Bitcoin (BTC) reclaimed the $62,000 psychological level on Friday following a reduction in the US unemployment rate. In addition to BTC, the S&P 500 (SPX) and the US Dollar Index (DXY) also posted gains. This marks a new market trend amid investors' heightened risk appetite.
According to the Bureau Labor of Statistics (BLS), the US Non-Farm Payrolls (NFP) in September increased by 254,000, meaning the economy added 107,000 more jobs than expected. As a result, the unemployment rate fell from 4.2% to 4.1%. Additionally, the BLS revised its NFP data for August and July upward, with employment data in both months 72,000 higher than previously reported.
Following the reports, the US Dollar Index spiked, indicating a strong labor market. Unlike strong NFP reports in previous times, when stocks and crypto tend to see a correction in the face of a rising USD, the S&P 500 and Bitcoin also posted notable gains.
The Kobeissi Letters noted that a potential reason for the change is the market's strong risk appetite. "The clear answer here is that risk appetite is incredibly strong. Markets are perceiving ALL news as good news for the first time in years," the analysts wrote.
Current market mentality:
— The Kobeissi Letter (@KobeissiLetter) October 4, 2024
1. Jobs report above expectations: Buy stocks, we avoided a recession.
2. Jobs report below expectations: Buy stocks, the Fed is going to cut rates.
3. Jobs report in-line with expectations: Buy stocks, the Fed is on track for a "soft landing."
How…
Bitcoin rose 2.3%, reclaiming the $62,000 level, while the S&P 500 closed above $5750, rising nearly 0.9% on the day.
Meanwhile, the price of gold declined after the NFP data. Only a few days earlier, gold was rising while Bitcoin and the S&P 500 were on a downtrend following Iran's missile launch on Israel.
The market reaction strengthens the rising correlation between Bitcoin and traditional stocks. While Bitcoin has been likened more to gold in the past due to its deflationary and decentralized status, its recent volatility and similar stock-like reaction to key economic data are altering the paradigm.
As noted in an earlier report by FXStreet, Bitcoin has mimicked the S&P 500's price movement on several occasions in the past year.
This emerging trend poses a key question: Are traditional investors now using Bitcoin to gain leveraged exposure to stocks? Another way to rephrase the question is will traditional investors begin to consider Bitcoin as a means of gaining leveraged exposure to stocks?
Meanwhile, Ecoinometrics data reveals that while Bitcoin wins on returns when compared against other top asset classes, gold is the best performer on risk-adjusted returns.
Bitcoin wins on returns but gold wins on risk adjusted returns.
— ecoinometrics (@ecoinometrics) October 3, 2024
These two stand out among major assets over the past year.
Bitcoin is still up a lot despite recent difficulties.
But gold’s slow and steady growth means it wins on risk adjusted returns. pic.twitter.com/Y0uPEUKCJd
Bitcoin is trading around $62,000 at the time of writing.