Nansen analyst: US employment data reinforces rate cuts, boosting crypto

The US ADP National Employment Report increased by 152,000 in May, below the expected number of 175,000 and the smallest increase since January. The ADP measures the monthly change in non-farm and private employment and a result below the expected signals that employment growth and wage growth are slowing down.

Aurelie Barthere, Principal Research Analyst at research firm Nansen, assesses that this result paints a picture of moderating real growth and a cooling labor market in the US when combined with other real activity data, such as retail sales, Q1 GDP, and CAPEX.

“As long as growth slows but does not contract, it is likely to push US rates lower and become a tailwind for crypto. So far, we cannot say that the slowdown in growth is too severe,” added Barthere.

Moreover, she mentions the services sector, which is holding up as proven by the latest PMI business survey, and highlighted that Jerome Powell has indicated that, were unemployment to increase with inflation sticky, he would have a preference for rate cuts.

“So investors are pricing a ‘Fed put’ when growth data comes in weak, but not too weak. Friday’s payroll is likely to become the next major data point in this narrative.”

A bright June

Crypto industry players expect a “bright June” for the market, as reported by Crypto Briefing. Fueled by the spot Ethereum (ETH) exchange-traded funds (ETF) approval in the US, this month can be met with an ETH price leap.

Additionally, ETH price momentum could spark a broad altcoin market growth, resulting in a “meme coin summer”, as this sector of the crypto market is showing the same signs of the non-fungible token (NFT) summer witnessed in 2021. As a result, retail money pulled from other high-yield projects temporarily might flow into crypto.

There are also the European Parliament elections, set to happen between June 6th and June 9th, in which the results could mean a more pro-crypto stance in the European Union, resulting in favorable regulations.