Three major US economic events will draw the attention of cryptocurrency traders and investors this week. This is due to the continued impact of US macroeconomic data on the price of Bitcoin (BTC) and cryptocurrencies since last year.
Meanwhile, Bitcoin is psychologically close to its all-time high of around $100,000, and after retreating to the $95,000 range over the weekend, it has rebounded and is now hovering around $98,000.
November FOMC Meeting Minutes
All eyes will be on the Federal Reserve's (Fed) November 6 FOMC (Federal Open Market Committee) meeting minutes, which will be released on Tuesday, November 26. Traders and investors will be watching to see if the FOMC minutes provide more information on how policymakers assessed the economy ahead of the November meeting.
The minutes may also reveal whether there was discussion of the economic impact following the US election results. This will come after policymakers decided on a 50 basis point (bps) rate cut in September, followed by a 25 bps cut. Investors will be looking for clues on whether the pace of rate cuts could slow from here.
Meanwhile, data continues to suggest the US economy is holding up well. However, there are concerns that President-elect Donald Trump's proposed policies could stoke inflation, which could reduce the need for low interest rates.
"Experts say Donald Trump's election victory could change US interest rate policy. His promised policies carry the risk of higher inflation... Traditionally, tariff hikes would increase US inflation," the Canadian Press reported, citing Sheila Block, an economist at the Canadian Centre for Policy Alternatives.
One way the FOMC minutes could impact Bitcoin and cryptocurrencies is through their effect on overall market sentiment. A dovish or hawkish tone from the minutes could influence market expectations and lead to changes in investor behavior.
Initial Jobless Claims
Another major US economic event this week is the release of initial jobless claims on Wednesday, November 27. Concerns about labor market weakness had arisen during the summer and fall due to increases in jobless claims, rising unemployment, and a slowdown in monthly job gains. This data influenced the Fed's decision to cut rates by 0.5 percentage points in September.
However, labor market data has come in better than expected since then, with the unemployment rate falling from a peak of 4.3% to 4.1%. The initial jobless claims data for the week ending November 16 came in at 213,000, a positive signal below the 220,000 estimate.
"US initial jobless claims fell 6,000 last week to 213,000, the lowest since April. The labor market is strong," said the publisher of the Lead-Lag Report.
Weekly jobless claims have been steadily declining after peaking a year ago in October. While initial claims are decreasing, the increase in continuing claims suggests employers are trying to retain workers, but those who have lost jobs are struggling to find new employment.
"Initial jobless claims are very slowly but steadily rising, while continuing claims hit a 3-year high. This reinforces that employers are not aggressively firing, but also not hiring," said the Sevens Report.
For now, the labor side of the Fed's dual mandate appears to be in good shape. If this trend continues, it could signal an economic turnaround and a strengthening labor market, which could spur increased consumer spending and investment in traditional assets like Bitcoin and cryptocurrencies.
US Personal Consumption Expenditures (PCE)
Cryptocurrency market participants will also be watching the October US PCE (Personal Consumption Expenditures) inflation data on Wednesday. This is the Federal Reserve's preferred metric. The November PCE index on Wednesday is also worth noting, as the data will show whether inflation continued to moderate in November.
"Forecast: Monthly PCE seen rising 0.2%, annual PCE seen at 2.3%; Core PCE monthly up 0.3%, core PCE annual up 2.8%," according to data from MarketWatch.
Rising PCE figures often raise concerns about the level of inflation in the economy. If PCE inflation exceeds expectations, investors may anticipate potential monetary policy actions like interest rate hikes, which could weaken the US dollar. A weaker dollar can be favorable for Bitcoin and other cryptocurrencies, as they often exhibit an inverse correlation to the USD.
In such a scenario, investors may turn to alternative assets like Bitcoin as a hedge against inflation, as cryptocurrencies are often viewed as a store of value similar to gold during periods of inflationary pressure.
Currently, the Federal Reserve is optimistic that inflation is approaching its 2% target. Policymakers have kept rates historically high to tame the rapid inflation surge over the past two years. In this context, traders and investors are closely watching price data for any positive signals that the Fed could start cutting rates.
