Bitcoin And Crypto Face These Key Dates In The Week Ahead
Once again, this week will bring important macroeconomic data for the Bitcoin and crypto markets that investors should keep an eye on. While Bitcoin has consistently managed to break correlation with the S&P 500 and the Dollar Index (DXY) in recent weeks, it is likely that the Federal Reserve’s monetary policy will continue to have a strong impact on cryptocurrencies.
And even though the week has started off calm, there are two macros events this week it could be significant. First, however, the US stock market starts with a day off due to President’s Day, while quarterly gains continue Tuesday through Friday.
In particular, major retailers may test the strength of the US stock market rally next week as investors eye the health of consumer spending and the impact of inflation on corporate earnings. On Tuesday, Walmart and Home Depot will release their report.
A damper on Bitcoin’s rally?
But on Wednesday, January 22nd at 2:00 pm EST, the first major event arrives, the FOMC Minutes. This is a detailed report on the most recent FOMC meeting on February 1st, providing detailed information on the economic and financial conditions that influenced the interest rate vote.
Financial and Bitcoin investors will likely pay more attention this time around, as last week several Fed speakers said the rate decision was not unanimous and they supported a 50 basis point increase. There were also higher CPI revisions and a bullish January report last week.
Based on this negative data, some voices suggest that the Fed could use the minutes to make some sneaky corrections. Fed minutes could hint at an imminent rate hike and shake financial markets.
In addition, Powell indicated that the minutes will provide information on what the Fed will decide when it stops its rate hike cycle – also an extremely important data point for financial markets.
In addition, the Fed is likely to reflect its desire for multi-month inflation data, which signals the Fed is on track to hit its 2% target. Here, the focus will be on the still extremely tight labor market, as wage pressures are not compatible with a 2% inflation rate.
Bitcoin investors should therefore watch the FOMC minutes closely to see if the Fed doubles down on its hawk stance. If so, the recent Bitcoin decoupling is likely to be put to the test.
The second big event of the week takes place on Friday, February 24th, when the main PCE price index is released. The PCE price index is the Federal Reserve’s preferred inflation measure because it reflects consumer spending habits in a more timely manner than the Consumer Price Index (CPI).
Core means it excludes the more volatile and seasonal food and energy prices compared to PCE. Since October 28th, Core PCE has dropped from 5.1% to 4.4% year-over-year, most recently in January.
This time, the expectation is for an increase of 0.4% in January, compared to 0.3% in December and 4.3% in the annual comparison. Should there be a downside surprise and the PCE comes in above expectations, fears about sticky inflation are likely to become more entrenched. This could also be a damper on the price of Bitcoin.
At press time, Bitcoin price was sitting at $24,520 after being rejected at crucial resistance at $25,223 once again.
Featured Image from iStock, chart from TradingView.com