AI Tokens Lead Crypto Rebound Amid Strong US Economy

Alternative cryptocurrencies, or other currencies, led the digital asset market higher on Friday after geopolitical worries eased and a booming US jobs report put recession fears to bed for the time being.

AI-focused protocol Bittensor’s {{TAO}}, {{RNDR}} Render tokens are up 14% and 8% in the past 24 hours, while CoinDesk’s computing index, which tracks several tokens related to AI, was the biggest gainer among crypto sectors.

Notably, asset manager Grayscale increased TAO’s stake in its AI-focused decentralized crypto fund to 27% from 3% in July, while adding Graph {{GRT}}, replacing Livepeer (LPT).

Bitcoin rose steadily during US trading hours to $62,300, up 2.2% on the day. The broader crypto benchmark Coindesk 20 index rose 4.2% over the same period, highlighting that altcoins outperformed BTC.

Perhaps helping the move was a much stronger-than-expected report on the US labor market, which added 251,000 jobs in September, beating the previous estimate of 140,000. The unemployment rate fell to 4.1 percent, allaying fears of an impending recession.

The positive sentiment also spread to the stock market, with the S&P 500 and Nasdaq ending the day 0.9% and 1.2% higher, respectively. The yield on the 10-year U.S. Treasury rose 13 basis points to just 4 percent, while the U.S. dollar index rose to its strongest level since mid-August. Following the report, investors now overwhelmingly expect a smaller 25 basis point rate cut from the Federal Reserve in November.

“Bitcoin and the longer tail of crypto assets are sensitive to labor market data as it influences the Fed’s decision on rate cuts, which in turn has a positive impact on BTC as borrowing costs fall,” he said Leena ElDeeb, research analyst at the digital asset manager. 21 actions. “We expect flows to begin to pick up following the escalating geopolitical tensions that have rattled the market over the past week.”

Bitcoin probably bottom in

Markus Thielen, founder of 10x Research, said that with the early October selloff now over, prices are likely to rise in the coming weeks. Derivatives market data suggests investors are not looking for hedging against the downside, Thielen added, while large sell-offs like the one earlier this week have often marked local price lows.

“As long as the US economy remains strong, stocks and cryptocurrency should have room to rise,” Thielen said.

Will Clemente, founder of Reflexivity Research, said the Fed’s easing of monetary policy amid a strong economy bodes well for bitcoin after this week’s rise in leverage.

The story continues

“People threw up their positions because they were overleveraged or fell for Iran’s bottle rockets the second time around,” Clemente said in an X. post. “Now with this morning’s great jobs report, the economy is confirmed strong while we’ve just started a global easing cycle and now we’ve just reset the positioning.”

“Lots of worries, but BTC keeps eating,” he added in a follow-up post.