3 Things That Could Influence Crypto Markets This Week

Last week was brutal for crypto markets, with losses extending into the weekend.

A flurry of employment data outside the US also didn’t stop stocks from falling as ‘Slumptember’ lives up to its name. This week will be heavy on inflation data with additional reports on jobless claims.

“This is the last week of inflation data before the long-awaited September Fed meeting,” Kobeissi’s Letter notes.

Economic events from September 9 to 13

The consumer price index (CPI) report for August, which is one of two key inflation indicators used by the central bank, will be released on Wednesday. The data reflects price trends in the economy and shapes consumer spending, so Fed policymakers are watching it closely as it will affect rate decisions.

The Producer Price Index (PPI) report for August, which reflects input prices for producers and manufacturers, will be released on Thursday. It is also a leading indicator of inflationary pressures as it measures the costs of producing consumer goods, making it a leading indicator for the following month’s CPI report.

Thursday will also see initial jobless claims data, which provide a broader picture of the labor market.

Key events this week:

1. OPEC Monthly Report – Tuesday

2. CPI Inflation Data for August – Wednesday

3. Initial data on unemployment claims – Thursday

4. August PPI Inflation Data – Thursday

5. Claims data for continuous unemployment – ​​Thursday

6. MI Consumer Sentiment Data – Friday

This is the…

— Kobeissi Letter (@KobeissiLetter) September 8, 2024

Preliminary readings of consumer inflation expectations from the Michigan Consumer Sentiment Index are released on Friday. These reports provide the results of a monthly survey of consumer confidence levels and views on long-term inflation. They are also used as a component of the Fed’s inflation expectations index calculations.

After last week’s weak economic data, the market is weighing the odds of a rate cut of 25 to 50 basis points at the Fed’s September meeting, and the CPI report is likely to have an important role in this process.

A weaker-than-expected CPI report could increase the chances of a 50bp rate cut at the September 18 meeting. The CME Fed Watch tool currently has a 31% chance of a larger rate cut.

Crypto market outlook

In theory, a bigger rate cut would be good for the crypto markets, but even that doesn’t seem to be enough to take away the bearish sentiment at the moment.

Markets returned to levels not seen since the August 5 Black Monday crash, with total market capitalization below $2 trillion at the end of last week. It has since recovered to $2.03 trillion, but remains at its lowest level since early February.

Bitcoin hit a weekend low of $53,300, but has since rallied to touch $55,000 during Monday morning’s Asian trading session. Ethereum fared worse, briefly dipping below $2,200 over the weekend. The asset recovered the $2,300 level, but remains weak.

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