As Bitcoin (BTC) is fluctuating within a certain range, traders and retail investors are paying attention to important US economic events this week as it could influence the price and set the direction of the next move.
Bitcoin is still trading between the psychological $60,000 level and the $57,000 level. Although September is often difficult, traders are hopeful that “Uptober” will bring better market conditions.
Important events in the US economic calendar
The US market will see the launch of Donald Trump’s decentralized finance (DeFi) project, World Liberty Financial (WLFI), on Monday.
“Join me live on Twitter Spaces at 8pm, September 16th, to launch World Liberty Financial. We are moving into the future with crypto and leaving behind the slow and outdated big banks,”
Trump said in a recent video message on X.
However, three important US economic reports this week could also impact crypto portfolios. With Bitcoin up nearly 7% in the past seven days, whether these gains continue will depend on how the market reacts to these reports.
US economic data. Source: MarketWatch#1. US retail sales
The Commerce Department's Census Bureau will release U.S. retail sales data on Tuesday, providing insight into consumer spending trends, which account for a large part of the U.S. economy. U.S. retail sales unexpectedly rose 1% in July from the previous month, reversing a revised 0.2% decline in June and far exceeding economists' expectations for a 0.3% gain.
Since consumer spending is the main driver of economic growth, strong retail sales in August would ease recession fears, indicate a healthy economy and boost confidence in risk assets like cryptocurrencies and stocks.
#2. FOMC Interest Rate Decision
The Federal Open Market Committee (FOMC) is expected to make its highly anticipated interest rate decision on Wednesday. Recent US Consumer Price Index (CPI) and other key economic data have made a rate cut all but certain as inflation cools. However, the extent of the cut remains unclear, with investors looking at the Fed's preferred approach. According to the CME FedWatch Tool, there is a 59% chance of a 50 basis point (bps) cut and a 49% chance of a 25 bps cut.
Rate Cut Probability. Source: CME FedWatch ToolThe potential impact on Bitcoin and other risk assets will depend on what traders have priced into the price. A 50 bps cut could surprise investors, potentially triggering market volatility. Conversely, a 25 bps cut would be in line with expectations, potentially triggering a more corrective reaction from Bitcoin.
Notably, JPMorgan favors a 50 bps cut, despite the Fed's tighter monetary policy as inflation nears its 2% target.
“We think there is good reason to accelerate the pace of rate cuts,”
Michael Feroli, chief US economist at JPMorgan Chase, said.
However, BeInCrypto notes that such a move could signal broader economic concerns, causing investors to shy away from risk assets like Bitcoin. As such, most analysts predict a 25 bps cut, as the current effective Federal Funds rate suggests that the Fed’s policy has been quite restrictive.
“Current expectations are that the FED will cut interest rates by 0.25%, which will benefit financial assets like stocks and Crypto, as it reduces borrowing costs,”
Mati Greenspan, CEO of Quantum Economics, told BeInCrypto.
After Wednesday’s rate decision, markets will be closely watching Fed Chairman Jerome Powell’s press conference for more clues on future rate cuts. Based on current data and market sentiment, a soft landing for the rest of the year seems likely.
#3. Claiming US unemployment benefits
Initial jobless claims were also tracked this week, providing a look at the current state of the labor market. Despite the weakening job market, the unemployment rate remains relatively low. Job openings have fallen significantly, consistent with a more normal market. As reported by BeInCrypto, the US economy added just 142,000 jobs in August, falling short of expectations. However, the August unemployment rate met forecasts at 4.2%, an improvement from the 4.3% recorded in July, signaling a decline in unemployment.
Data on Thursday will reveal the latest developments in the U.S. labor market. While its impact may not be as direct or significant as other economic indicators, a rise in jobless claims could signal economic weakness. This could prompt some investors to turn to alternative assets, like cryptocurrencies, as a way to hedge against the traditional markets.
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