Crypto markets must brace for volatility this week, with four U.S. economic data likely to impact investors’ portfolios.
These macroeconomic data come as Bitcoin (BTC) remains below $100K. Analysts predict further price declines, but there is still a glimmer of hope, tied to Donald Trump’s inauguration in the next seven days.
Producer price index (PPI)
On Tuesday, US PPI (Producer Price Index) data will be released, with the US Bureau of Labor Statistics (BLS) report expected to have an impact on cryptocurrencies. Specifically, the US PPI report provides insight into inflation at the manufacturer level. It also provides an early signal about future consumer prices and can therefore influence investor sentiment.
This week’s US PPI report will release December producer-level inflation, with the Median Forecast at 0.3%, down from November’s 0.4%. both Forecasts and experts’ expectations, marking the 5th consecutive month PPI increased. High prices of manufactured products in November show that inflationary pressures are still persistent.
It turns out that the Fed’s fight against inflation with higher interest rates is far from over. Therefore, financial markets, including cryptocurrencies, will be watching US economic data on Tuesday. Any significant deviation from the Forecast could affect cut expectations interest rates and market psychology.
Consumer price index (CPI)
Besides the Producer Price Index (PPI), the US Consumer Price Index (CPI) is the focus of attention in this week’s economic data. Minutes from last week’s FOMC meeting highlighted policymakers’ concerns about the inflationary potential of President-elect Donald Trump’s proposed policies, with little indication that the Fed may cut interest rates soon.
According to Reuters, economists expect YoY CPI headline inflation to increase slightly to 2.8% from November’s 2.7%, with Forecasts ranging from 2.6% to 2.9%. Core inflation, excluding food and energy, is expected to rise to 3.3%.
As the market awaits the CPI release on Wednesday, higher-than-expected inflation could increase skepticism about the Fed’s ability to lower interest rates. This concern is further compounded by the inflationary impact of Trump’s proposals. Such developments could strengthen the USD, which could put Bitcoin under downward pressure.
“I think we will go back to $100k and invalidate it if PPI and CPI data don’t make us golden,” one crypto market participant speak.
Blackrock profits
Key earnings reports this week include BlackRock, Citigroup, Goldman Sachs Group, JPMorgan Chase and Wells Fargo on Wednesday, followed by Bank of America and Morgan Stanley on Thursday.
BlackRock’s report will be closely watched due to its prominent role in driving institutional interest in Bitcoin and Ethereum through its IBIT and ETHA ETFs (exchange-traded funds). .
“Looking forward to the dividend increase announcement from BlackRock,” a famous user on X wrote share.
A dividend increase from BlackRock could show that the company sees its Bitcoin-related product as profitable and sustainable. Such a move could improve the reputation of the cryptocurrency market, attracting more institutional investors.
Institutional investors often look for signs of stability and profits before entering new markets. Positive signs from BlackRock could encourage institutional adoption of Bitcoin and Ethereum, which could spur price increases and widespread market adoption.
Initial unemployment claim
Thursday’s weekly unemployment claims report caps off a series of U.S. economic events that could be relevant to the cryptocurrency market. Initial unemployment claims track the number of first-time unemployment claims filed in the previous week, providing an overview of labor market performance.
Recent data showed that US job growth unexpectedly picked up in December, with the unemployment rate falling and weekly initial jobless claims hitting a low of 201K. Additionally, the November JOLTS report from the Bureau of Labor Statistics revealed a surprise 8.1 million job openings, reflecting a strong end to 2024 for the labor market.
Crypto markets will closely watch Thursday’s unemployment claims report for signs of labor market weakness. The average prediction stands at 210K. When demand is lower than expectations, it would suggest a strong jobs market, which could signal steady consumer spending and a resilient economy.
However, such strength could prompt the Federal Reserve to consider raising interest rates, which could boost USD but weigh on Bitcoin.
“The job market is closely linked to consumer spending, which drives much of the U.S. economy. A healthy job market promotes confidence and economic growth while rising employment could signal economic hardship ahead,” said one user on X share.
As of the time of this writing, Bitcoin is trading at $94,045, down 0.5% since opening trading on Monday, according to TinTucBitcoin.
Notably, this week’s US macroeconomic data comes ahead of an important event for cryptocurrencies in the United States. On Monday, January 20, a market holiday, President-elect Donald Trump will be inaugurated. In his inaugural address to the nation, Trump may pledge to a U.S. strategic reserve Bitcoin presence.
