Key Points
- Bitcoin price rises as the US dollar weakens following an increase in jobless claims.
- Investors may shift capital from safer assets to riskier ones such as Bitcoin amid expectations of a Fed interest rate cut.
The US dollar’s performance has taken a hit due to a spike in unemployment claims, which has positively impacted the price of Bitcoin and equity markets.
Data from TradingView indicates that the U.S. Dollar Index (DXY), a measure of the dollar’s performance against major global currencies, saw a 0.45% drop from Thursday’s peak of 105.73 to 105.25.
Market Reactions
In the wake of the U.S. unemployment data release, the S&P 500 traded within 1% of its all-time high. By Thursday’s close, the Dow Jones had risen by 0.85%, the S&P 500 had gained 0.51%, and the Nasdaq Composite had increased by 0.27%. Concurrently, the price of Bitcoin saw a 2.5% increase over the past 24 hours, trading at $62,927 at 9:06 a.m. ET.
According to Aurelie Barthere, Principal Research Analyst at Nansen.ai, “U.S. rates seem to have peaked on April 30, with minus 20bps for the U.S. two-year yield, to price lower growth, the DXY is down 1% and Bitcoin is up 8% since then.”
Impact on Risk Assets
A lower DXY, combined with weaker employment data from the U.S., further suggests that the U.S. labor market is cooling off. This could potentially pressure the Federal Reserve to lower rates sooner. As a result, investors might be tempted to move capital from safer assets like bonds to riskier ones like equities and cryptocurrencies such as Bitcoin.
However, Barthere warns that a downturn in the dollar could also negatively affect credit markets and risk assets. “Investors should remain attentive to potential signs of greater growth weakness, which would not be positive for risk assets including crypto, as equities and credit are rich in terms of historical valuations and risk premia.”
The weekly jobless claims report from the U.S. Labor Department revealed that new claims for unemployment benefits reached their highest level in over eight months last week. This follows a disappointing U.S. jobs report last Friday, which showed that employers added only 175,000 jobs last month, falling short of the anticipated 243,000 increase.
Finally, the GM 30 Index, which represents a selection of the top 30 cryptocurrencies, has risen by 2.53% to 131.96 in the past 24 hours.
