Important events for cryptocurrency market this week4 min read
The European Central Bank (ECB) raised interest rates by 0.75 percentage points last Thursday – a historically strong rate hike to counter persistently high inflation. As expected, the interest rate hike caused the euro to rise against the US dollar, as was the case on the day the ECB last raised interest rates. The recovery in the euro exchange rate pushed the US dollar index DXY around 2 percentage points southwards. This price correction subsequently led to a significant price recovery on the European and US stock indices as well as on the crypto market.
The BTC price was able to make up more ground in the following days and rose back towards the important resistance level at USD 21,892. The second-largest cryptocurrency ETH also gained significantly in value, reaching a new monthly high of USD 1,789 a few days before the scheduled date of “The Merge” between September 14 and September 15. The success of the ETH transformation on Proof-of-Stake can be seen as a significant milestone for the entire crypto sector.
CPI consumer price index provides new insights into US inflation rate
The flood of numbers in the upcoming trading week starts with the US consumer price index (CPI) for the month of August. On Tuesday, September 13, at 2:30 p.m. (CET) the US Bureau of Labor Statistics will release the CPI data for the previous month of August. In July, the year-on-year increase in the consumer price index slowed to 8.5 percentage points from the previous 9.1 percentage points. Should the rate of inflation in the USA fall again and undercut the analysts’ expectation of 8.1 percent again, the likelihood of a continuation of the recent price recovery in the US stock indices will increase further. As in the previous month, a further decline in the CPI consumer price index could have a bullish effect on the price development of risky asset classes such as the crypto market.
ETH’s move to proof-of-stake is expected mid-week
All investors in the crypto space are looking at ETH’s “The Merge” in the middle of the week. Between September 14th and 15th, the ETH network is expected to switch from Proof-of-Work (POW) to Proof-of-Stake (POS), which has been postponed several times. During this period, volatility in ETH and the crypto sector as a whole is likely to increase significantly. If the merger of the beacon chain with the ETH mainnet is successful, this could subsequently lead to a price increase in ETH and all ERC-20 and ERC-21 cryptocurrencies. However, renewed delays caused by unexpected errors and problems completing the merger could result in a significant sell-off in ETH. Market participants should also not rule out a so-called “Sell the Fact” event. It is not uncommon for assets to be sold off on the financial market after important innovations have been successfully implemented.
US PPI Producer Price Index on Wednesday
On Wednesday 14 September at 14:30 (CET) the US Producer Price Index (PPI) will be released. Market experts expect a reduction in production costs of minus 0.1 percentage points. In the previous month, the decrease in producer prices had already amounted to minus 0.5 percentage points and was thus well below the forecast of plus 0.2 percent. The Producer Price Index (PPI) measures the products and services produced and sold in the US in terms of changes in transaction prices. Another decline in the producer price index would be a further indication of falling inflation in the USA and should cause the US dollar index DXY to correct south again. A weaker US dollar, in turn, increases the likelihood of a sustained recovery in the stock and crypto markets.
Fresh data on US retail sales on Thursday
On Thursday 15 September at 14:30 (CET) US retail sales for the month of August will be released. They are considered an important measure for calculating the consumer’s buying mood. Most recently, US retail sales were flat month-on-month. The buying mood of private households has gradually decreased in the last month. Market players expect a slight increase of 0.2 percentage points for August. If the published retail sales are again below the experts’ expectations and thus indicate a decrease in consumer sentiment in the USA, this could lead to a rethinking of the US Federal Reserve faster than expected. Fed Chairman Powell only confirmed last week that he intends to reduce inflation back to a manageable level even at the expense of a recession in the USA, but the scope for further interest rate hikes would still be increasingly reduced.
The big decline and new EU consumer prices seal the trade week
On Friday, September 16, but also in the days before, increased volatility can be expected on the classic financial markets due to the big expiry date on the last trading day of the week. Four times a year on the so-called Witches’ Sabbath, on the third Friday at the end of each quarter, options and futures on indices, stocks and commodities expire three times a year. The issuers of the bets, the so-called writers, move the prices on the global markets in the expiry week, if necessary, in the best direction for them in order to let as many bets as possible expire worthless.
Data on the consumer price index (CPI) in the euro zone will also be released on Friday morning at 11:00 a.m. (CET). The forecast of the analysts is an increase of 9.1 percent compared to the same month last year. The experts’ expectations are therefore on a par with the inflation rate for the euro area published last month. Should the inflation rate again exceed estimates, the ECB would have to consider raising interest rates further when it next decides on interest rates.