June 12, 2023
By Murtuza Merchant
The release of promising employment figures last Friday indicated a vibrant U.S. labor market, which surpassed financial forecasters’ anticipations with an impressive surge in nonfarm payrolls and a slight increase in joblessness.
The impact of these statistics on the future direction of digital asset markets, however, has sparked discussion among financial experts.
The writer of ‘NFT: From Zero to Hero’, Anndy Lian, considers the encouraging employment report as a possible impetus for global governments to reconsider their policies concerning digital currencies.
Lian believes that the flourishing crypto industry provides a compelling proposition for economic progress and technological innovation.
“Uplifting employment statistics might persuade governments to adopt a more amenable position towards cryptocurrencies,” Lian observed.
He, however, did not say how the better job data might affect the US government’s policies over crypto, given that the Securities and Exchange Commission (SEC) sued crypto exchange giants like Binance and Coinbase for possible violation of securities laws.
He praised the initiative of the Hong Kong administration in promoting the expansion of web3, blockchain, and the crypto industry, deeming it a positive indicator for the sector.
But this enthusiastic outlook is not universally endorsed.
Aaron Rafferty, a pivotal figure at StandardDAO, articulates a more guarded position.
Despite the ostensibly optimistic employment statistics, Rafferty highlighted that it doesn’t necessarily indicate a significant change in the economic predicament currently affecting worldwide markets.
He observed a substantial decline in investment in blockchain firms as investment companies pivoted toward AI technologies.
“Seeing as the trajectory of crypto assets and the blockchain sector has remained fairly stagnant over the past year, this report doesn’t suggest any notable shift in that direction,” Rafferty clarified.
Striking a balance between caution and optimism, Christopher Alexander, Chief Compliance Officer at Liberty Blockchain, noted that Bitcoin typically mirrors the movements of conventional markets, which have reacted positively to the employment report.
Nevertheless, Alexander warned that the persistent worry over an impending recession could discourage large-scale investors, restricting cash flow and impeding growth.
Meanwhile, the Blockchain Governance Council’s Founder, Raj Kapoor, highlighted the ongoing regulatory hurdles faced by crypto enterprises.
Kapoor suggested that encouraging employment data in isolation might not guarantee market expansion. He drew attention to the prevailing regulatory debates and court cases which present significant hurdles to budding crypto businesses, limiting their ability to leverage the positive economic trends.
Moreover, Kapoor pointed out the potential repercussions of the Federal Reserve’s assertive monetary policy, which seeks to control inflation by hiking interest rates.
He cautioned that this could potentially limit the short-term growth potential of crypto prices, considering the current macroeconomic climate.
In summary, the robust employment data provides an optimistic outlook for the broad economic setting, but the resulting impact on crypto markets is dictated by a complex interplay of factors.
Investor attitudes, the regulatory environment, and overarching macroeconomic policies all play a part. It is evident that the future course for cryptocurrencies remains as volatile and thrilling as ever.
Stefan Rust, CEO of independent inflation data aggregator Truflation, said that it seems the job market came in really strong with 339,000 new jobs created in May, however, the same report seems to imply layoffs of 440,000, suggesting a net loss of jobs over the month.
“Indeed, we have recently seen a lot of revisions to previous reports. For example, in Q1 the Bureau of Labor Statistics announced an increase in salaries by 5% and has since revised that increase down to -.7%,” he said.
“This suggests that initial reports are not accurately reflecting the market. As so many important decisions are made based on this data, this could be leading to decisions that are hurting the economy,” he added.
This is why it’s critical to have real-time, automated, independent, and transparent solutions – we need more independent, verifiable sources of truth, Rust said.
About the author
Murtuza Merchant is a senior journalist and an avid follower of blockchain and cryptocurrencies.