Wednesday saw another trading session full of losses for all types of cryptocurrencies. Several macroeconomic news from the day before continued to weigh on confidence, as did the rise in bond yields. As a result, many investors were strictly in selling mode.
There were many red numbers next to the names of altcoinsboth major and minor. Token meme Shiba Inu (SHIB -1.69%) was trading down more than 4% between 1 p.m. ET and late afternoon, and Litecoin (LTC -0.49%) had fallen by 3%. Utility cryptos have joined them in this march downward. Cardano (ADA -5.62%) And Solana (GROUND -0.86%)which were heading south at rates of almost 9% and just over 5%, respectively.
Jobs and bond yields
As usual, these coins and tokens were inspired by the perennial crypto leader. Bitcoinand that was not a good thing. After hitting the much-vaunted $100,000 level last month, Bitcoin has been rather shaky ever since. It saw a sharp rise last year and, like any asset that has become relatively expensive, it can be vulnerable in the event of unfavorable news.
On Tuesday, the federal Bureau of Labor Statistics released November job opening numbers. This was 8.1 million, a small but notable increase from October’s 7.8 million.
All things being equal, an increase in job openings means increased economic activity, that is, increased spending throughout the economy. That’s good news for any asset class, right?
Not necessarily. Cryptocurrencies are sensitive to changes in the macroeconomics in a somewhat counterintuitive way. As some view them as a hedge against the “traditional” financial system, what is considered good for the economy as a whole could be seen as detrimental to coins and tokens.
Crypto investors fear that a surging economy could lead to higher inflation. As we have seen in recent years, rising inflation leads central bankers to raise interest rates in an attempt to calm the situation. Higher interest rates increase the appeal of securities like bonds, draining money from riskier assets such as cryptocurrencies.
This appears to be happening since the Bureau’s latest employment data was announced. The yield on the 10-year U.S. Treasury note rose significantly as investors digested the numbers.
Sell ​​signs?
I don’t think this will trigger a sustained aggressive sell-off in cryptocurrencies. Demand remains strong for all kinds of coins and tokens, and the market as a whole appears resilient. It will take a lot more than just an increase in job openings to put pressure on this market, and barring a major negative development in the near future, I don’t think it will seriously collapse.
Eric Volkman has positions in Bitcoin. The Motley Fool holds positions and recommends Bitcoin, Cardano and Solana. The Motley Fool has a disclosure policy.