Markets
Three threats to watch closely this week
2pm ▪ 4 minute read ▪ by Evans S.
The cryptocurrency market is a turbulent sea where every wave of news can cause ripples. This week, several factors could shake up this sector. Cryptocurrency investors and enthusiasts must remain vigilant in the face of three major threats: US economic decisions, inflation indicators, and the continued dominance of Bitcoin.
The decision of the US Federal Reserve
All eyes are on the American Federal Reserve (Fed) this week. The Fed will announce its interest rate decision on Wednesday, June 12, an event that could have significant repercussions on cryptocurrency markets.
Historically, Fed decisions strongly influence market movements, and cryptocurrencies are no exception.
The Fed is likely to keep interest rates unchanged, following the release of robust employment data in May.
Politicians seem inclined to keep rates between 5.25% and 5.5%, a stability that has lasted for seven consecutive meetings.
However, any hint of change could sow doubt and cause greater volatility in cryptocurrency markets.
Furthermore, the possibility that the Fed will reduce the number of rate hikes planned for this year adds a layer of uncertainty. Investors should prepare for sudden movements, especially those involved in altcoins, which are often more volatile than Bitcoin.
Inflation indicators: CPI and PPI
Inflation indicators play a crucial role in monetary policy decisions. June 12 will see the release of the main report on the consumer price index, a key indicator of inflation.
An increase in the consumer price index could push the Fed to adjust its interest rate policy, with immediate repercussions on cryptocurrencies.
The year-over-year CPI is expected to remain stable at 3.4%, suggesting the Fed may not change rates this week.
However, past correlations between CPI data and Bitcoin prices show that surprises in the numbers can cause significant movements. A higher-than-expected CPI could be bearish for the major cryptocurrency (Bitcoin), while a lower CPI could be bullish.
The following day, June 13, the producer price index (PPI) will be published. PPI, which measures the average change in prices received by domestic producers, is another important indicator of inflation. The cryptocurrency market’s reaction to this data will be closely watched, as it provides clues to the future direction of the Fed’s monetary policy.
Bitcoin’s dominance and its implications for other cryptocurrencies
Finally, Bitcoin’s continued dominance in the cryptocurrency market is a crucial factor to monitor. Bitcoin, often nicknamed digital gold, maintains a dominant position that influences the entire market.
This dominance may undermine the idea of an altcoin season, where alternative cryptocurrencies overtake Bitcoin.
On June 9, the cryptocurrency trader known as “Emperor” shared his thoughts on the state of the market with his 390,000 followers on X.
According to him, the current sideways trend could continue, with little short-term volatility. However, altcoins may suffer due to Bitcoin’s strong dominance, discouraging significant rotation into these assets.
Investors, therefore, need to closely monitor Bitcoin’s movements. Bitcoin’s strong performance may drain capital from altcoins, exacerbating their volatility. Conversely, Bitcoin weakness could provide an opportunity for altcoins to shine, but this requires constant vigilance and a well-defined strategy.
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Evans S.
Fascinated by bitcoin since 2017, Evariste has not stopped researching on the topic. If his main interest is in trading, the sage is desperate to discover all the advanced cryptocurrency centers. As an editor, he aspires to consistently provide high-quality work that reflects the state of the industry as a whole.
DISCLAIMER
The views, thoughts and opinions expressed in this article are solely those of the author and should not be relied upon as investment advice. Do your research before making any investment decisions.