Federal Reserve policy remains the main driver of the sector. Speaking at the Jackson Hole symposium last Friday, Fed Chair Kevin Warsh said persistent inflation could require tighter monetary policy, arguing that price pressures remained significant and the labor market was close to full employment. Cryptocurrencies weakened early in the week, but subsequent labor data moderated rate-hike expectations.
The July JOLTS report showed 7.271 million job openings, below the expected 7.330 million. ADP private payrolls increased by 38,000 in August, compared with the 47,000 forecast and the previous 46,000 reading. Initial jobless claims rose from a revised 204,000 to 206,000, while continuing claims increased from 1.771 million to 1.779 million.
Combined with more cautious comments from Fed Governor Christopher Waller, the data reduced the implied probability of a September rate increase from approximately 64% at the start of the week to around 50%, according to the CME FedWatch Tool. Lower rate expectations weighed on Treasury yields and supported demand for risk assets, including cryptocurrencies.
Friday’s federal employment report, scheduled for 12:30 GMT, is the next major catalyst. Resilient labor-market data could revive expectations of tighter Fed policy and pressure cryptocurrencies, while further signs of cooling could support the current recovery.
Market sentiment remains positive, with the Crypto Fear & Greed Index reaching 74 and entering the “Greed” zone. According to ETF flow data, spot Bitcoin funds attracted $730.8 million on September 3, their largest daily total since January. BlackRock’s IBIT led with $454.0 million, followed by ARKB with $137.7 million and Fidelity’s FBTC with $74.4 million.
The cryptocurrency market could extend its advance next week if ETF demand remains strong and U.S. employment data do not revive expectations of faster Fed tightening.
