Crypto's Relief Rally: Here’s What’s Behind ETH and BTC’s Green Week

Crypto had its best week in months. Bitcoin rose 6.75%, and Ethereum rose 13.54%, easily beating stocks and gold. A new report from crypto trading firm Wintermute breaks down what drove the surge and why some caution is still needed.

Wintermute: Weak jobs data and a dovish Fed sparked the rally

The rally started with weak U.S. jobs numbers. Only 57,000 jobs were added last week, far below the expected 110,000. It was the weakest report in four months. Unemployment also fell to 4.2%.

This weak data reduced the chances that an interest rate hike would happen this year. There were fears that the Federal Reserve was looking into hiking rates sometime this year. Fed Chair Kevin Warsh had said inflation is still too high, which hinted at a hawkish stance of the Fed.

According to Wintermute, the mix of weak data and a softer Fed tone brought relief to markets in general. 

“Last week's data point, a real slowdown in the U.S. economy, gave the market a reason to expect a more dovish Fed following a hawkish start, and that's what got traded through Warsh's remarks, mixed messaging and all,” they said.

The S&P 500 rose 2.17%, and the Nasdaq went up by 0.86%. Gold also rose 1.20%, while crypto saw the most gains, with Ethereum and Bitcoin both posting double-digit gains.

Source: Wintermute

Whale buying and new projects add fuel

Wintermute shared that Bitcoin's gain was largely backed by whales. They bought more than 270,000 BTC as the price sat near its 200-week average price. Also, traders started buying call options between $60,000 and $70,000. The coin is currently bouncing around $62,000 and $63,000

Meanwhile, Bitcoin ETFs broke a 10-day streak of outflows of $2.73 billion. The funds saw a $221.7 million inflow on July 2. However, Wintermute said that the outflows for the year are still high at $5.4 billion.

ETH’s jump, on the other hand, was attributed to news from the network. On July 1, the network's team launched a platform called Ethereum Institutional. This is backed by well-known names including Joseph Lubin, BitMine, and SharpLink. 

It aims to help banks use the coin for tokenized assets and stablecoins. This launch comes even as the Ethereum Foundation cut a fifth of its staff and 40% of its budget, and after roughly $345 million left Ethereum ETFs the week before.

In other developments in the market, a new stablecoin called Open USD was launched with backing from 140 companies, including Visa, Mastercard, and Coinbase. It directly changes how current stablecoin companies make money. Circle's stock dropped 15-17% on that news. 

In conclusion, Wintermute called the move a "textbook relief rally." They said all the news combined gave the market a breather from its terrible spell: