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The crypto market is deep in the green this Wednesday evening. Many prices are in the positive territory – a welcome change after several red weeks. Those hoping to buy bitcoin at a lower price might be a bit disappointed. But investors who still had open positions are finally getting some breathing room.
The industry is wondering what to attribute this to. There seems to be quite a bit of momentum behind this move, with less leverage and more serious buyers. Many fingers point to macroeconomic data for the current rise. But data, such as lower unemployment, actually works against the market. Below you can read what the real fuel is that drives the crypto market engine.
Markets in the Plus Ahead of Thanksgiving #
Tomorrow is Thanksgiving in the United States. On that day, financial markets (except the crypto market) are closed and business people are at home with their families at the kitchen table. Therefore, everything must happen today, and that is visible. Wall Street is ecstatic, with many tech stocks suddenly in the positive.
Large tech stocks such as Nvidia, Dell and Oracle have managed to shake off concerns about a possible bubble for now. New investments and strong profit margins have regained some confidence, and that spills over to other markets.
The crypto market seems to enjoy the same positive sentiment, and is up three percent. Market leader bitcoin is average and also climbs three percent. BNB and solana outperform this, both rising four percent.
Greater Chance of Rate Cut #
An equally large, if not larger, catalyst playing a role across the market is the upcoming interest rate decision by the Federal Reserve. All eyes are on December 10, when the central bank of the United States makes its decision. 83 percent of investors expect a rate cut, which usually acts as a boost for the market and increases investments in risky assets such as cryptocurrencies.
However, not all signals are green. Today’s announcement of jobless claims is pointed to by many as the reason for today’s rise, but in fact it turned out negative. Jobless claims are the applications for benefits when one is unemployed. This fell by 6,000 to 216,000 last week. It means that the labor market is doing better than expected, which makes an economic stimulus such as a rate cut less necessary.
So the jobless claims do not seem to be a reason for a rate cut. Fortunately for investors, there are other factors that increase their chances. The number of people already receiving benefits has risen and the cost of living is also going up. Prices of other products have risen less sharply than expected, implying that inflation is not as strong anymore. These are all factors for a potential rate cut.
"Nvidia has removed some short-term fears. Since then, the Fed has made some more conservative statements, mainly the Fed governor of New York, and those statements signal a potential rate cut in December which now seems to be pushing the markets up."
— Matthew Keator, managing partner of Keator Group, in a conversation with Reuters
Zooming In on the Rising Crypto Market #
If we zoom in further and look specifically at the crypto market again, there is even more support from Wall Street. The crypto exchange-traded funds (ETFs) attracted quite a bit of capital yesterday, after a volatile but red period. The bitcoin ETFs attracted €111 million in investments, and the ethereum ETFs added €68 million.
In conclusion: the crypto market does not seem to be rising so much because of today’s jobless claims release. It is more of a reaction to a busy and positive trading day, ahead of Thanksgiving. Broader economic data and sentiment point to a rate cut in December, and that gives investors confidence. Tech stocks are reacting strongly to this now, and the crypto market also benefits.