After the publication of the consumer price index (CPI) report from the Bureau of Labor Statistics (BLS) last week, crypto traders and investors continue to closely monitor the US economic calendar.
This week, three key economic indicators could influence the sentiment in the bitcoin and cryptocurrency markets as a whole. Meanwhile, Donald Trump's trade policy and geopolitical tensions in the Middle East continue to affect the US economy.
What US indicators could affect crypto this week
Below are three economic indicators that could impact the crypto portfolios of investors and traders in the coming days.
Retail sales in the USA
This week, one of the key benchmarks for the market will be the report on retail sales. It shows how actively Americans spend money. Consumer spending directly affects about 70% of the entire economy.
According to MarketWatch, in April, sales grew by 0.1% compared to March. This is weak but still positive dynamics. Now analysts expect a decrease of 0.6% in May. The main reason is the instability following Trump's trade decisions.
If the May figures turn out to be lower, it could intensify discussions about a Fed rate cut: the economy looks vulnerable, and the market may need a stimulus. Such a backdrop usually plays in favor of bitcoin, making it a safe-haven asset.
But if the statistics turn out to be better, for example, sales do not decline or even increase slightly, it could strengthen the dollar and lower expectations for the rate.
Unemployment claims
This week, a report on initial claims for unemployment benefits will be released. It shows how many people have applied for support for the first time after losing their jobs. This is one of the main indicators of the state of the US labor market.
Employment dynamics is increasingly becoming a benchmark for the crypto market. The weaker the numbers, the higher the expectations that the Fed will opt for a policy easing.
A week earlier, 248,000 new claims were recorded, which is more than analysts expected. Now an increase to 250,000 is projected.
Such dynamics indicate a weakening labor market. This, in turn, increases the chances of a policy reversal by the Fed. This is a good sign for bitcoin.
"The labor market is cracking → 248 thousand claims (maximum since October) → average for 4 weeks: 240 thousand (maximum since August 2023) → on benefits: 1.96 million people (maximum since November 2021). Weakness = Fed reversal = crypto growth," wrote analyst eye zen hour on X.
FOMC decision on interest rates
This week, the main focus is on the Open Market Committee's (#FOMC ) decision on the interest rate. It will be published on Wednesday.
Last week, inflation in the US rose again, for the first time since February. The CPI figure is considered a lagging indicator, but it is what the Fed relies on to try to keep price growth within its 2% target.
Now this data will directly impact the rate decision. According to the CME FedWatch Tool, markets are almost certain that the Fed will not change anything. The probability of maintaining the rate at 4.25–4.5% is estimated at 96.7%.
Nevertheless, 3.3% of market participants still expect a quarter-point cut, down to a range of 4.0–4.25%.
The decision will depend on how much economic statistics indicate the need for stimulus. The Fed has two main goals: stable prices and maximum employment. If the data shows that support is necessary, there is a chance for the rate to shift downwards.
In addition to macroeconomics, political signals may also affect the rate. One of them is the pressure from Donald Trump. Despite the regulator's cautious stance, he is again demanding that Powell cut the rate.
"The Fed needs to cut the rate by a whole percentage point. Then we will have to pay less interest on government debt. This is extremely important," Trump wrote on Truth Social after the inflation data was published.
Markets are currently pricing in a rate cut in September. Therefore, an unexpected move this Wednesday would be a shock to everyone and would likely give bitcoin a new impetus. After all, lower rates make non-yielding assets, like cryptocurrencies, more attractive.
If the rate remains unchanged, it is unlikely to provoke a sharp reaction, as this outcome is already priced in.
