Bitcoin, S&P 500, USD Rise Simultaneously Amid Falling Unemployment Rate

• The US dollar index rose as September saw a drop in the unemployment rate.
• Bitcoin and S&P 500 strengthen correlation with another simultaneous rally.
• Gold outperformed Bitcoin on risk-adjusted returns.

Bitcoin (BTC) recovered the psychological level of $62,000 on Friday after a cut in the US unemployment rate. In addition to BTC, the S&P 500 (SPX) and the US Dollar Index (DXY) also posted gains. This marks a new market trend amid investors’ increased risk appetite.

Bitcoin, S&P 500 and USD react to NFP

According to the Bureau of Labor Statistics (BLS), US non-farm payrolls (NFP) rose by 254,000 in September, meaning the economy added 107,000 more jobs than expected. As a result, the unemployment rate fell from 4.2% to 4.1%. In addition, the BLS revised upward its NFP data for August and July, with employment data for both months 72,000 higher than previously reported.

Following the reports, the US dollar index rose, pointing to a strong labor market. In contrast to the strong NFP reports of the past, when stocks and crypto tend to see a correction in the face of a rising USD, the S&P 500 and Bitcoin also posted notable gains.

The Kobeissi letters noted that one potential reason for the change is the market’s strong appetite for risk. “The clear answer here is that risk appetite is incredibly strong. Markets perceive ALL news as good for the first time in years,” the analysts wrote.

Bitcoin rose 2.3%, reclaiming the $62,000 level, while the S&P 500 closed above $5,750, up nearly 0.9% on the day.

Meanwhile, gold prices fell after the NFP data. Just days earlier, gold was rising while Bitcoin and the S&P 500 were on a downtrend after Iran launched missiles at Israel.

The market reaction reinforces the growing correlation between Bitcoin and traditional stocks. While Bitcoin has been more likened to gold in the past due to its deflationary and decentralized status, its recent volatility and similar stock reaction to key economic data is changing the paradigm.

As mentioned in a previous report by FXStreet, Bitcoin has mimicked the price movement of the S&P 500 several times over the past year.

This emerging trend raises a key question: Are traditional investors now using Bitcoin to gain leveraged exposure to stocks? Another way to rephrase the question is: Will traditional investors begin to consider Bitcoin as a means of gaining leveraged exposure to equities?

Meanwhile, Ecoinometrics data reveals that while Bitcoin is winning in returns compared to other leading asset classes, gold is the best performer in terms of risk-adjusted returns.

Bitcoin is trading around $62,000 at the time of writing.