How do various news data (news background) affect the cryptocurrency market? Let's break it down.
The main source of influential news is the United States. All economically important news happens there, as the Dollar is the main currency.
Let's analyze recent data on the example of the number of initial jobless claims in the US.
Date - 20.04 at 3:30 pm
Previous: 240K
Forecast: 240K
Actual: 245K
Explanation: The actual values turned out to be higher than expected (245K versus 240K people), which means that the number of unemployed increased, directly affecting the USD (Dollar).
If the Dollar drops, cryptocurrency grows, as people invest fiat money.
This is what the Federal Reserve (Fed) does by tightening its monetary policy, i.e. removing excess money from the market. Thus, the Fed, through its tightening, can direct the market where it needs to go, increasing or decreasing inflation in the country. And since other countries are tied to the Dollar, they follow the US economy.
Should you trade on the news? Definitely yes, but you need to be very careful and knowledgeable during the period of news releases. Often, understanding the news, you can accurately predict the nearest direction, for example, of the BTC, ETH, or any other coin whose price is influenced by this news