Nervousness and losses abound for cryptos after the surprising U.S. jobs report

The cryptocurrency market falls. Bitcoin (BTC) drops more than 2% in the last 24 hours and is below $23,000, while Ethereum (ETH) retreats another 2% as it tries to hold $1,600.

After a historic January marked by a very strong rally, cryptos are starting February timidly. The optimism with which they received the latest monetary policy decision of the Federal Reserve (Fed) contrasts sharply with what was seen in Friday's session and over the weekend, especially after the publication of the bizarre January employment report in the United States. According to the Bureau of Labor Statistics, the world's leading economy created 517,000 jobs in January, nearly triple the number expected (185,000) and almost double the December figure (260,000). At the same time, the unemployment rate unexpectedly fell to 3.4%, the lowest level since 1969.

"The US jobs report number was so good that many had to check the number twice to make sure that they were not reading the print incorrectly. The data confirmed that the US labour market is thriving and showed no sign of weakness which traders have been thinking about due to the message that they had during the current US earnings season," explained Naeem Aslam, chief market analyst at AvaTrade. The expert recalled that the Fed "watches the US labour very closely and for them, it is an important indicator in determining the path of their monetary policy".

For Neil Wilson, chief market analyst at Markets.com, the data " simply confirms everything that I feared – super tight labour market won’t let the Fed stop hiking. Was too early to declare victory and think peak rates. Inflation higher for longer, especially as the market is buying the Fed pause idea and financial conditions are loosening. Every time the Fed blinks the market jumps and inflation gets worse and harder to tame," he sentenced.

For Ipek Ozkardeskaya, senior analyst at Swissquote Bank, Friday´s jobs report was a "monstrous beat, from all perspectives. It was a monstrous slap on the Federal Reserve (Fed) doves’ face, as the latest US jobs data was nowhere close to an economy that’s supposed to be slowing down, and eventually enter recession and call for a rate cut.And it’s another reminder that the huge layoffs in big companies, and especially in big tech stocks remain the exception to the rule."

In this regard, analysts noted that next week's U.S. inflation data will be released, which, according to Ozkardeskaya, may make the employment data less bad if the drop is "significant." "We will know whether the latest jobs data is bad news, because the tight labor market continues to drive inflation, or good news, because inflation remains on an easing path despite the strength of the labor market," he commented.

For his part, Aslam stated that, despite market thinking to the contrary, the Fed "has not yet declared victory on its war against inflation" and the central bank knows that "inflation is still trending much higher than their desired target and there is a threat that next week, we may see the inflation print changing its direction as oil prices are much more stubborn," he added

In addition to the inflation data, experts highlighted that Tuesday's appearance by Fed Chairman Jerome Powell could provide important clues about the direction the Fed will take in March following the employment reading.

On the other hand, on Wednesday Robinhood will present quarterly results and it will be interesting to see if the company's bet on cryptocurrencies still does not give the desired result; the consensus is not particularly positive with the financial services firm's accounts and anticipates a loss of 10 cents per share.

FTX also asked politicians who received donations from Sam Bankman-Fried to return the money donated to the company so that they can afford payments to its creditors during the restructuring process. It is estimated that the political donations could exceed $90 million.

In other market news, there have been widespread declines. Ripple (XRP) drops nearly 3%, while Dogecoin (DOGE) falls nearly 4%, as well as Polygon (MATIC) and Shiba Inu (SHIB). Solana (SOL) retreats 4%.