Bitcoin and cryptocurrency markets had a very bullish week. While the price of BTC increased by 14.5% in the past seven days, reaching a new annual high of $31,432, the total market capitalization of the crypto market increased by 10.7%.
The market continued to rally on the news of the BlackRock Bitcoin ETF breaking with the price consolidation in the US stock markets. However, it remains to be seen if this rally can continue or if the bulls will run out of steam. Next week, five events in particular that could determine the price direction of the bitcoin and cryptocurrency markets will be in focus.
Fed and macro data in the spotlight
On Wednesday, June 28, US Federal Reserve Chairman Jerome Powell will once again appear in front of the cameras. After Powell testified before the US Congress last week on various topics, this time the focus will once again be on the current interest rate and monetary policy.
The Fed chairman is likely to reiterate his hawkish stance and the Fed’s reliance on data. Only surprises are likely to have a (negative) impact on the market, which, according to FedWatch, expects a further 25 basis point rally in July of 72% anyway.
But the Fed’s results on stress testing banks in the US could also be interesting on Wednesday. In view of the many emergency interventions and still increasing Use of Bank Term Financing Program (BTFP), the report is eagerly awaited. The market will be watching closely to see how healthy the banking system is and which banks might fail the test.
If a number of banks do not pass the test, this is likely to have an impact on the financial markets. Already in March, waning confidence in the US banking system caused an upward trend in BTC. Besides, the US Dollar Index (DXY) could come under further pressure, providing a tailwind for Bitcoin and cryptocurrency prices.
On Thursday, June 29, the US Bureau of Economic Analysis will release the latest preliminary US GDP figures for the first quarter of 2023 at 8:30 AM EST. The forecast is 1.4%, again stronger than last time (1.3%).
Although this still leaves the US GDP well below 2%, a confirmation or better forecast could indicate a stabilization of the US economy. The broader financial market as well as the bitcoin and cryptocurrency markets will likely take this positively. On the other hand, if the current estimate misses, a bearish reaction can be expected.
On Friday, June 30, the Bureau of Economic Analysis will release the core PCE (personal consumption expenditures) for May at 8:30 AM EST. In April, core PCE was +0.4% m/m, again above expectations of +0.3%. For the month of May, analysts expect another increase of +0.4%. On an annual basis, analysts expect 4.7%, unchanged from April (also 4.7%).
Remarkably, core inflation remains a focus for the Fed, as it is currently proving to be the “stickiest”. In this regard, core personal consumption expenditures could have an important impact on the probability of another rate hike by the Federal Reserve. Thus, the cryptocurrency market will be watching the data closely and will likely react accordingly.
$5 billion worth of Bitcoin options is set to expire
Next Friday will also be important for the Bitcoin market for other reasons. First, BTC will close a monthly and quarterly candle, and second, a record amount of over $5 billion in Bitcoin options will expire on June 30th. The event may cause a sharp increase in volatility for a short period.
At press time, Bitcoin is at $30,250 after taking a breather over the weekend.
Featured image from iStock, chart from TradingView.com