Amid the ongoing range-bound movement of Bitcoin (BTC), crypto traders and investors this week are focusing on key US economic events that could affect prices and set a directional trend.
Bitcoin continues to trade between the psychological $60,000 level and the $57,000 threshold. Despite September’s typical challenges, traders remain hopeful that “Uptober” will bring better market conditions.
Key events on the US economic calendar
The US market will wake up on Monday to the launch of Donald Trump’s decentralized finance (DeFi) project, World Liberty Financial (WLFI).
“Join me live on Twitter Spaces at 8 p.m., this September 16, for the launch of World Liberty Financial. We are embracing the future with crypto, leaving the slow and outdated big banks behind,” Trump said in a recent video message on X.
However, three key US economic data releases this week could also impact crypto portfolios. With Bitcoin up nearly 7% over the past seven days, whether these gains continue will depend on how the market reacts to these reports.
US retail sales
The Commerce Department’s Census Bureau will release U.S. retail sales data Tuesday, providing key insights into consumer spending trends, which make up a large part of the U.S. economy.
In July, U.S. retail sales unexpectedly rose 1% from the previous month, a sharp contrast to June’s revised 0.2% decline and far exceeding economists’ expectations of a 0.3% rise.
As consumer spending is a major driver of economic growth, strong retail sales figures in August will ease recession worries, signal a healthy economy and boost confidence in riskier assets such as cryptocurrencies and stocks.
FOMC interest rate decision
The long-awaited interest rate decision from the Federal Open Market Committee (FOMC) is set for Wednesday. After the recent US consumer price index (CPI) reading and other key economic data, a rate cut looks almost certain as inflation cools.
However, the size of the cut remains unclear, with market participants eager to learn the Federal Reserve’s preferred approach. According to the CME FedWatch Tool, there is a 59% probability of a 50 basis point (bps) rate cut and a 49% chance of a 25 bps cut.
The potential impact on Bitcoin and other risk assets will depend on what traders have already priced in. A 50 bps cut could surprise investors, potentially driving market volatility. In contrast, a 25 bps cut would be in line with expectations, likely prompting a more measured reaction from Bitcoin.
Notably, JPMorgan supports a 50 bps cut, despite the Fed’s tightening monetary policy as inflation nears the 2% target.
“We think there is good reason to accelerate their pace of rate cuts,” said Michael Feroli, JPMorgan Chase’s chief economist in the US.
However, BeInCrypto noted that such a move could signal broader economic concerns, causing investors to shy away from riskier assets like Bitcoin. As a result, most analysts expect a cut of 25 bps, as the current real Federal Funds rate suggests that the Fed’s policy is already quite restrictive.
“The current expectation is that the Fed will cut interest rates by 0.25%, which will be positive for financial assets such as stocks and crypto, as it reduces the cost of borrowing money,” Mati Greenspan, CEO of Quantum Economics, told BeInCrypto said.
After Wednesday’s rate decision, markets will closely follow Fed Chairman Jerome Powell’s press conference for insights on future rate cuts. Based on current data and market sentiment, a soft landing for the rest of the year seems likely.
US unemployment claims
Initial jobless claims are also on the watch list this week, providing insight into the current state of the labor market. While the labor market has softened, unemployment rates remain relatively low.
Jobs fell significantly, consistent with a more normalized market. As reported by BeInCrypto, the US economy added just 142,000 jobs in August, missing expectations.
However, the unemployment rate for August met forecasts, standing at 4.2%, which was a slight improvement from the 4.3% recorded in July, indicating a decrease in unemployment.
Read more: How to buy Bitcoin (BTC) and everything you need to know
Thursday’s data will reveal the latest progress in the US labor market. Although its impact may not be as direct or significant as other economic indicators, an increase in jobless claims can signal economic weakness. This may prompt some investors to turn to alternative assets, such as cryptocurrencies, as a hedge against traditional markets.
Disclaimer
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Disclaimer for Uncirculars, with a Touch of Personality:
While we love diving into the exciting world of crypto here at Uncirculars, remember that this post, and all our content, is purely for your information and exploration. Think of it as your crypto compass, pointing you in the right direction to do your own research and make informed decisions.
No legal, tax, investment, or financial advice should be inferred from these pixels. We’re not fortune tellers or stockbrokers, just passionate crypto enthusiasts sharing our knowledge.
And just like that rollercoaster ride in your favorite DeFi protocol, past performance isn’t a guarantee of future thrills. The value of crypto assets can be as unpredictable as a moon landing, so buckle up and do your due diligence before taking the plunge.
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