- American stocks surged to the highest point in 10 months.
- Invesco QQQ has jumped to the highest level since April last year.
- Bitcoin and other cryptocurrencies could surge as well.
American stocks surged on Friday as investors cheered the strong US non-farm payrolls (NFP) data and the passing of the debt ceiling deal. Invesco QQQ ETF stock jumped to a high of $355.95, the highest point since April 2022. It has surged by over 40% from the lowest level this year. Similarly, the SPY ETF soared to a high of $426, meaning it has moved into a bull market.
QQQ and SPY ETF rallies
Invesco QQQ is an ETF that tracks the Nasdaq 100 index while SPY ETF tracks the S&P 500 index. They are the two biggest ETFs in the US, with over $545 billion in assets under management. As such, they are good representatives of the American stock market.
There are three main reasons why the two indices have surged recently. First, they rallied after the American Congress passed the debt ceiling agreement. By so doing, members of the two houses prevented an unprecedented default of America’s debt. That default would have led to a major dive of most financial assets like stocks and cryptocurrencies.
Second, the ETFs jumped after the US published strong non-farm payroll (NFP) data. The numbers showed that the country added over 339k jobs in May after it added over 294k jobs in the previous month. The reading was better than the median estimate of 180k. However, the unemployment rate rose slightly to 3.7%.
These numbers mean that the American economy is doing well. While this is a good thing, it means that the Fed could have an excuse to deliver another rate hike this month. Most analysts expect it to decide to leave rates unchanged.
Finally, the two ETFs jumped because of the bullish momentum in the stock market as investors buy. This is evidenced by the rising fear and greed index, which I wrote about here.
Implications for cryptocurrencies
The soaring stock market has a positive impact for the sleeping cryptocurrencies market because of the close correlation that exists between the two. In fact, most digital currencies were in the green on Friday, with Bitcoin price trading at $27,000 and Ethereum trading at $1,890
It seems like the recent Bitcoin sell-off has reached a bottom, which is a positive thing. Therefore, we can’t rule out a situation where Bitcoin price jumps in June. If this happens, other altcoins like Ethereum, Solana, and Cardano will also be in the green.
Historically, cryptocurrencies tend to do well when stocks are rising. For example, Bitcoin and major indices soared to a record high in the same year. They then pulled back sharply last year.
