This week in the cryptocurrency market is shaping up to be one of the most important in terms of macroeconomic events. Not only will these unfolding developments have a ripple effect on cryptocurrencies, but also stocks, the dollar, and every other asset class. Let’s analyze these critical events and why they are important to cryptocurrency enthusiasts and investors.
The macroeconomic calendar and its impact on cryptocurrencies
Throughout the week, the cryptocurrency market will be impacted by a series of macro events, from inflation measures to the Federal Reserve interest rate decision, to the revelation of the “Hinman Documents” that have the potential to change the outcome of Ripple against the SEC case.
The volatile week on the regulatory front begins with the release of the Hinman documents, which could affect not only the outcome of the Ripple court case, but also the status of cryptocurrencies as securities more broadly. The SEC is also expected to respond to Coinbase’s request for clearer regulatory rules.
The bulk of the eventful week begins with the CPI numbers for May. The Consumer Price Index is an important indicator of inflation, and it measures the average change in the prices of a basket of consumer goods and services. If the CPI is higher than expected, this indicates that inflation is on the rise, which could lead to increased speculation about a rate hike. These potential rally could strengthen the dollar, which usually leads to declines in bitcoin and other cryptocurrencies as investors seek safety in the greenback.
The next day will see the release of the PPI figures for May. The producer price index measures the average change in the selling prices that domestic producers receive for their output. A higher-than-expected PPI indicates an increase in inflation at the output level, which could push consumer prices down the line. This could affect cryptocurrencies similarly to the CPI, as a strong dollar could lead to a drop in cryptocurrency values.
Cryptocurrency Market Points to Extreme Volatility Ahead | TOTAL at TradingView.com
If that wasn’t enough, on Wednesday the Fed’s interest rate decision will be released. Interest rate decisions are always closely watched by the financial markets. If the Fed raises interest rates to combat inflation, the cost of borrowing increases, and companies are less likely to take on debt. This could lead to a decline in the stock market, which often spills over into the cryptocurrency market as investors seek to reduce overall risk. However, experts predict a possible pause in price hikes, which could boost cryptocurrency prices along with stocks. But only if the inflation numbers cooperate.
On Thursday, additional macro reports will be released on Initial Jobless Claims, Retail Sales, Industrial Production, Business Inventories, and more. These data points give us a snapshot of the current economic situation. Rising unemployment claims could signal economic weakness, which could lead to a flight to the safety of the dollar and the sale of risky assets such as cryptocurrencies. Conversely, strong retail sales and industrial production could indicate economic strength and increased risk appetite, which could lead to a boost in cryptocurrency prices.
Finally, on Friday, Fed Chairman Waller will deliver an early morning speech. The speech could give insight into the Fed’s thinking and future monetary policy. Depending on the tone and content of Waller’s remarks, the cryptocurrency markets can experience significant volatility.
The culmination of these events leads to a weekend of American vintage markets, with Juneteenth to be noted. Historically, lower trading during holiday periods can lead to increased volatility due to lower liquidity.