The bitcoin and cryptocurrency market is in what could be the most important week of 2023 so far. While all eyes are on the FOMC meeting on Wednesday, this week is once again filled with a lot of important macro data. Add to this the unresolved situation regarding the First Republic Bank.
Moreover, bitcoin price has returned to a pivotal turn. After BTC first climbed to $29,975 on Sunday, bears launched another attack just before the end of the month, pushing BTC towards $28,500. However, they failed to prevent the fourth consecutive monthly green candle.
Major events for Bitcoin and cryptocurrencies this week
On Tuesday, May 2 at 10:00 AM EST (4:00 PM CET), the US Bureau of Labor Statistics will release the JOLT Job Opportunities report. In March, the number of job vacancies fell below 10 million for the first time since May 2021. As of April 4, a total of 9.93 million jobs were reported available.
Forecasts show that 9.683 million jobs were available in April, indicating a further slowdown in the US labor market. If the jobs data comes out better than expected as the US economy proves to be resilient, US stock prices are expected to continue to perform well. Likewise, the crypto market is likely to benefit from good job market data.
On Wednesday, May 3, 2023 at 2:00 PM EST (8:00 PM CET), the focus will be on the US Federal Reserve’s interest rate decision. According to the latest news data Of the CME FedWatch tool, 84.5% expect another rate hike of 25 basis points to 5.25%.
However, that decision is likely already priced in. What will be more important is the FOMC press conference at 2:30 PM EST, where Fed Chairman Jerome Powell will deliver his remarks for the coming months. During the press conference, volatility is expected to rise in the bitcoin and cryptocurrency markets.
The market is hoping for a comment from Powell that this was the last rate hike and that there will be the first rate cuts later this year. However, the latter seems unlikely, especially since Powell philosophized about raising interest rates twice and continuing tight monetary policy this year in a conversation with the bogus Volodymyr Zelensky. It will also be interesting to see how Fed Chairman Powell responds to the FDIC’s emergency intervention at First Republic Bank.
Powell remains under pressure given the ongoing problems in the US banking sector and the credit crunch that continues to deepen. So is Goldman Sachs Believes:
We expect the FOMC to signal that it expects a pause in June but retains a hawkish tendency, pausing earlier than initially envisioned as bank pressures are likely to cause a tightening of credit.
On Friday, May 5, 2023, the focus will once again be on the US labor market. At 8:15 AM ET (2:15 PM CET), the Bureau of Labor Statistics will release the Non-Farm Payrolls (NFP) employment numbers for April. Recently, the numbers have deteriorated slightly.
The forecast for the creation of 180,000 new jobs for the month of April is well below the average for the last few months of trading. And recently, at the beginning of the year, 517 thousand new job opportunities were created. Confirmation of these expectations would increase the likelihood of a recession in the United States in the coming months, and the corresponding negative reaction in financial markets is likely. On the other hand, a positive surprise could be a catalyst for the rally in the cryptocurrency market.
Also at 8:30 AM EST, the US Unemployment Rate for April will be released. The estimate is 3.6%. In March, the unemployment rate fell from 3.6% to 3.5%. Fed Chairman Powell has stressed several times that a possible recession in the US could also lead to a rise in the unemployment rate towards 4.5%. So the unchanged unemployment rate should be viewed positively by the market.
Other events this week
A positive impulse, like last week, may also come from the stock market this week. 25% of S&P 500 companies report earnings. After strong quarterly numbers from internet giants Microsoft, Alphabet and Amazon, the US stock market closed its last trading week with a plus sign.
The crisis of the First Republic could also be of interest. As reported by Bitcoinist, the next domino in the banking system could be a catalyst for Bitcoin. According to reports from various sources, First Republic Bank has already been sold. Two of the most promising bidders are said to be JPMorgan and Bank of America.
At the time of writing, Bitcoin is trading at $28,600.
Featured image from iStock, chart from TradingView.com