AI Tokens Propel Cryptocurrency Market Recovery Amid Robust Economic Indicators
A resurgence in altcoins leads the cryptocurrency market as strong U.S. job statistics alleviate recession worries, with insights from key industry analysts.
AI Tokens Propel Cryptocurrency Market Recovery Amid Robust Economic Indicators
Alternative cryptocurrencies, or altcoins, are driving the market upward on Friday as geopolitical concerns diminish and a robust jobs report from the U.S. quells recession fears for the time being.
Artificial intelligence-focused tokens, like Bittensor's TAO and Render's RNDR, surged 14% and 8% respectively in the last 24 hours, while the CoinDesk Computing Index, which tracks various AI tokens, emerged as the top performer in the crypto sector.
Interestingly, asset management firm Grayscale increased the allocation of TAO in its decentralized AI-focused crypto fund from 3% to 27% since July, adding The Graph GRT and replacing Livepeer (LPT).
Bitcoin's value rose steadily during U.S. trading hours, reaching $62,300 with a daily increase of 2.2%. The broader Coindesk 20 Index, which benchmarks the entire crypto market, saw a 4.2% rise in the same timeframe, highlighting the altcoins' superior performance over BTC.
This positive market shift aligns with the unexpectedly strong labor market report from the U.S., revealing an addition of 251,000 jobs in September—well over the anticipated 140,000—while the unemployment rate dipped to 4.1%, alleviating fears of a looming recession.
Investor confidence translated to the stock market as well, with the S&P 500 and Nasdaq indexes closing 0.9% and 1.2% higher, respectively. U.S. Treasury bond yields also rose, and the dollar index hit its highest point since mid-August. Following the job report, investors are now broadly expecting a minimal 25 basis point interest cut from the Federal Reserve in the upcoming November meeting.
"Bitcoin and the wider range of crypto assets respond sensitively to labor market data as it influences the Fed's rate-cut decisions, ultimately benefiting BTC as borrowing costs decrease," stated Leena ElDeeb, a research analyst at 21Shares. "We anticipate a recovery in investment flows due to the recent increase in geopolitical tensions that previously unsettled the market."
Bitcoin Bottom Likely In
Markus Thielen, founder of 10x Research, indicated that the early October market sell-off seems to be over, with projections for prices to rise in the coming weeks. Derivatives market data reveals that investors are not hedging against further downside. Large liquidations similar to those experienced earlier this week typically suggest local price bottoms.
"As long as the U.S. economy remains strong, both stocks and crypto appear to have the potential for continued growth," Thielen noted.
In a statement, Will Clemente, founder of Reflexivity Research, mentioned that the Fed's easing of monetary policy in a strong economy bodes well for Bitcoin following this week's market corrections.
Clemente added, "Many liquidated their positions due to over-leverage or were misled by geopolitical concerns, but with today's excellent jobs report, the economy is validated as strong, opening the pathway to a global easing cycle and resetting market positioning."
