Despite another 0.75% interest rate hike by the US Federal Reserve, causing US stock indices to fall sharply in price, the cryptocurrency Bitcoin (BTC) once again managed to defend the psychological price barrier of $20,000 and even rose to a high of $21,478 per BTC. What developments are important for the crypto market this week?

Table of Contents

1. US midterm elections in investors' sights
2. Consumer prices in China on Wednesday
3. CPI consumer price index gives new insight into US inflation rate
4. US consumer confidence to end the week

US midterm elections in investors' sights

The US mid-term elections are important indications for the crypto market. 30% of the Senate is up for re-election and so is the House of Representatives. If US President Joe Biden's Democrats suffer an electoral defeat here, a tough two-year period is looming due to the Republicans' blockade policy. This was also previously the case during Barack Obama's second term. Changes in energy policy could then be jeopardised and Biden would only be able to make legislative changes by decree. Looking back to the past, the stock market reacts positively when Republicans have more power. A possible defeat for the democrats could possibly cause a short-lived stock market rally and the crypto market could follow suit.

Consumer prices in China on Wednesday

Next Wednesday at 2:30 CET, Chinese inflation figures for October will be released. Monthly consumer price inflation is expected to rise slightly from 0.3% to 0.4%. If consumer prices rise again, China's central bank PBOC may consider raising the key interest rate. Moreover, rising consumer prices will put further pressure on the central bank.

CPI consumer price index gives new insight into US inflation rate

On Wednesday at 14:30 CET, the Bureau of Labor Statistics will release the latest US inflation figures for the month October. Compared to September, the headline figure is expected to fall from 0.6% to 0.5%. The headline figure excludes energy and food prices. However, for the consumer price index including energy and food prices, inflation is expected to rise from 0.4% in September to 0.7% in October. Should the forecasts come true, the Fed will come under further pressure and will have to reconsider its last interest rate decision in December. As a result, the US dollar is likely to gain strength, creating more selling pressure in financial markets such as the stock market, but possibly also the crypto market. If inflation rises less than expected, the Fed will have more workspace and there will be less selling pressure in financial markets. Looking at inflation figures from previous years is less done by experts, as inflation is significantly higher than normal.

US consumer confidence to end the week

Consumer confidence is measured by the University of Michigan. They will release their consumer confidence forecasts for the month of November on Friday 11 November at 4pm. Consumer confidence indicates how optimistic people are about economic developments in the US. In October, confidence stood at 56.2. It is expected to fall slightly to 56.0. Should actual consumer confidence rise above expectations, the US dollar could benefit. This could then have a negative effect on US indices and crypto markets. If consumer confidence falls, that is a bad sign for the US dollar. The crypto market could then react positively to this.

If job growth declines, this will have a negative impact on future consumer spending and further exacerbate the economic downturn. October was expected to see 200,000 job available. Compared to September, this is a decline. Back then, there were 288,000 job available. Should expectations come true, this will have a negative effect on the US dollar. Again: often this has a positive effect on the crypto market.