Markets
Cryptocurrency Markets Brace for Impact of Major US Economic Events
US economic data continues to impact Bitcoin and cryptocurrencies in general. Market participants are bracing for the impact ahead of several events on the calendar this week.
Markets are also coming off the much-hyped Bitcoin 2024 Conference, which concluded on Saturday after keynote speeches from keynote speakers.
US Economic Data This Week
Second Market ObservatoryThis week is full of economic events. Let’s analyze those that could have a serious impact on the cryptocurrency market and affect investors’ portfolios.
US Economic Calendar. Source: Market Observatory
JOLTS Job Offers in the United States
Markets are awaiting Tuesday’s Job Openings and Labor Turnover Survey (JOLTS) for June from the U.S. Bureau of Labor Statistics (BLS). The number of job vacancies is expected to decline to 8 million from 8.1 million in May, as are measures of labor market slack and wage growth.
These data are expected to inform the labor market and influence policy. Investors will be watching job creation numbers and wage growth data closely, which could influence market sentiment and expectations for monetary policy.
Weaker employment data and slowing wages are positive for cryptocurrencies. to encourage the Federal Reserve to start cutting interest rates. While labor markets need to cool down for inflation declining, the July 30 report could give a jolt to the Bitcoin market.
Non-farm payrolls
Traders will also be closely watching the BLS ADP on Wednesday. occupation Nonfarm Payrolls (NFP) report. The U.S. economy added 206,000 jobs in June, slowing from May’s lowered tally of 215,000.
Wednesday’s report is expected to show private payrolls rising by 149,000 jobs in July. The median forecast is 168,000, up from 150,000 previously. In the current environment, negative employment data is a positive for markets.
To know more: Cryptocurrency or Banking: Which is the Smarter Choice?
In particular, the US Fed uses NFP data to inform its decision to raise interest rates or keep them higher for a longer period. Like the JOLTS report, this data also shows whether the labor market is supportive of a change in the Fed’s stance and traders’ fears of an interest rate hike.
FOMC meeting and Powell press conference
On July 31, the Federal Open Market Committee (FOMC) will be interesting to follow. It will be followed by a press conference by Federal Reserve Chairman Jerome Powell. The meeting will focus on potential changes in interest rates.
The Fed kept interest rates between 5.25% and 5.50% in June. As reported by BeInCrypto, the The US Consumer Price Index (CPI) fell to 3% in June, suggesting an easing in inflation. However, according to Powell’s delivery of the Half-yearly report on monetary policyThe Fed is not ready to cut rates.
He cited a “lack of confidence that inflation is sustainably moving toward the 2% target.” That means the Fed could continue to raise interest rates until it feels comfortable that inflation has calmed down. Unfortunately, progress against inflation has been slow since mid-2023, inspiring policymakers to be skeptical of early rate cuts: They could reignite inflation.
To know more: How to Protect Yourself from Inflation Using Cryptocurrencies
However, the case for a rate cut continues to strengthen. Tailwinds are coming from inflation and labor market data showing slowing price increases while unemployment rises.
As a result, expectations are that the Fed could cut its benchmark interest rate by September. Notably, the central bank has not yet committed to a timeframe.
Morgan Stanley analysts expect the FOMC to keep the current interest rate at 5.375%. They expect Powell to reiterate his confidence in his Wednesday press conference, hinting at a growing willingness to lower interest rates.
“We continue to look for three cuts this year starting in September. A strong gain on inflation allows the Fed to move closer to rate cuts. Chairman Powell should signal improved confidence,” analysts said.
However, the minutes of the June FOMC meeting revealed steady economic activity in the United States. They also reported strong labor market conditions and low unemployment rates. The bottom line is that political leaders follow the path to slower inflation. The main focus of Fed officials is to use inflation indicators to determine whether price increases are under control or not.
US Economic Calendar Implications for Cryptocurrencies
The number of Nonfarm Payrolls added to the US economy each month has a major effect on the US dollar and risk assets such as Bitcoin and cryptocurrencies. The Fed looks at jobs and inflation data to determine the need for an interest rate hike. Therefore, employment data is also key to the central bank’s decision.
Higher interest rates make borrowing expensive, which negatively impacts asset risk. This is because traders use leverage for gains in risky assets like cryptocurrencies. Therefore, the NFP data could prompt volatility in the prices of Bitcoin and cryptocurrencies in general.
Cryptocurrency traders and investors should therefore brace for volatility this week. Bitcoin is struggling to reach $70,000 and could drag altcoins down with it depending on how US Economic Data have proven effective. Total global market capitalization rose nearly 4%, kicking off the week with a strong start.
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