The crypto market is keeping an eye on some important economic data from the US this week. Macroeconomic events are playing an increasingly important role in the price development of Bitcoin. With Bitcoin fluctuating around $95,000, these economic reports could determine the market’s next direction.
1. Consumer confidence – today
On Tuesday, the University of Michigan will publish its American consumer sentiment index. This report provides insight into consumer sentiment, their buying intentions, inflation expectations and general economic outlook.
The previous consumer confidence figure was 104.1, and the expectation is for a slight drop to 102.4. Although this figure does not directly influence the crypto market as an interest rate increase by the Federal Reserve would, it is still an important indicator. The crypto market, and Bitcoin in particular, is largely driven by private investors, making their confidence in the economy an important factor.
2. Initial Jobless Claims – Thursday
The weekly report on initial jobless claims will be published on Thursday. This figure provides a real-time indication of the US labor market and can strongly influence investor sentiment.
An unexpected rise in the number of unemployment claims can indicate economic weakness, which often leads to a reluctance among investors to take risks. This can reduce the demand for volatile assets such as Bitcoin. On the other hand, if unemployment claims fall or are lower than expected, this indicates a strong labor market. This could encourage investors to take more risks, which could be positive for crypto.
The forecast for this week is 225,000 unemployment claims, up from the previous 219,000.
3. GDP – Thursday
The American GDP report will also be published on Thursday, which could have a major impact on the crypto market. Like other economic figures, GDP provides insight into the overall health of the economy and can influence expectations regarding the Fed’s monetary policy.
A stronger than expected GDP can indicate a strong economy, which can reduce the attractiveness of Bitcoin as a safe haven. Investors may then be inclined to invest in traditional assets such as stocks, while the Fed may maintain a tighter monetary policy. This could put downward pressure on the Bitcoin price.
However, if GDP turns out weaker than expected, this could fuel concerns about a recession. This could increase the likelihood of interest rate cuts, which could be beneficial for crypto. The current expectation for Q4 2024 is 2.3% growth.
4. PCE inflation rate – Friday
The Personal Consumption Expenditures (PCE) report, the Fed’s favorite inflation gauge, will be published on Friday. This report will provide more clarity about the inflation trend and can therefore influence expectations about future interest rate changes.
If the PCE turns out to be higher than expected (above 0.3% monthly growth for the general index or 0.2% for core inflation), this may indicate that inflation remains persistent. This would reduce the likelihood of rapid interest rate cuts, making investors less inclined to invest in risky assets such as Bitcoin.
A lower PCE, closer to or below the Fed’s 2% target, on the other hand, could cause a rally. This could fuel expectations that the Fed will soon lower interest rates, which would give the crypto market a boost.
