The word Paul and the end of QT may affect liquidity and Bitcoin's position.
ADP job statistics and unemployment claims may affect the likelihood of an interest rate cut and pressure the cryptocurrency markets.
The PCE inflation reading may confirm price cuts and the direction of BTC.
The first week of December 2025 will witness critical U.S. economic events that impact monetary policy expectations and Bitcoin's direction, as traders prepare for potential actions from the Federal Reserve (Fed).
Bitcoin investors face a crucial week with Federal Reserve Chair Jerome Powell's talk on December 1, coinciding with the end of the official quantitative tightening (QT) policy. With the odds of a rate cut in December now raised to 86%, significant volatility is expected across risk assets.
Powell's speech and the end of quantitative tightening
Federal Reserve Chair Jerome Powell is expected to speak to markets on Monday, December 1, at 8:00 PM Eastern Time. This event is not only a highly anticipated speech from him but also marks the official end of the Federal Reserve's quantitative tightening program, a policy change announced by the Federal Open Market Committee in October.
The Federal Reserve's statement on October 29 said, "The committee decided to end the reduction of securities holdings on December 1,"
This move reflects the ample reserves available in the banking system. Powell's remarks come amid speculation about potential changes in Federal Reserve leadership, adding another layer of uncertainty in the market.
Since Powell's speech occurs before the Federal Reserve's communication blackout period ahead of the December policy meeting, it is likely to be of significant importance.
Any hints regarding future prices may spur immediate market reactions. The end of quantitative tightening suggests a shift toward a more accommodative monetary policy, which could increase dollar liquidity.
Adding to the uncertainty, reports indicate that President Trump has already chosen a replacement for Powell, although no official announcement has been made yet.
Such speculations may increase volatility as markets weigh the possibility of a new chair who may push for faster rate cuts.
Odds of replacing Federal Reserve Chair Jerome Powell. Source: Kalshi
Employment in ADP
Automatic Data Processing (ADP), the largest payroll processor in the U.S., is preparing to release the ADP employment change report for November, which measures the change in the number of people employed in the private sector in the United States, at 8:15 AM Eastern Time on Wednesday.
The previous report for November indicated only a gain of 42,000 jobs, according to MarketWatch's economic calendar. The new data will provide key insights into labor market health ahead of the government's official job numbers release.
Economic events in the United States this week. Source: MarketWatch
A strong employment number could reduce the chances of a rate cut and put pressure on Bitcoin and other risk assets. Conversely, weak job growth could bolster the case for Federal Reserve easing, which typically benefits cryptocurrency markets.
The well-known artificial intelligence bubble is expected to play a role in the U.S. jobs report this week, even as various industry experts express their sentiments.
Labor statistics are crucial for the Federal Reserve's dual mandate and direction of policy decisions.
Initial unemployment claims
Initial jobless claims arrive on Thursday, December 4, at 8:30 AM Eastern Time. As a weekly measure of layoffs, this report provides an immediate view of labor market conditions. It indicates the number of American citizens who filed for unemployment insurance for the first time last week.
Increasing claims may indicate economic weakness and support calls for easier monetary policy, while decreasing claims suggest resilience and less urgency to cut rates.
Historically, Bitcoin has been highly sensitive to employment releases as they shape the Federal Reserve's monetary policy expectations and liquidity.
Traders often position themselves ahead of these reports, leading to increased volatility in spot markets and derivatives markets.
PCE inflation data
Friday, December 5, brings the Personal Consumption Expenditures (PCE) price index at 8:30 AM Eastern Time, the Federal Reserve's preferred measure of inflation.
This report reveals the extent of progress towards the central bank's 2% target. It will be released alongside personal income and spending data to provide a comprehensive view of consumer health.
Investors are focused on core and headline PCE figures. A weaker reading could confirm a downward trend in inflation, bolstering expectations for a rate cut in December.
Data from the CME FedWatch Tool shows that interest rate bettors are wagering on an 87.6% chance of a rate cut at the December 10 meeting, compared to a 12.4% chance of policymakers maintaining their stance.
Odds of a rate cut by the Federal Reserve. Source: CME FedWatch Tool
In contrast, persistent inflation may lead to caution from the Federal Reserve, potentially disappointing markets hoping for sharp easing.
Consumer sentiment is reported at 10:00 AM Eastern Time, with the previous value at 51.0 on the economic calendar. This data reflects households' views on the economy and spending. A decline in sentiment can indicate decreased demand and support the need for easier monetary policies, which typically benefits Bitcoin.
These four major economic releases create a high-stakes environment for digital asset markets in one week. Bitcoin's correlation with traditional risk assets means that general economic news is likely to drive market direction more than events specific to digital currencies.
As the first week of December begins, interactions between job data, inflation trends, and the Federal Reserve's stance define Bitcoin's momentum and its response to changing monetary policy signals.
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