What happened
The general sluggishness in top cryptocurrencies over the past few days was extending into the weekend on Saturday afternoon. Both Bitcoin (BTC -3.70%), which continues to hover around the psychologically important $20,000 barrier, was down slightly over 1% over the preceding 24 hours. The No. 2 coin, Ethereum (ETH -4.73%) was falling at a deeper rate of 1.8%.
So what
Many alt-asset investors are looking for macroeconomic signs that favor cryptocurrencies, and they're not getting them.
Friday morning, the government's Labor Department released its latest monthly jobs report; this revealed that the U.S. economy added 315,000 jobs in August. Although that was the lowest figure since April 2021, it wasn't far from many economists' estimates. It also indicated that the American labor market continues to tighten, a dynamic that could drive up wages and thus exacerbate inflation.
In that case, the Federal Reserve would continue or even accelerate its policy of raising interest rates to tame inflation. And as interest rates rise, the lure of "defensive" investments like blue-chip stocks and various flavors of bonds increase. As we've seen, this can freeze out assets taken to be more speculative... and, for many, the leading exhibit in the gallery of speculative assets is cryptocurrencies.
Now what
Taken together, Bitcoin and Ethereum provide a major bellwether for the sentiment on cryptocurrencies in general. Not surprisingly, numerous other coins and tokens fell along with them on Saturday or traded sideways. We can expect that trend to continue as long as there are few economic signals at least weakly flashing green for that asset class.
