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The key crypto currency Bitcoin again trended sideways in the previous week and was unable to follow the price recovery on the US stock indices. Lower than forecast PCE inflation data saw the Nasdaq and S&P500 close at weekly highs. Despite Bitcoin taking a breather, this development is still positive. According to Coin Metrics, the correlation of the key cryptocurrency with the US stock index S&P500 has further reduced in the last few weeks of trading, which also indicates an increasing isolation from the classic financial markets. The continued resilience to negative news such as the CFTC lawsuit against the largest crypto exchange Binance in the USA is noteworthy. As long as the Bitcoin coursecontinues to rank unimpressed within the trading range from the previous week and the buyer side can defend the area between 26,500 US dollars, the view, similar to that described in the last Bitcoin price analysis from March 28th, should be directed upwards for the time being.
The following economic data will be relevant this week
The trading week leading up to the Easter holidays starts on Monday with the release of the US manufacturing PMIs. The day after, the JOLTs job report from the USA was published. In the middle of the week, the Institute for Supply Management will present the latest purchasing manager indices for the US service sector. At the end of the week on Good Friday, the US Bureau of Labor Statistics publishes the large US labor market report (NFP) and the current US unemployment figures, despite the holiday and closed Wall Street.
US purchasing managers’ index for the manufacturing economy
Monday, April 03, 2023: At the beginning of the week At 16:00 (CET) investors will look at the ISM Purchasing Managers’ Index (PMI) for the US manufacturing sector. For the past month of March, the experts expect a sustained reduction to 47.5. At 47.7, the index determined last month was already below the forecast of 48.0. If the purchasing managers’ index corrects again, consolidation on the US stock markets is to be expected, as was the case in the previous month. Bitcoin benefited from weakness in the US Dollar Index (DXY) on the day. It remains to be seen whether the trend of relative outperformance of the BTC price compared to the US stock markets can be consolidated. On the other hand, if the manufacturing sector stabilizes and comes in above expert forecasts, the US stock market should remain bullish. Optimally, the crypto sector can also join this positive movement and trend back towards its highs of the previous week. Traditionally, however, sales in the week before Easter are below average, which is why a sustained sideways phase should not come as a surprise.
JOLT’s job report on Tuesday
Tuesday, April 04, 2023:At 4:00 p.m. (CET) the current JOLTS jobs report for the month of March will be presented. The latest estimate is 10.4 million vacancies. In the previous calculation period, the number of vacancies was 10.82 million, around 200,000 fewer than the figures published in February. Despite the steady decline in open job offers, analysts’ pessimistic forecasts have been consistently exceeded since October 2022. If the number of vacancies is below expectations for the first time, this would be an indication that the economic slowdown that market experts had been predicting for some time has finally arrived in the US economy. A deterioration in the situation on the job market would further increase the probability of the economic downturn in the second quarter. A weak JOLTS report is likely to lead to renewed price setbacks on the US stock indices and could also put prices on the crypto market under further pressure. However, if US companies continue to create more new jobs than forecast, as they have done in the last six months, the chance of a bullish continuation of the trend in US stock indices increases. In recent months, the financial market has reacted positively to a resilient JOLTs report.
US Service Sector Purchasing Managers Indices
Wednesday, April 05, 2023:The latest Purchasing Managers’ Indices (PMI) for the US services sector will be released midweek at 4:00 p.m. (CET). Most recently, the figures presented for February, at 55.1, were again above the expert expectation of 54.5. The service sector is once again proving to be robust. As a result, the stock markets in the USA rose significantly northwards. If the analyst estimate of 54.5 is exceeded again, investors should continue to rate this positively. The stock as well as the crypto market could benefit again. If, contrary to expectations, the service sector weakens significantly, this would be a clear signal that the US economy is increasingly cooling down overall. Investors could increasingly part with stocks from this sector, which is reflected in falling prices, especially in the stock index S&P500, would express. However, the effects on the prices of Bitcoin and Co. are difficult to predict. As long as the Nasdaq does not drop significantly again, the key crypto currency could be largely unimpressed in view of the recent low correlation with the largest US stock index. Problems in the service sector should also further increase the likelihood of inflation falling further in the coming months.
Employment report and unemployment rate in the US at the end of the week
Friday, April 07, 2023: Despite the Good Friday holiday, the latest US non-farm payrolls (NFP) figures for the month of March will be presented at 2:30 p.m. (CET). The expert estimate of 213,000 newly created jobs is below the February data. In the previous month, US companies had created 265,000 new jobs. If the forecast is exceeded for the seventh month in a row, a positive reaction on the financial markets can be expected. The recession, which many market players regard as certain, would continue to be postponed into the future. On the other hand, weak labor market data is likely to have a negative impact on prices on the financial markets and lead to consolidation.
Also at 2:30 p.m. (CET) the US unemployment rate for the month of March will be published. The market experts’ estimate is 3.6 percentage points. Most recently, the unemployment rate rose from 3.4 percent to 3.6 percent despite a strong labor market report. It remains to be seen whether this negative development is only temporary. Continued weakness in the real estate and construction sectors could further increase the number of unemployed. If the number of newly created jobs is below analysts’ expectations, the unemployment rate is likely to increase further and reach the December 2022 level. However, in anticipation of a public holiday, US stock trading will remain closed. Only the futures market is open and could move index prices.
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