Stocks, Cryptos Falter on Jobs Data, Binance Hack Fallout

Even after hints earlier in the week that a turnaround was coming, cryptocurrencies and equities are lined up to end another week in the red following jobs data that suggests rising interest rates will likely continue and ongoing turmoil in the digital asset space. 

It was a sea of red across the board midway through the trading session Friday. Bitcoin and ether lost 2% and 1.5%, respectively. The S&P 500 and tech-heavy Nasdaq posted 2% and 3% losses, respectively. 

Macroeconomic data and further trouble in the crypto world contributed to the decline, analysts said. Cryptos were already suffering from widespread volatility in equity markets, fueled by increasing inflation, calls for central banks to pivot and fret over how high interest rates might go.

News of a hack on Binance’s BNB Chain, coupled with positive news on the labor front and a strong US dollar, put an end to crypto’s slight rally earlier in the week. 

BNB Chain noted on Twitter that it had paused its network, sending the price of Binance Coin (BNB) lower. The cryptoasset traded for as little as $279 by 7:50 pm ET. By Friday afternoon, the price had recovered to around $282, according to data compiled by Blockworks.

“BNB dropped less than 5%,” Changpeng Zhao, often known as CZ, said Friday morning during an appearance on CNBC’s Squawk Box. CZ added that his team has now minimized the damage to “less than $100 million.” 

On the macro side, Friday’s jobs data showed that unemployment fell to 3.5% in September, down from 3.7% in August. It’s a sign traders took to mean a Federal Reserve pivot is a long way off, Craig Erlam, senior market analyst at Oanda, said.

“Even earlier in the week when equity markets were rallying strongly, there was always a sense that the jobs report could spoil the party,” Erlam said. “And not because it could point to cracks appearing in the labor market, quite the opposite in fact.”

The market seems to be thinking that poor economic data, such as rising unemployment or poor manufacturing PMI, as seen on Tuesday, will leave the Fed with no choice but to back off its rate raising policy. 

“The labor market until now has been very resilient and while cracks appearing will get the attention of the central bank, it will take much more than that to force it to slow down,” Erlam said. “What’s more, without inflation indicators consistently pointing to lower price growth, policymakers will be hesitant to ease up sooner.” 

The central bank’s next policy meeting is scheduled for November.

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