Key Indicators for Bitcoin and Crypto - Trading Week 11
- 5 minute read
The price of Bitcoin fell more than 10% last trading week to US$19,565, dragging down the entire crypto market. At the beginning of the week, hawkish statements by Fed chairman Jerome Powell caused price declines in financial markets. In the second half of the week, the situation suddenly worsened. Besides the failure of US crypto bank Silvergate (SI), the closure of Silicon Valley Bank (SIVB) by the US authority Federal Deposit Insurance Corporation (FDIC) in particular caused a crash in the banking sector in the US and Europe. The US stock indices Nasdaq and S&P500 also lost significantly and slid to new monthly lows. Several crypto companies such as Ripple Inc, BlockFi and other crypto startups are also affected by the liquidity problems of the SIVB, which serves as a house bank for many tech and startups.
Circle was hit particularly hard. The USDC stablecoin issuer deposited almost 8% of its cash reserves with Silicon Valley Bank, amounting to about $3.3 billion. As a result, the USDC stablecoin temporarily lost its peg to the US dollar on Saturday. However, markets breathed a sigh of relief late Sunday night. In a joint action with the Federal Reserve Bank (Fed), the US Treasury announced that it would close Signature Bank (SBNY) and make all deposits of both SIVB and SBNY available for a customer rescue. Customers of both banks can withdraw their deposits in full today, Monday. The entire financial market surged as a result. USDC also managed to raise its repeg to 1:1 against the US dollar moments later. The bitcoin exchange rate rebounded by about 10% to the US$22,800 mark by early morning. Ethereum (ETH) also made noticeable gains, along with the entire altcoin market, peaking at US$1,620.
✔️ Inflation data from the US;
✔️ Producer prices and retail sales in the US;
✔️ European Central Bank interest rate decision;
✔️ Inflation data from Europe
In trading week 11, investors can look forward to inflation data from the US on Tuesday. The following day on Wednesday, US producer prices and retail sales will start to be published. Next Thursday will be dominated by the European Central Bank's interest rate whistle and a day later the trading week will end with inflation data from Europe.
Table of Contents
- US inflation data on display
- US producer prices and retail sales mid-week
- European Central Bank interest rate decision
- Inflation data from Europe at the end of the week
US inflation data on display
Tomorrow at 13:30 (CET), the US Bureau of Labor Statistics will present the final US inflation data for the month of February. In January, annualised inflation was 6.4% above the forecast of 6.2%. For the month of February, experts now expect a decline to 6.0%. If analysts' expectations are confirmed, both the stock and crypto markets could start a recovery move after the correction in recent weeks. On the other hand, if consumer price indices come in above expectations, the US dollar should gain further ground in the near term. In addition, it remains to be seen whether markets can actually continue to gain despite the US bailout, or whether disillusionment will spread through the market.
US producer prices and retail sales mid-week
Next Wednesday at 13:30 (CET), the latest US producer price index (PPI) for the previous February will be presented. Market experts expect a month-on-month increase of 0.4%. In January, producer prices were already up 0.5% on the previous month. If price rises increase as experts expect, the US dollar is likely to gain further strength and could thus create further headwinds for the equity and crypto markets. On the other hand, if producer price index are below market experts' expectations, it would ease pressure on Bitcoin and Co. and could lead to a bullish price reaction in the crypto market.
Also at 13:30 (CET), the latest retail sales figures for the month of February will be presented. They are considered an important measure for calculating private households' willingness to buy. In the latest trading month, US retail sales rose 3.0%. This was well above expectations of 1.8%. For the month of February, the expert estimate of -0.3% is significantly lower than the value from the previous January. If private household propensity to buy comes in above the analysts' forecast, it could fuel the price recovery in the stock and crypto markets. On the other hand, if published retail sales are below expectations and fall back into negative territory, it would be another indication of a cooling of the US economy. Recently, weak retail sales had a negative impact on stock market prices and also in the crypto sector.
European Central Bank interest rate decision
On Thursday at 14:15 (CET), it is Europe's turn. The ECB will announce its second major interest rate decision in the new trading year. Given still high inflation in the eurozone (most recently 8.5%), analysts expect a further 5% interest rate adjustment to 3.50%. A smaller increase of just 0.25% would cause a lot of volatility in financial markets in an initial reaction. The euro is likely to fall against the US dollar. Special attention will be paid to the ensuing press conference at 14:45 (CET). Any statement by ECB chief Lagarde on the development of monetary policy measures in Europe will be closely watched by investors.
Inflation data from Europe at the end of the week
The trading week will end with the final consumer price data for the eurozone for the month of February at 11:00 (CET). These will then be presented. In the pre-release on 2 March, inflation data in Europe came back slightly above expectations at 8.5%. This expectation for the final data remains unchanged at 8.5%. If last month's figures remain at this level and even come in lower, the market should react positively and both equities and crypto assets should increase in value.
On the other hand, if inflation comes in above analysts' expectations, financial market prices could correct again. As core inflation recently rose 0.3% to 5.6%, outpacing experts' expectations, this shows that pressure on consumer prices remains high. Final core inflation in February is seen as unchanged from the preliminary expectation at 5.6%.