5 US Economic Events That Affect Bitcoin Sentiment This Week

Crypto market participants have a lot to look forward to this week, with 5 US economic data releases expected to start on Tuesday. The market is buzzing, anticipating the impact of these events on BTC (BTC) and the crypto market in general.

The impact of US macroeconomic data on BTC remains clear after a period of this effect subsiding or drying up in 2023.

Also Read: Bitcoin Price Drops to $100,000 as Long-Term Investors Dump

Consumer Confidence

The first US economic event impacting crypto this week is the Consumer Confidence survey on Tuesday, January 28. This survey reflects spending trends, consumer attitudes, shopping intentions, and vacation plans, among other things.

The Medium forecast is 106.3 after the previous reading of 104.7. Higher consumer confidence indicates that people are willing to spend more, thus boosting economic activity. This could drive more investments into cryptocurrencies like BTC.

Conversely, a decline in consumer confidence could lead to reduced spending and investment. This would support a more gradual path for the Federal Reserve (FED), leading to increased liquidation in the financial system.

This could benefit BTC as investors seek alternative stores of value and inflation hedges. Therefore, Tuesday's data will be crucial for the crypto market, measuring the level of optimism or pessimism among consumers about the overall economic situation.

FOMC Statement and Fed Chair

In addition to consumer confidence, the crypto market is also watching the FOMC interest rate decision on Wednesday, January 29. This is the first FOMC decision since President Donald Trump took office, making it a noteworthy event.

"Trump is demanding rate cuts, but Powell is not budging. This confrontation could shake the market,"

crypto trader Roger Smith joked.

Policymakers have recently expressed concerns about inflationary pressures, particularly related to Trump's proposed fiscal policies. In the latest meeting, the FOMC minutes did not provide many signs of a near-term rate cut, further reinforcing the Fed's hawkish stance. As BeInCrypto has reported, this stance puts downward pressure on risk assets, including cryptocurrencies.

In this context, the CME FedWatch tool shows a 99.5% probability of a 25 Bit (0.5%) rate cut. As this would signal no change in interest rates, the focus will be on the press conference with Fed Chair Jerome Powell. With this, traders and investors are anticipating higher volatility between market-moving information from the Fed Chair.

"I'll decide that after the FOMC rate decision on Wednesday, January 29 at 2:00 pm ET - Fed Chair Powell's press conference at 2:30 pm ET. I don't have any positions on right now but I see a small opportunity for upside,"

a trader said.

Notably, the Fed has two mandates - to keep the Consumer Price Index (CPI), a measure of inflation, rising 2% per year and to maintain full employment in the economy.

GDP

The US GDP (Gross Domestic Product) report will be released on Thursday, January 30, adding to the list of US economic data to watch this week. The Medium forecast is 2.5% after the previous reading of 3.1%. This data measures the total value of goods and services produced in a country.

A positive GDP adjustment could signal a strong and growing economy. This would encourage investors to allocate more Capital into risky assets like BTC and cryptocurrencies. Conversely, a Dump in the adjustment could lead to a shift in investor sentiment, resulting in a temporary Liquidation of cryptocurrencies.

Initial Jobless Claims

The crypto market will also be watching the Initial Jobless Claims report on Thursday, providing insights into the health of the US labor market. Notably, the number of Americans filing new claims for unemployment benefits has recently increased. However, it appears to be stabilizing near levels consistent with a gradual cooling of the labor market. This has set the stage for the Fed's openness to interest rate cuts.

The previous data was 223,000, with the current Medium forecast at 225,000. Higher-than-expected jobless claims could indicate economic instability and uncertainty. This would lead investors to seek alternative assets like BTC as a hedge against the traditional market.

Conversely, a Dump in jobless claims could bolster investor confidence in the traditional market, potentially diverting Capital away from cryptocurrencies. Fed officials also closely monitor the labor market, recognizing the risks of waiting too long to cut interest rates.

Personal Income and PCE Index

The US Bureau of Economic Analysis (BEA) will release personal income, spending, the PCE index, and core PCE on Friday. Weaker personal income and spending, along with softer inflation numbers, could signal a slowdown in economic activity. To address this, the Federal Reserve may consider pausing rate hikes to stimulate borrowing and spending, thereby boosting economic growth.

Meanwhile, the Personal Consumption Expenditures (PCE) index, excluding volatile food and energy prices, will be an important inflation indicator. Higher-than-expected core PCE may indicate increasing inflationary pressures.

This will encourage investors to diversify their investment portfolios by investing in assets like Bit, which is considered an inflation hedge. Conversely, lower core PCE could lead to reduced demand for cryptocurrencies as investors shift to more stable investment options.

Ahead of the US economic events, data from BeInCrypto shows Bit trading at $100,355, down nearly 5% since Monday's market open.

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