This week, three US economic events will be on the radar of crypto traders and investors. This interest comes from the continued influence of US macroeconomic data on Bitcoin (BTC) and cryptocurrency prices in 2024, after interest declined last year.
Currently, Bitcoin has not yet reached the psychological threshold of $100,000, hovering above $98,000 after falling to around $95,000 over the weekend.
Minutes of the Fed’s October FOMC Meeting
All eyes will be on the Federal Reserve (Fed) on Tuesday, November 26, when the minutes of the November 6 FOMC (Federal Open Market Committee) meeting are released. Traders and investors will be watching to see whether the FOMC minutes reveal more details about how policymakers assess the economy ahead of the November meeting.
The minutes may also show at least some discussion about the potential economic impact of the US election results. They will come after policymakers voted to cut interest rates by 25 basis points, following an initial 50 basis point cut in September. Investors will be looking for any clues about the Can the pace of interest rate cuts slow down from here?
Meanwhile, data continues to show that the US economy is holding up well. However, fears that President-elect Donald Trump’s proposed policies could fuel inflation could minimize the need to lower interest rates.
“Experts say that Donald Trump’s election victory could change interest rate policy in the US because the policy promises he makes are causing higher inflation risks… Tradition tells us that Import tariff increases will increase inflation in the US,” The Canadian Press reportedciting economist Sheila Block of the Canadian Center for Policy Alternatives.
One way the FOMC minutes could impact Bitcoin and cryptocurrencies is through their influence on overall market sentiment. Every dove or hawk in the minutes could influence market expectations and lead to changes in investor behavior.
Number of initial applications for unemployment benefits
Another important US economic event this week was the release of initial jobless claims on Wednesday, November 27. Labor market weakness has been a concern. through the summer and fall, with jobless claims rising, the unemployment rate rising and monthly employment growth slowing. This data influenced the Federal Reserve’s decision to cut interest rates by half a percentage point in September.
Since then, however, labor market data has been better than expected, with the unemployment rate falling from a peak of 4.3% to 4.1%. Initial jobless claims data previously came in at 213K for the week ending November 16, below the 220K forecast, which is a good sign.
“U.S. initial jobless claims fell 6,000 to 213K last week, the lowest since April. Labor market is stabilizing,” publisher of Lead-Lag Report note.
Weekly unemployment claims have been falling steadily after reaching a more than one-year peak last October. While initial claims fell, the continued rise in claims suggests that employers are trying to retain workers. However, people who lose their jobs have difficulty finding new jobs.
“Initial claims continue to be very slow but claims continue to reach a three-year high. This reinforces that employers are not actively firing but they are also not hiring,” Sevens Report comment.
For now, the situation appears to remain stable on the labor front, one of the Federal Reserve’s two dual mandates. If this trend continues, it could suggest that economic troubles are reversing and the labor market is strengthening. This could lead to increased consumer spending and investment in traditional assets such as Bitcoin and cryptocurrencies.
US PCE inflation
Crypto market participants will also be keeping an eye on US PCE (Personal Consumption Expenditures) inflation data in October, as this is the Fed’s preferred measure. The October PCE Index on Wednesday is also worth watching. The data will show whether inflation continues to slow in October.
“Expectations: Monthly PCE expected to increase 0.2% Annual PCE expected at 2.3% Monthly core PCE growth at 0.3% Year-over-year core PCE growth at 2.8 %,” data on MarketWatch shows.
Rising PCE figures often raise concerns about higher levels of inflation in the economy. If PCE inflation beats expectations, it could weaken the dollar as investors anticipate potential monetary policy actions, such as interest rate hikes. A weak USD is often beneficial for Bitcoin and other cryptocurrencies, which typically show an inverse relationship with the USD.
In such situations, investors can turn to alternative assets such as Bitcoin as a protection against inflation. Cryptocurrencies are often seen as a store of value, similar to gold, during periods of inflationary pressure.
For now, the Federal Reserve remains optimistic that inflation is approaching its 2% target. Policymakers have maintained interest rates at historically high levels to combat bouts of inflation over the past two years. Against this backdrop, traders and investors are closely watching price data for positive signals that could prompt the Fed to start gradually reducing interest rates.