An encouraging jobs report that suggests the U.S. economy might finally be contracting in a meaningful way left crypto markets unstirred, although ether (ETH) rose, closing the performance gap this year with bitcoin (BTC).
Ether traded strong and has risen 3.8% over the past 24 hours, suggesting investors see it as undervalued. ETH is up roughly 55% for the year, while BTC, which traded lightly amid low volatility on Tuesday, is up close to 70%.
The Job Openings and Labor Turnover Survey (JOLTS) showed that job openings fell by 632,000 in February to 9.9 million, the lowest level since May 2021. The 9.9 million mark exceeded expectations of a decline to 10.4 million and signaled the persistently tight jobs market may be loosening.
The general consensus for most of 2023 has been that weaker employment is a necessary precursor to the Federal Reserve pausing its pace of interest rate hikes. Tuesday’s reading fits with the current narrative that bad news for the economy equals good news for asset prices that have been weighed by inflationary fears.
Crypto markets were quiet. Bitcoin traded flat for most of the day, on lower-than-average volume. BTC trading volume has fallen below its 20-day moving average for 14 straight days.
ETH gains took the asset within shouting distance of $1,900 for the first time since August.
A sustained move higher than $1,862 would push ETH’s price past the upper range of its Bollinger Band, a bullish sign for the asset.
By contrast, BTC’s price is trading along its 20-day moving average, a sign the price is flattening.
The ETH/BTC ratio has increased 4.3% this week. ETH, the second-largest cryptocurrency by market capitalization after BTC, has narrowed the performance gap on its larger peer.
The recent difference in performance is reflected in a 22% decline in correlation between BTC and ETH since March 10.
ETH bulls may see this as an opportunity. While the correlation coefficient between BTC and ETH has declined to 0.77 from 0.99 on a daily basis, the monthly correlation between the two remains above 0.95.
The recent dislocation on a smaller time frame likely represents the flight to safety crypto investors made into BTC during the recent banking turmoil. The extent to which ETH was left behind, however, may be appealing to investors who still view ether as undervalued, particularly given the continued contraction of its overall supply.
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