example, last quarter’s earnings report from the top American crypto exchange, Coinbase, shows that institutional investors account for nearly 84 percent of the total trading volume on the exchange.
The exchange noted that the institution’s trading volume remained highest even though it was $58 billion less than the previous quarter’s total trading volume. It is also worth noting that Ethereum’s total trading volume on Coinbase has surpassed Bitcoin’s, and it only took 12 months for that to happen.
Our Q3’22 financial results are in.
Check out our letter to shareholders:https://t.co/JmThnye15x
— Coinbase (@coinbase) November 3, 2022
Apart from Dogecoin, the remaining top 20 cryptocurrencies traded in the green following the ‘poor’ US unemployment data. DOGE is down 2.6 percent after Twitter shelved its crypto wallet development plans. However, the meme-themed coin is still up 65 percent in the last week as it profited from musk’s Twitter takeover.
Like cryptos, US equities also soared in price following the US unemployment data release. According to the unemployment data, there were 261,000 additional jobs in October; a 0.2 percentage points increase in the unemployment rate.