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The recovery in the crypto sector continued to gain momentum in the past trading week and caused the price of the key crypto currency Bitcoin (BTC) to rise to a new high for the year at USD 31,443. The largest cryptocurrency thus braced itself against a price consolidation on the US stock markets. The Nasdaq100 technology index posted its first weekly decline since mid-April at -1.4 percent. Further applications for Bitcoin Spot ETFs by the fund providers WisdomTree and Invesco are likely to have had a positive effect on the price development of Bitcoin and Co. The fact that Fed boss Jerome Powell recognized stablecoins as a type of money in his annual survey is also positive. With his statement, the top US monetary authority is opposed to a possible SEC lawsuit, which could also aim to regulate the DeFi sector as well as stablecoins. New statements by the International Monetary Fund (IMF), which has so far been more hostile to crypto, could also be interpreted as stabilizing. In a new statement, he also spoke out against nationwide crypto bans. After the negative news about the SEC lawsuits against Binance and Coinbase in the middle of the month, the tide seems to be turning.
However, Bitcoin must confirm its recovery movement with a sustained price stabilization above the $30,000 mark this week in order to target new targets on the upside in the short and medium term.
The following economic data will be relevant this week
The new trading week will be opened by figures for US consumer confidence tomorrow, Tuesday. In the middle of the week, several speeches by the chairmen of several central banks will follow at the same time in the afternoon. In the evening, investors look again towards the USA. The Federal Reserve Bank (Fed) announces the results of its annual bank stress test. The current estimates for US gross domestic product will follow in the second half of the week. Finally, on the last day of the trading week, investors are looking to the US Fed’s much-watched PCE core inflation.
US consumer confidence opens the trading week
Tuesday, June 27, 2023: Tomorrow, at 4:00 p.m. (CET), the Conference Board (CB) will release the monthly US consumer confidence figures for the month of June. At 102.3 in the previous month, private households’ assessment of economic development in the USA was above the expert forecast of 99.0. Currently, no clear direction can be identified, the figures in the previous months were partly above, but partly also below the analysts’ expectations. For the month of June, the market observers forecast an increase to 104.0. If the estimates are undercut and even below the figures presented for the previous month of May, this would increase the likelihood of a US recession. In 2023, weak consumer data already had a negative impact on price developments on the financial market. A persistently weak consumer confidence could have a negative impact on the US stock markets and also temporarily weigh on the crypto sector. If, on the other hand, the forecast is met or even exceeded and optimism among US consumers recovers, the Bitcoin price should be able to benefit from this, as it was last in April.
Fed Chair Powell and ECB Chair Lagarde appear in front of the cameras at the same time
Wednesday, June 28, 2023: The heads of the relevant central banks are currently in the spotlight almost every week. There will be a triple showdown on Wednesday. In addition to US Federal Reserve Chairman Powell and the Chair of the European Central Bank (ECC) Lagarde, Andrew Bailey, President of the English Central Bank (BOE), also appears in front of the cameras. All three are likely to address the current interest rate and monetary policy of their central banks in their speeches and provide an assessment of inflation trends in the coming months. While Powell is likely to focus on the recent pause in US interest rates due to the further decline in US consumer prices, Lagarde and Bailey in particular will discuss further interest rate moves. Above all, BOE boss Bailey will have to justify his latest interest rate hike of 50 basis points (only 25 basis points were expected) and address the recently rising consumer prices in the United Kingdom. In view of the uncertain political situation in Ukraine, which could result in an increase in wheat and rye prices, the situation on the raw materials market could deteriorate again in the coming months. This development could also thwart the ECB’s plan to consider a pause at one of its next interest rate meetings.
Annual US bank stress test
On Wednesday evening, the US Federal Reserve will announce its results of the US bank stress test. In view of several emergency interventions by various US authorities to save various financial institutions in the previous months, this report is awaited with great anticipation. Only the Fed’s provision of liquidity was able to avert a collapse of the banking system. Market participants will therefore take a close look at the health of medium-sized banks in the USA. Should some regional banks fail the test, a significant increase in volatility in the US financial sector can be expected as a result. If more money is needed for the ailing banking system, the US dollar index DXY could come under further pressure and thus act as a tailwind on the prices of Bitcoin and Co.
Gross domestic product in the US
Thursday, June 29, 2023: At 2:30 p.m. (CET), the latest advance releases of US gross domestic product for the first quarter of trading in 2023 will be presented. Although the preliminary forecasts of 1.3 percent growth were again slightly above the estimates of 1.1 percent, they are still well below the final figures for the final quarter of the previous year. At 2.6 percent economic growth, these were twice as high as currently forecast. The latest estimates of 1.4 percent were raised again slightly by the analysts. If the expert forecast is confirmed or even beaten, this indicates at least a stabilization of the US economy. The market participants could then rate this recovery trend positively in an initial reaction and continue to hold on to their stocks and crypto holdings and possibly even expand them. If, on the other hand, the current estimate is missed, the US financial market is likely to react negatively. The Bitcoin course could consolidate as a result and lose strength.
US PCE core inflation to end the week
Friday, June 30, 2023: At 2:30 p.m. (CET) on the last day of the trading month of June, the Bureau of Economic Analysis publishes the latest figures on core inflation for the previous month of May. Most recently, the core inflation rate in a monthly comparison was +0.4 percent again above the expert forecast of +0.3 percent. For May, the analysts expect a further increase of +0.4 percent. If core inflation is higher than expert expectations, investors are likely to rate this negatively, since the probability of further interest rate hikes in the coming months, as already communicated by the US Federal Reserve at the last press conference, is likely to increase. Market participants could then decide to part with risky equity and crypto positions in particular. If, on the other hand, the core inflation rate rises less than analysts expect, the financial market should end the trading week on a positive note. As last seen in March, the Bitcoin price should benefit from a declining inflation rate.
