The cryptocurrency market experienced a sharp decline over the weekend, with the price of Bitcoin dropping to a support level of $112,000 and then rising slightly above $114,000, amid renewed economic tensions and a decline in risk appetite, especially after U.S. President Donald Trump announced new tariffs under an executive order, along with weak data from the U.S. labor market.
Volatility is expected to continue this week as a result of three main factors:
1. Escalating trade tensions:
The U.S. administration has imposed reciprocal tariffs that will take effect on August 7, while trade talks with China resume ahead of a key review expected on August 12.
The return of these tensions to the forefront may increase pressure on financial markets and lead to sharp movements in risk assets, including cryptocurrencies.
2. Influential economic data:
Markets are anticipating the release of the purchasing managers' index for services from S&P and the Institute for Supply Management (ISM), which will reflect the state of the U.S. economy.
This data comes after a weaker-than-expected jobs report, increasing the likelihood of an economic growth slowdown.
Investors are also closely monitoring the speech of Federal Reserve Chairman Jerome Powell during the annual monetary policy forum in Kansas City.
Any hints regarding a potential interest rate cut at the upcoming September meeting may directly affect market movements.
3. Earnings season and unemployment data:
With the corporate earnings season reaching its peak, attention is focused on upcoming reports from companies like Palantir and AMD.
The results of these companies could increase market volatility, especially if they come in below expectations.
Additionally, unemployment claims data will be released on Thursday, another indicator of the state of the U.S. labor market.
All of these are factors that may influence the dynamics of financial markets, including the cryptocurrency market.
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