The US released stronger-than-expected jobless and GDP data, but crypto investors had debt ceiling negotiations on their minds on Thursday.
They recently held Bitcoin below $26,500, up about 0.3%, but below the last nearly two-week range between that threshold and $27,500. The largest cryptocurrency by market cap has shed some of its 2023 gains in recent weeks as investors grapple with a mix of macroeconomic uncertainties, particularly of late with the ongoing US debt ceiling standoff above it will decide whether the US government can pay its bills. On Thursday, members of the Republican House of Representatives reported on progress in talks with the White House, but whether the sides can reach an agreement in time to avert a government default remains uncertain.
“The debt ceiling concern is definitely weighing on BTC and cryptocurrencies in general,” wrote Riyad Carey, research analyst at digital asset data provider Kaiko, to CoinDesk via Twitter. “We’ve been pretty volatile over the past few weeks, which hasn’t been the case.” There have been many crypto-specific catalysts.
Carey does not expect a dramatic price shift in bitcoin price any time soon, if not beyond, as the next big catalyst, the BTC halving, is almost a year away. “Of course regulatory developments could mess this up,” he wrote.
Ether recently changed hands at just above $1,812, up about 0.3% from the same time Wednesday. Most other major cryptos took on faint shades of green, with Layer 2 platform Polygon’s token MATIC rising 2% recently. The CoinDesk Market Index, a measure of the performance of crypto markets, rose 0.46%.
Tech stocks appeared to be floating after chipmaker Nvidia announced sales would rise on growth in artificial intelligence protocols. The technology-heavy Nasdaq Composite and the S&P 500, which has a strong technology component, rose 1.7% and 0.9%, respectively. Safe haven gold continued its recent decline less than a month after hitting a near record high, falling more than a percentage point to trade at $1,959.
But assets of all stripes appeared largely unfazed by Thursday’s jobs data. These showed that 229,000 Americans filed for unemployment benefits last week, significantly fewer than the 245,000 expected, and that the US economy grew 1.3% for the third straight quarter of growth. Earlier this year and throughout 2022, such news might have sparked a cascade of digital assets, but the CoinDesk analyst on Thursday pointed to a shift in the narrative that good economic news leads to lower crypto prices.
Nevertheless, the debt ceiling negotiations continued to be the focus of the attention of many market observers. “Right now, everything hinges on the debt ceiling, and until a resolution is found, I don’t expect Bitcoin to perform as strongly as it has year-to-date,” says Brent Xu, CEO and co-founder of Umee, a Web3 bond market platform, wrote to CoinDesk. “If the crisis lasts longer, it seems like BTC and other digital assets could linger for quite a while or even trend down.”
Xu wrote that bitcoin and other digital assets remain in a “crypto spring phase,” so with the current sideways volatility punctuated by short-term pullbacks, expect this trend to continue into next year, when the halving begins. If that happens, then we’re probably on our way to the races.
He added: “Right now, I think investors and traders are cautious with their capital given the high level of macroeconomic and political uncertainty.”