Morning Crypto Brief: BTC Pivots $30K, ETH Eyes Break Below Key Support Pre-US NFP Data Release

Key Points

• Cryptocurrency markets are trading cautiously ahead of the release of US jobs data at 1330BST.
• Bitcoin continues to pivot $30,000 whilst ethereum is eyeing a break below key support in the $1,700s.
• Any signs of building US wage pressures could hurt crypto sentiment.

State Of The Market

Cryptocurrency markets were largely unenthused by Thursday’s healthy rebound on Wall Street and for the most part continue to trade within recent intra-day ranges in the run-up to the release of key US jobs data for May. Total crypto market capitalization was last around $1.21 trillion, down just over 2.0% on the day having found resistance at Thursday’s highs around the 21-Day Moving Average in the $1.25 trillion area, but still above support in the $1.20 trillion area for now.

The upcoming release of the US labor market report for May at 1330BST poses two-sided risks to crypto, with wage growth data set to be the most closely scrutinized metric. If it comes in hotter than expected, that would exacerbate inflation fears and, given that Fed policymakers (like Vice Chairwoman Lael Brainard on Thursday) have emphasized the central bank’s data-dependent approach to tightening in beyond September, would likely trigger a fresh build-up of Fed tightening bets.

This would likely send US yields higher, hurting crypto amid the higher “opportunity cost” of holding non-yielding assets, and the US dollar higher, hurting crypto by making the purchase of USD-denominated cryptocurrencies more expensive for international buyers.

Conversely, an easing of wage pressures would come as a relief to crypto investors, as it would contribute to the narrative of US inflation having now peaked and ease some of the pressure on the Fed to tighten so quickly. The YoY pace of US wage growth is expected to have declined to 5.2% in May, according to a Reuters poll of economists, though the MoM growth rate it seen accelerating slightly to 0.4% from 0.3%.

The headline non-farm payroll (NFP) change number (i.e. the number of jobs added/lost in the US economy last month) is expected to come in at 325K, a slight slowdown from April’s 428K, while the unemployment rate is seen dropping from 3.6% to 3.5%. Unless there is a massive deviation from expectations, these numbers probably won’t impact crypto and broader markets too massively, as the US labor market is known to be robust and suffering from a shortage of willing workers.

Note also that the US ISM Service PMI survey for May is also scheduled to be released on Friday at 1500BST, and will also be closely scrutinized as a timely indicator as to the health of the dominant US service sector.

Bitcoin Pivots $30,000, Ethereum Eyes Test Of Key Support In $1,700s

Bitcoin continues to pivot on either side of the $30,000 level, with the 21-Day Moving Average at $29,875 acting as a magnet for the time being, as traders await upcoming macro risk events. At current levels just under the big figure, bitcoin’s market cap is just above $570 billion, while its market dominance just hit a fresh high since last October above 47%, suggesting a still risk-averse feel to crypto market conditions.

Ethereum is trading with a slightly more bearish bias and was last down around 4.0% on the day at weekly lows near $1,750 per token, with the bears eyeing a test of last month’s annual lows, and mid-2021 lows, in the mid-$1,700s. A break below this key support area could see prices swiftly drop to the next area of support around $1,550. At present, ethereum’s market cap is around $215 billion.

Most of the major altcoins are trading with similar-sized losses to ethereum, with Cardano’s ADA, Solana’s SOL and Avalanche’s AVAX each down between 4-7% on Friday, whilst Binance’s BNB and Ripple’s XRP are down closer to 3.0%.

Cardano remains the standout performer on the week and is still holding onto gains of over 15%, despite the broader market trading roughly flat. Analysts continued to cite FOMO/hype ahead of Cardano’s upcoming Vasil hard fork, which will deliver a number of significant upgrades to the network.

Exchange/Miner News: FTX Expands To Japan As Others Suffer, Bitzero To Build $500M Facility In North Dakota

Even as many of its competitors suffer amid the ongoing “crypto winter”, leading global crypto exchange FTX announced its expansion into the Japanese market on Friday. The company announced the launch of FTX Japan, its new exchange in the country, which will allegedly support the fast deposit and withdrawal of the Japanese yen. FTX CEO Sam Bankman-Fried hailed the expansion, saying it “not only gives us a technological advantage but also allows us to work directly with Japanese regulators in a transparent, constructive and positive manner”. Japan has a potential crypto trading market size of almost $1 trillion, he continued.

Regarding FTX’s suffering competitors, Gemini announced on Friday that it would be laying off 10% of its staff. In a memo to employees, the Winklevoss brothers (who created Gemini) said “this is where we are now, in the contraction phase that is settling into a period of stasis — what our industry refers to as crypto winter”. “This has all been further compounded by the current macroeconomic and geopolitical turmoil… We are not alone” they continued.

Elsewhere, Coinbase announced earlier this week that it would be extending its current hiring pause for the foreseeable future, whilst also rescinding various several accepted job offers. “After assessing our business priorities, current headcount, and open roles, we have decided to pause hiring for as long as this macro environment requires,” the company said in a statement.

In Bitcoin miner news, Kevin O’Leary (known as a star on “Shark Tank”) backed bitcoin mining start-up Bitzero announced plans this week to build a $500 million facility in North Dakota, which has been chosen as the company’s hub for its North American operations. Akbar Shamji, the company’s CEO, said that they plan on building 200 megawatts worth of data centers in the state within the next three years.

Regulation News: Japan Passes Bill To Recognise Stablecoins, White House Drafts Bill To Reduce Energy Consumption Of BTC Mining

Japan’s parliament on Friday passed a historic bill to create a legal framework around stablecoins, making it the first major economy to do so. The legislation, which comes into effect next year, says that for a stablecoin to be considered as legal money, it must be linked to the yen or another legal tender and can only be issued by licensed banks, registered money transfer agents and trust companies. Holders of such stablecoins would be guaranteed the right to redemption at face value, much like how governments across the world guarantee citizen banking deposits.

Over in the states, the White House is drafting new policy recommendations that would aim o reduce the energy consumption and carbon emissions footprint of the crypto mining sector. US President Joe Biden issued an executive order back in March that directed government agencies to ensure the “responsible” mining of digital assets such as bitcoin.

Meanwhile, New York’s state Senate passed a bill on Thursday that would put a two-year moratorium on bitcoin mining using carbon-based energy, amid concerns about the environmental impact. Existing mining firms and those currently undergoing permit renewal would not be impacted. The bill will now be sent to New York Governor Kathy Hochul’s desk to be signed into law.

Elsewhere, California-based retirement plan provider ForUsAll is suing the US Department of Labour (DoL) over a controversial warning it issued back in March that 401(k) retirement saving plan sponsors should “exercise extreme care” when allowing savers to allocate their portfolios towards crypto. ForUSAll was the first major US retirement plan provider to allow savers to allocate money into crypto, though US asset management giant Fidelity Investments recently followed suit.

ForUsAll CEO Jeff Schulte told CoinDesk that “Congress never gave government officials the power to pick winners and losers, let alone the legal authority to arbitrarily restrict entire asset classes”. “It certainly never authorized agencies to take such sweeping and abrupt action with no public process,” he continued.

Finally, El Salvador’s government continues to delay the issuance of its much-touted bitcoin bond. Earlier this week, the country’s Finance Minister Alejandro Zelaya said that it was not yet time to launch the so-called Vulcano Bonds, given that the price of bitcoin remains “troubled”. Zelaya did not give any guidance as to when it might launch the bond.