The cryptocurrency market experienced a sharp decline over the weekend, with the price of Bitcoin dropping to a support level of $112,000 before rising slightly above $114,000, amid renewed economic tensions and a decline in risk appetite, especially following U.S. President Donald Trump's announcement of new tariffs under an executive order, along with weak data from the U.S. labor market.
Volatility is expected to continue this week due to three main factors:
1. Rising trade tensions:
The U.S. administration imposed reciprocal tariffs that will take effect on August 7, while trade talks with China resume ahead of a major review expected on August 12.
The return of these tensions to the forefront may increase pressure on financial markets and lead to sharp moves in risk assets, including cryptocurrencies.
2. Influential economic data:
Markets are anticipating the release of the Purchasing Managers' Index (PMI) for services from Standard & Poor's 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 watching Federal Reserve Chair Jerome Powell's speech during the annual monetary policy forum in Kansas City.
Any hints regarding a potential interest rate cut at the upcoming September meeting could directly impact 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 lead to increased market volatility, especially if they come in below expectations.
Additionally, unemployment claims data will be released on Thursday, which is another indicator of the state of the U.S. labor market.
All of these factors could affect the course of financial markets, including the cryptocurrency market.
