Important eveńts for crypto this week5 min read
In the past trading week, the key crypto currency Bitcoin (BTC) did not make sustainable progress. Despite ongoing problems in the banking sector, the US Federal Reserve Bank (Fed) again increased interest rates by 0.25 percent to 5.00 percent in the middle of the week. Although the BTC price subsequently rose briefly to a new annual high of US$ 28,937, it gave up its gains again in the wake of another hawkish statement by Fed boss Jerome Powell during the press conference and corrected at the top to US$ 26,678. Dollar before stabilizing. Bitcoin moved in this 8 percent trading range until yesterday’s weekly close. Meanwhile, the banking sector in both the US and Europe came under renewed pressure. The vast majority of financial institutions ended the week near their weekly lows. Account holders in the US recently withdrew around $100 billion from both large and small US financial institutions. Although the US Treasury Department, after a joint meeting with the Fed and the FDIC, once again assured that the financial system would work flawlessly and resiliently, the financial authorities in the USA recently considered extending the emergency credit facility to additional banks.
The following economic data will be relevant this week
In the new trading week, investors will first look at fresh data on US consumer confidence on Tuesday. The latest figures on sales of existing properties, which are important in the USA, will follow in the middle of the week. In the second half of the week on Thursday, the Office for National Statistics will announce the final figures for US gross domestic product (GDP). On the last day of the trading week, the market players first look at the advance publication of the consumer price indices for the euro area and on Friday afternoon at the PCE core inflation rate for the USA in February.
US consumer confidence figures
Tuesday, March 28, 2023: On Tuesday at 4:00 p.m. (CET) the Conference Board (CB) will announce new figures on US consumer confidence for the trading month of March. The level of optimism about economic development in the US was 102.9 in February, well below expectations of 108.5. Consumer confidence fell for the second month in a row. For the month of March, the market experts expect a further decline to 101.0. If forecast is beaten, the US Dollar Index (DXY) is likely to continue last week’s bullish move and could act as a headwind for Bitcoin. On the other hand, if analyst expectations are missed and consumer confidence is even below expectations, the probability of a recession in the USA increases further. Continued weakness in consumer confidence should be welcomed by financial markets as it would further increase the chance of interest rate cuts in the coming months.
Pending home sales in the US midweek
Wednesday, March 29, 2023: At 16:00 (CET), the latest sales figures for existing homes in the USA will be released. With existing home sales representing around 90 percent of the US housing market, this metric is an important component in assessing US consumer spending. After sales for the last calculation period of +8.1 percent were well above expectations of only +1.0 percent, the analysts are now expecting a decline of -3.0 percent. If the sales figures for existing homes are better than expected, this could indicate continued stabilization in the recently weak housing market. A complete collapse of the real estate market is likely to exacerbate the banking problems in the US and lead the US economy into recession. As a result, the US Federal Reserve would have to lower interest rates faster than planned. Paradoxically, investors are likely to use bad numbers from the housing market for new entries in the stock and crypto market.
Gross domestic product in the US
Thursday, March 30, 2023: At 2:30 p.m. (CET), the final US gross domestic product figures for the last quarter of 2022 will be published. In the last two advance publications for the fourth quarter in January and February, the market experts missed the published figures with their forecast. The analysts are currently anticipating 2.7 percent economic growth in the final quarter of the previous year. Most recently, the experts were 0.2 percent below the forecast from February of 2.9 percent. If the final figures confirm the latest estimate of 2.7 percent, the market reaction could be positive. The Bitcoin price should then also tend bullish. Most recently, market participants gave a positive assessment of a strong gross domestic product. If there is renewed weakness, Jerome Powell is likely to continue to be under pressure. It would be conceivable that the market would therefore rate bad GDP data positively. Rarely have the market players been so torn in their interpretation of this important indicator.
Inflation data from Europe and US PCE core inflation to end the week
Friday, March 31, 2023: At 11:00 a.m. (CET), the advance consumer price releases for the euro area for the month of March will be announced. At 7.2 percent, the expert forecast is well below the final inflation rate of 8.5 percent in the previous month. In particular, falling crude oil prices are likely to be the main reason for the forecast being reduced again. However, since the inflation data in the UK rose significantly, contrary to expectations, and was again in double digits at 10.4 percent, the data for Europe could also be above expectations. The result is likely to have a negative impact on the stock market. If, on the other hand, the analysts’ expectations are met and even turn out to be lower than anticipated, the market could honor the decline. Equity and cryptoassets should then increase in value.
At 2:30 p.m. (CET), the Bureau of Economic Analysis presents the core PCE rate for the US for the month of February. As in the previous month, a month-on-month increase of +0.4 percent is forecast. Last month, the PCE price index was already above market forecasts at +0.6 percent. As a result, the financial markets corrected to the south. If this trend continues, a weak end of trading on Friday should be expected again. However, if the core inflation rate has risen less than analysts expected, the stock market and with it the Bitcoin price should benefit. However, since the Fed has recently switched from a pure focus on the inflation problem to the systemic risks in the banking sector, the evaluation of the data is increasingly difficult.