Bitcoin (BTC) buckled to $28,900 Friday afternoon then recovered slightly above the $29,000 level, as cryptocurrency markets gave up gains and turned lower during the day.
Ripple’s XRP led the downside action among large-cap digital assets by dropping nearly 5% in the last 24 hours. The fifth-largest cryptocurrency by market capitalization was trading at 64 cents, the lowest price since July 13’s partial court win against the U.S. Securities and Exchange Commission.
ADA, SOL and MATIC, the tokens of smart contracts platforms, Cardano, Solana and Polygon, also reversed giving up early gains. LTC, the native token of the Litecoin network, extended its losing streak typical around its quadrennial halving event and dropped another 4.5%.
Some smaller cryptocurrencies defied the otherwise red day in crypto markets. Popular dog-themed token SHIB was up 4% as developers unveiled plans to tie all ecosystem applications to a blockchain-based digital identity. Helium’s HNT surged near 19% during the day, continuing its momentum since the token’s halving day on August 1.
The CoinDesk Market Index, a broad measure of crypto market performance was recently down 1.5%.
See more: Get professional-grade crypto data and news at CoinDeskMarkets.com
Equity markets drop
U.S. stocks gave up sizable early gains to turn modestly negative by the Friday market close.
The government Friday morning reported the economy as having added 187,000 jobs in July versus forecasts for 200,000. In addition, June’s originally reported 209,000 job gain was revised lower to 185,000. There were some stronger data in the report, with the unemployment rate slipping to 3.5% versus forecasts for 3.6%, and average hourly earnings rising at a 4.4% pace against expectations for 4.2%.
The odds of the Federal Reserve hiking rates again at its mid-September meeting slipped to 14% from 20% prior to the report, and the 10-year Treasury yield is pulling back sharply from 2023 highs hit yesterday, now down 11 basis points to 4.06%.
Brace for sideways action
“I suspect that we will trend sideways for a good long while, perhaps for the next several months or even well into next year,” Bob Baxley, a core contributor to DeFi infrastructure provider Maverick Protocol, wrote in an email to CoinDesk. “There isn’t enough fresh capital flowing into the space at the moment for a meaningful rally.”
But Baxley added optimistically that shifting conditions will lead to “an inflow of both users and new capital.”
“I say this because Ethereum is seeing its foundations become sturdier and its applications more sophisticated and increasingly friendly for users,” he wrote.
Meanwhile, U.S. equity markets ticked down slightly as bond yields rose, a sign of lessening investor appetite for risk assets. The S&P 500 and tech-heavy Nasdaq Composite closed down 0.3% and 0.1%, respectively.
In an email to CoinDesk, Brent Xu, CEO and co-founder of Web3 bond-market platform Umee, wrote that crypto prices are unlikely to spike for a prolonged period “until the macro environment softens more,” including a cessation of the interest rate hiking that has characterized central banking policy for more than 16 months.
“We are certainly close to peak rates, though we could have another hike or two ahead of us depending on how sticky inflation actually is,” Xu wrote. “I’m not convinced inflation is falling as fast as many are hoping. In short, we have a long way to go before we enter the optimistic phase of the cycle.”
Xu added: “We experienced such a meteoric surge…, especially with Bitcoin, that I don’t know how these levels can be sustained, let alone surpassed in a meaningful way. We’re left with money already in the digital asset ecosystem just getting recycled through various coins over and again, as has happened in previous down markets.”