Crypto rebounds as labour data calms markets but is the rally sustainable?

Crypto rebounds as labour data calms markets but is the rally sustainable?

At first glance, the improvement in global risk appetite appears to stem from a stabilising US labour market, a critical pillar in the Federal Reserve’s dual mandate framework. The ADP employment report for October delivered a modest but symbolically important reversal, showing a net addition of 42,000 private-sector jobs after September’s sharply revised contraction of 29,000, itself an improvement from the initially reported 32,000 decline. This sequential recovery, however slight, offers a glimmer of resilience against the backdrop of persistent inflation concerns and lingering uncertainty around the terminal interest rate.

Equity markets responded with measured enthusiasm. On Wednesday, the S&P 500 gained 0.4 per cent, the Dow Jones climbed 0.5 per cent, and the Nasdaq led the charge with a 0.7 per cent advance. This rebound followed a tech-heavy selloff that had tested investor resolve, and the bounce suggests the presence of committed dip buyers willing to step in at lower levels. The market’s fragility remains evident in the movement of US Treasury yields, which edged higher across the curve.

The two-year yield rose by 5.4 basis points to close at 3.629 per cent, while the 10-year yield jumped 7.4 basis points to 4.159 per cent. Higher yields typically signal either expectations of stronger growth or stickier inflation, both of which could complicate the Fed’s path toward rate cuts in early 2026. Meanwhile, the US Dollar Index held steady at 100.17, reflecting a balanced tug-of-war between softening safe-haven demand and the dollar’s relative yield advantage.

In commodities, gold advanced 1.2 per cent to settle at US$3979 per ounce, benefiting from the dollar’s temporary flatlining and ongoing geopolitical tensions that continue to underpin safe-haven demand. Crude oil told a different story. Brent crude dropped 1.4 per cent to US$63.52 per barrel after the Energy Information Administration reported the largest weekly build in US crude stockpiles since July. This inventory surge underscores weakening near-term demand expectations, possibly tied to China’s tepid economic recovery and Europe’s stagnation, and adds downward pressure on energy markets already grappling with oversupply concerns.

Turning to Asia, equity markets closed mixed on Wednesday but opened higher in early Thursday trading, reflecting spillover optimism from the US session. US equity index futures now point to a lower open, hinting at profit-taking or renewed caution as traders digest the week’s data flow and await the Bank of England’s policy decision. The BOE is widely expected to hold its benchmark interest rate at 4.0 per cent, a move that would align with the central bank’s recent dovish tilt amid cooling UK inflation and fragile growth.

Against this macro backdrop, the cryptocurrency market staged a modest but notable recovery, rising 2.15 per cent over the past 24 hours. This bounce comes after a punishing weekly decline of 7.8 per cent and a steep monthly drop of 18.25 per cent, suggesting that the asset class may have reached a point of technical and psychological exhaustion. Three interlocking forces appear to be driving this rebound: regulatory reprieve, ETF-related optimism, and a classic technical reset in overextended short positions.

The most immediate catalyst emerged from an unexpected source: the US government shutdown. This administrative pause has temporarily halted the Securities and Exchange Commission’s aggressive probe into the crypto treasury holdings of over 200 publicly traded companies. While shutdowns rarely produce positive market outcomes, this one inadvertently created a window of regulatory calm.

Traders seized on the pause as a signal that enforcement actions, particularly those targeting corporate crypto adoption, would be delayed, if not softened. The psychological relief was enough to lift risk appetite across the board, allowing Bitcoin and key altcoins to claw back from multi-week lows. This respite remains contingent. Once the shutdown ends and the SEC resumes operations, the threat of renewed scrutiny could quickly resurface, potentially triggering another wave of volatility.

A second, more structural driver lies in the evolving landscape of crypto exchange-traded funds. Franklin Templeton’s recent filing of an updated XRP ETF application, utilising the auto-effective S-1 mechanism previously deployed by Bitwise and Canary Capital, marks a significant, if cautious, step toward broader institutional acceptance. The move signals that major asset managers continue to explore avenues to offer crypto exposure through regulated vehicles, even for assets entangled in legal ambiguity. XRP’s unique situation casts a long shadow.

The unresolved SEC versus Ripple case continues to deter full-scale institutional endorsement, and while XRP itself rose 2.3 per cent in response to the ETF news, outpacing Bitcoin’s 1.9 per cent gain, the market’s reaction remained measured. Investors recognise that without a definitive legal resolution, any ETF approval for XRP would face heightened regulatory resistance, limiting its near-term upside potential.

Finally, the rally gained momentum from technical factors rooted in market structure. The total crypto market capitalisation, now at US$3.44 trillion, bounced precisely off the 78.6 per cent Fibonacci retracement level of its recent decline, which sat at US$3.37 trillion, a confluence that often attracts algorithmic and discretionary buyers alike. Simultaneously, the 14-day Relative Strength Index (RSI) climbed to 35.87, exiting deeply oversold territory and signalling a reduction in bearish momentum. This technical rebound was amplified by forced short-covering.

As prices began to rise, leveraged short positions faced liquidation, creating a feedback loop that accelerated the upward move. Open interest in perpetual futures contracts increased by 3.11 per cent, indicating fresh capital entering the market. Scepticism lingers: funding rates remain negative at -0.0035 per cent, suggesting that traders are still reluctant to pay a premium to maintain long positions, preferring instead to collect fees from overextended shorts.

Looking ahead, the sustainability of this rally hinges on two competing forces. On one side, the near-perfect correlation between crypto and the Nasdaq, currently at 0.96, ties Bitcoin’s fate to the broader tech sector’s performance. Any stumble in US equities, particularly among mega-cap tech stocks, will likely drag crypto lower. Compounding this vulnerability, US spot Bitcoin ETFs have seen net outflows of US$1.3 billion over the past week, reflecting institutional caution amid macro uncertainty.

On the other side, the potential resumption of ETF approvals, especially for Ethereum or other major assets, could reignite bullish momentum. Similarly, a prolonged regulatory lull might allow the market to rebuild positioning without the spectre of enforcement actions.

For now, traders must watch key levels. Bitcoin faces formidable resistance near US$104,000, a psychological and technical barrier that has repelled previous rallies. Meanwhile, shifts in altcoin liquidity, particularly in assets like XRP, Solana, and Ethereum, will offer clues about whether this bounce evolves into a broader market rotation or remains a fleeting technical correction.

The macro environment offers neither clear tailwinds nor unambiguous headwinds. Instead, it presents a narrow corridor of opportunity, flanked by regulatory uncertainty, monetary policy crosscurrents, and fragile sentiment. Navigating this terrain will require precision, patience, and a keen eye on both data and discretion.

 
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Why crypto can’t escape the Nasdaq and what it means for the next 30 days

Why crypto can’t escape the Nasdaq and what it means for the next 30 days
The current market environment presents a textbook case of how macroeconomic uncertainty, structural leverage, and sector-specific stress can converge into a self-reinforcing selloff across both traditional and digital asset markets. The recent 5.32 per cent drop in crypto prices over the past 24 hours is not an isolated event but rather the culmination of three interlocking dynamics: miner distress, derivatives deleveraging, and heightened correlation with equities, particularly the Nasdaq-100. Each of these forces feeds into the other, creating a feedback loop that amplifies volatility and accelerates liquidations.

Miner capitulation stands out as one of the most critical bearish catalysts in this cycle. Publicly traded mining firms like Canaan and Hut 8 have seen their equity valuations hammered, with Canaan plunging 14.6 per cent on November 4 to close at US$1.1280 per share. This sharp decline reflects investor anxiety over the sustainability of mining operations as Bitcoin’s price hovers dangerously close to breakeven production costs. Recent data indicates that average mining costs reached US$114,233 as of November 3, while Bitcoin traded below US$101,000 by November 5.

This negative margin environment leaves miners with few options other than selling accumulated Bitcoin reserves to cover electricity, maintenance, and debt obligations. Hut 8’s Q3 2025 earnings report, which showed US$83.5 million in revenue, a 91 per cent year-over-year increase, nonetheless revealed underlying fragility. Despite strong top-line growth driven by scaling operations, the company’s aggressive 1,530 MW expansion plan introduces significant execution and financing risk in a deteriorating price environment.

When miners sell into a falling market, they exacerbate downward momentum, especially when hashprice, the revenue per terahash per second, has already collapsed by 23 per cent since October. The critical technical level to watch remains US$103,000. A decisive break below this support could trigger a wave of forced sales from marginal operators, further depressing spot prices.

Simultaneously, the derivatives market has undergone a dramatic reset. Total open interest in crypto derivatives has contracted by 27.5 per cent month-over-month, falling to US$786 billion, a clear signal that leveraged participants are rapidly de-risking. On November 4 alone, US$851 million in long positions were liquidated, predominantly on perpetual futures contracts where average leverage ratios hover around 25x on major exchanges like Binance.

The shift to negative funding rates, currently at -0.003 per cent, confirms that the market structure has flipped from bullish speculation to defensive shorting or passive hedging. Historically, sustained negative funding often precedes short squeezes, but only after sentiment reaches extreme pessimism. The spot-to-perpetual volume ratio of 0.26 underscores that price discovery is now dominated by derivatives traders reacting to macro headlines rather than organic spot demand.

This dynamic makes the market hypersensitive to external shocks, such as shifts in US Treasury yields or Federal Reserve commentary. With the 10-year yield settling at 4.083 per cent and the 2-year at 3.572 per cent, the yield curve remains inverted, a classic recession warning that weighs heavily on risk assets.

Perhaps most concerning for proponents of crypto’s digital gold narrative is its persistent correlation with tech equities. Over the past 24 hours, Bitcoin exhibited a 0.86 correlation with the Nasdaq-100 (QQQ), directly contradicting earlier hopes of decoupling.

While some analysts had pointed to a temporary breakdown in correlation during October, the reversion to high co-movement in early November demonstrates that institutional investors still treat crypto as a high-beta tech proxy rather than an independent store of value. This linkage became evident as US equities tumbled, Nasdaq down two per cent, S&P 500 down 1.2 per cent, dragging crypto lower despite fundamentally different supply mechanics.

Meanwhile, traditional safe havens like gold rose 0.8 per cent, reinforcing the flight-to-quality behaviour that excludes volatile digital assets during risk-off episodes. The strength of the US Dollar Index, which climbed to 100.20 for a fifth consecutive day, further pressures dollar-denominated commodities, including Bitcoin, by increasing the relative cost for foreign buyers.

Taken together, these forces create a precarious equilibrium. Miner selling adds persistent spot supply pressure. Derivatives unwinding removes liquidity and amplifies moves through forced liquidations. And macro correlation ensures that any stumble in US equities instantly transmits to crypto markets. Within this turbulence lies a potential opportunity. The Crypto Fear & Greed Index has plunged to 20, Extreme Fear, the lowest reading since March 2025.

Historically, such extremes often coincide with local bottoms, as panic selling exhausts weak hands and creates conditions for a contrarian rebound. If Bitcoin holds above US$103,000, miners may stabilise their balance sheets, derivatives funding could normalise, and the narrative might shift from capitulation to accumulation. But if that support fails, the path of least resistance points lower, potentially toward the US$95,000 zone where mining economics become untenable for a broader swath of the network.

In either scenario, the market is undergoing a necessary cleansing, a washout that tests conviction and separates speculative froth from durable conviction. For now, all eyes remain on price action at the margin, where every candlestick carries the weight of macro fate and miner survival.

Source: https://e27.co/why-crypto-cant-escape-the-nasdaq-and-what-it-means-for-the-next-30-days-20251105/

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