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Crypto: Bitcoin rises on Fed pivot optimism, blowout jobs report

Yahoo Finance’s Jennifer Schonberger joins the Live show to discuss how crypto investors are weighing Fed rate hikes and economic data.

Video transcript

RACHELLE AKUFFO: Crypto one of the many sectors that seems to be watching the Fed's next moves with muted trading suspected to be a side effect of a market that's waiting on that anticipated rate hike.

Joining us with more is Yahoo Finance's Jennifer Schonberger. Hey, Jen.

JENNIFER SCHONBERGER: Hey, there. Good morning to you.

Yeah, investors holding their fire ahead of expected remarks from Federal Reserve Chair Jay Powell tomorrow before making any big moves. Given that blowout jobs report Friday showing more than 500,000 jobs that were created in December, investors are eager to understand if that could cause the central bank to raise rates higher than expected.

Powell said at his post-policy-meeting press conference last week that the job market is still very strong and that there's, quote, "still work to do." He said officials will be looking at the data through March and haven't made a decision on interest-rate projections, though he said rates could, quote, "certainly be higher than what we're writing down now." Back in December, the Fed penciled in rates peaking between 5% and 5 and 1/4%.

Now before starting to rebound this year, Bitcoin and crypto crashed last year, in part because the Fed raised rates at the fastest pace since the 1980s to crush decades-high inflation. That caused liquidity to come out of the market and risk assets like Bitcoin to sell off.

With inflation showing signs of slowing down and the Federal Reserve slowing the pace of rate hikes, that gave investors optimism that the Fed could be reaching the end of its rate-hiking cycle soon.

Darius Tabatabai, CEO at decentralized exchange Vertex Protocol, said, quote, "Should central bankers pivot to more aggressive rate hikes again, which is more likely after the jobs numbers came in, that would be bearish for most risk assets, including Bitcoin and altcoins." Though he said, "The rally would likely resume and trading volumes would probably pick up if Powell commits to staying the course and slowing the pace of rate hikes for at least the immediate future."

Powell speaks Tuesday at 12:30 PM Eastern in a Q&A at The Economic Club of Washington. Back to you.

RACHELLE AKUFFO: We'll certainly be keeping an eye on what that means for institutional investors and how they're feeling about crypto as well. Jen Schonberger, thanks so much.