Bitcoin had its biggest jump today since October 1st jumping over 10% and crossing over the $40,000 mark Friday morning in the United States. It was the first time in over two weeks BTC crossed the $40K level and pushed well past the $38.5K resistance level ($41,530 up 11.5% at time of publication). Ethereum performed almost as well and is closing in on the $3K mark ($2,982 up 10.95%). But why?
First, thank you Amazon! The tech giant beat earnings expectations and as they have done recently cryptocurrencies followed the movement of tech stocks. The huge Seattle-based online retailer thankfully didn't go the way of Facebook who missed their target and lost a ton of value as result. Now known as Meta, the large social media company lost $251B - the largest drop in history and saw a drop in their user base for the first time in company history. Instead, Amazon followed the likes of Apple, Microsoft and Google who all had strong quarterly earnings reports.
Amazon's stock rose 12% adding more that $1710B in value. This is basically like adding the value of all AT&T in one day. Amazon's total value is now sits around $1.58T. The company posted earnings of $14.3B, almost doubling earnings from the same period in 2020. Amazon also announced that it would be raising its Prime Membership fees by $20 to $139/year.
Second, thank you American companies! The US released a jobs report that really pumped excitement into the market and ignored the omicron surge that hit the states after the holidays. Non-Farm US employment grew by 467K jobs and is hovering around the 4% mark. Dow Jones had estimated growth at 150K in January and the jobs report crushed that number sending crypto markets flying. In addition, the previous two months jobs reports were both revised upwards showing the end of 2021 was even stronger than previously thought (November raised to 647K from 249K and December raised to 510K from 199K).
Wages continue to grow jumping another 23 cents to an average wage of $31.63 for private non-Farm positions. While approximately 3 million people missed work in December due to the pandemic, that number nearly doubled in January to 6 million but did not negatively impact unemployment figures. These developments, however, will only strengthen the Feds resolve to raise interest rates likely starting next month.
The US economy continues to push higher showing little signs of being derailed by the omicron variant. It is a widespread boom with only construction jobs showing a loss in January.
Personally, the tie between cryptocurrencies and the US economy and more specifically technology stock correlation is troubling to me. For those of us who live in the US and have a portfolio heavily weighted towards technology stocks, adding crypto isn't really diversifying our portfolios.
That said, it is a relief for many to see their cryptos recovering and breaking resistance levels.
