Key indicators for Bitcoin and Crypto - June 19-23
- 7 minute read
The past trading week began with a decline in the crypto market and the Bitcoin price reached a new multi-month low at $24,750. There were liquidations of leveraged long bets, threatening to push the price below the important technical mark of $25,000. Later in the week, however, the Bitcoin price recovered and rose to around $26,500. News of a new Bitcoin spot ETF filing by Blackrock, the world's largest asset manager, also had a positive effect on the price. The recovery should be seen as a false breakout to the downside, thanks in part to weakness in the U.S. dollar index (DXY). Currently, Bitcoin is trading close to the falling trend line at $26,800. Economic data and a possible deal between the SEC and Binance and Coinbase may encourage further price increases.
Brief summary:
✔️ On Tuesday, preliminary estimates of the number of building permits in the US for the month of May are presented. This number is seen as a leading indicator of the US housing market.
✔️ On Wednesday and Thursday, the Fed chairman will answer questions from policymakers about the Federal Reserve's economic and fiscal policies. The chairman's responses could affect the U.S. stock market and the Bitcoin price.
✔️ On Thursday, the latest US existing-home sales figures for the month of May will be presented. These figures provide insight into the state of the U.S. real estate market and may affect the U.S. dollar and Bitcoin.
✔️ On Friday, the latest purchasing managers' indices (PMI) for the U.S. service sector will be released. These figures may affect the stock market, especially stocks focused on the service sector.
Table of Content
- Building permits in the US at the beginning of the week
- Fed chairman Powell questioned by U.S. policymakers
- More data on the U.S. housing market
- U.S. service sector purchasing managers' indices
Building permits in the US at the beginning of the week
On Tuesday, June 20, 2023 at 2:30 p.m. (CET), the Census Bureau will present preliminary estimates of building permits in the US for the month of May. These permits are an important indicator of the health of the US housing market. In the previous month, the final numbers of new building permits were in line with experts' expectations. Despite this result, US stock indices fell about three percent and the Bitcoin price by more than four percent. For the month of May, analysts forecast a slight improvement in the real estate market. Compared to the previous month, the number of building permits issued is expected to increase from 1.417 million in April to 1.435 million in May. If the number of building permits issued is stronger than in the previous month, this could lead to increases in the value of the U.S. stock market and thus the Bitcoin price. On the other hand, if the number of building permits is lower than expected and the real estate sector continues to cool, it could lead to a price correction in U.S. stock indices and possibly new weakness in the cryptocurrency market.
Fed chairman Powell questioned by U.S. policymakers
On Wednesday and Thursday, June 21 and 22, 2023, Fed Chairman Powell will traditionally answer questions from policymakers about the Federal Reserve's (Fed) assessment of economic and fiscal policy. These hearings will last several hours and take place at 4 p.m. (CET). Powell will face questions from both Democratic and Republican politicians in the Senate and House of Representatives. They will ask him questions about his views on recent Fed monetary and interest rate decisions and expect solid justifications for the Fed's actions over the past 12 months. US policymakers' comments on topics such as inflation, banking problems, economic risks and the real estate market will be closely watched in the stock market. Market participants hope to gain more insight into U.S. central bankers' policies for the coming trading months. Like last year, the financial market may react sensitively to unclear statements from Powell or a lack of tight monetary policy in his responses. Large price movements on the U.S. dollar index (DXY) and the U.S. stock market are also expected to affect the bitcoin price and the entire crypto market. Increased volatility can be expected during these two days of research.
More data on the U.S. housing market
On Thursday, June 22, 2023 at 4 p.m. (CET), the National Association of Realtors will present the latest existing-home sales figures for the month of May. This data is considered an important indication of the U.S. real estate market. If the sales figures are higher than expected, it indicates rising consumer spending and a stabilization of the U.S. economy. If forecasts fall short, it confirms a continued cooling of the housing market. For the past two trading months, sales figures have been lower than experts' forecasts twice in a row, leading to consolidation in both the U.S. stock and crypto markets. If the published figures beat expectations, which has been revised up to 4.24 million from the previous month, this could put further pressure on the U.S. dollar. A continued weakening of the U.S. currency may initially have a positive effect on the prices of Bitcoin and other cryptocurrencies. However, if existing-home sales figures indicate continued weakness in the U.S. housing market, given the high interest rates on new loans, the U.S. dollar may recover from the recent price correction, which could have a negative effect on both the U.S. stock market and the price of Bitcoin.
U.S. service sector purchasing managers' indices
On Friday, June 23, 2023 at 15:45 (CET), the latest purchasing managers' indices (PMI) for the US services sector will be released. In the last month of May, the final figures came in at 54.9, slightly lower than experts' expectations (54.1). Despite some declines, the US service sector continues to grow more strongly than the manufacturing sector. Only if the analyst expectation of 54.0 is significantly exceeded may investors be inclined to pull back more from stocks focused on the service sector, which could put pressure on the U.S. stock market as a whole. In contrast, if the services sector weakens significantly from expectations, this would be a strong indication of possible further cooling of the U.S. economy, despite positive signals from other sectors. However, the impact on the prices of Bitcoin and other cryptocurrencies is difficult to predict. As long as the Nasdaq does not fall significantly, the crypto market may remain largely unaffected given the recent low correlation. However, problems in the services sector may increase the likelihood of further declines in inflation in the coming months. In contrast, if the services sector remains resilient and exceeds expectations, U.S. equity indices may continue their upward trend of recent weeks and also provide preliminary stability to the crypto market.