Key Indicators for Bitcoin and Crypto - Trading Week 17

- 7 minute read

Mike Hesp
Mike Hesp

Bitcoin ended last trading month above $29,000, more than 2% above the previous week's close. The majority of the rest of the crypto market also continued to stabilize, despite a midweek dip. The crypto market thus followed the recovery of the major U.S. stock indices S&P500 and Nasdaq100. Following strong quarterly results from Internet giants Microsoft, Alphabet, Meta and Amazon, the U.S. stock market closed the trading week and trading month with price gains. Gold and silver also showed slight weekly and monthly gains. Given the bank failures in the U.S. over the past two trading months, the correlation between Bitcoin and the precious metal gold also rose to a two-year high. These developments are important for the Bitcoin price this week:

✔️ Inflation data for Europe;

✔️ US Federal Reserve Fed interest rate decision and press conference;

✔️ European Central Bank's key interest rate decision;

✔️ Labor market report and US unemployment rate close out trading week.

Table of Content

  1. Inflation data for Europe
  2. US Federal Reserve Fed interest rate decision and press conference
  3. European Central Bank's key interest rate decision
  4. Labor market report and US unemployment rate close out trading week

Inflation data for Europe

Tomorrow, 2 May, the new data week starts at 11:00 CET with the pre-published EU consumer price figures for the month of April. In the previous month of March, inflation in Europe was 6.9%, but is still well above the ECB's key interest rate. The forecast for the trading month of April is again slightly higher at 7.0%. If the April inflation figure comes in below experts' expectations, a bullish market reaction can be expected in the equities and crypto sectors.

On the other hand, if the inflation data comes in above analysts' expectations, it would be a bummer for the European Economic Area (EEA). As a result, price depreciation is to be expected. With core inflation recently rising 0.4% to 5.7%, clearly above experts' expectations, pressure on consumer prices is likely to remain high.

US Federal Reserve Fed interest rate decision and press conference

On Wednesday, May 03, 2023, investors can focus on the US Federal Reserve Bank's interest rate decision. At 20:00 CET, these figures will be announced. These figures will be released at 20:00. According to the latest data from the CME FedWatch tool , 83.9% of analysts expect a further rate hike of 0.25% to a total of 5.25% This development left the US stock market cold. Given the better than expected quarterly earnings of many US companies, investors have so far ignored a further interest rate hike. The market seems to have grown accustomed to the Fed's hawkish monetary policy and is focusing on other economic data. It remains to be seen how Fed Chairman Powell will react to the FDIC's emergency intervention in US middle market bank First Republic Bank (FRC) last Friday. Fed Chairman Powell remains under pressure in light of ongoing problems in the US banking sector and the growing "credit crunch."

During Powell's subsequent press conference at 8:30 p.m. CET, journalists are likely to ask critical questions about the future monetary policy of the US monetary watchers and closely watch his statements about possible changes in fiscal policy. A huge increase in market volatility can therefore be expected especially during the press conference.

European Central Bank's key interest rate decision

This Thursday, May 4, attention turns to Europe. At 14:15 CET, the European Central Bank (ECB) is going to announce its third major interest rate decision in 2023. Market participants expect another interest rate hike from 0.25% to 3.75% in total. Given that key interest rates are still well below the inflation rate of nearly seven percent, another interest rate hike is inevitable. But since the ECB has recently raised interest rates several times by 0.5% to close the gap, another 0.5% rate hike is not out of the question. Europe's monetary watchers have so far failed to bring the inflation problem under sustainable control. However, if Ms. Lagarde surprises the market with a 0.5% interest rate adjustment, the initial reaction in the stock market in Europe is likely to be negative and cause prices to correct. Meanwhile, the euro exchange rate would rise, which would be positive for Bitcoin prices, as the US dollar index DXY is likely to come under further pressure. Like the previous day, investors will pay particular attention to the ECB chief's statements during the subsequent press conference at 2:45 CET. How Lagarde assesses the development of the economic outlook for Europe and what monetary policy measures the ECB plans to take in the coming months will be closely watched by investors.

Labor market report and US unemployment rate close out trading week

The trading week concludes with labor and unemployment figures in the US. At 14:30 CET, the Bureau of Labor Statistics presents the latest non-farm employment (NFP) figures for the month of April. The latest figures deteriorated slightly to 236,000 jobs, below the expert forecast of 239,000 new jobs. For April, the forecast of 180,000 new jobs created is significantly below the average for the past few trading months. At the beginning of the year, 517,000 new jobs had been created. If the analysts' expectations come true or even underperform, an initial reaction is to expect a price consolidation in the stock market, as the danger of a recession in the U.S. economy becomes more likely again in the coming months. On the other hand, if the jobs data can surprise and the US economy can compensate for last month's decline, a further positive development in US stock prices is conceivable. The crypto market should also benefit from good labor market data.

Also at 14:30 CET, the US unemployment rate for the month of April will be announced. Analysts expect an unemployment rate of 3.6%. In March, the unemployment rate was still down from 3.6% to 3.5%, despite fewer new non-farm jobs. Whether this decline is only temporary after an unexpected rise in February is uncertain. Continued weakness in the real estate and construction sectors and an increasing wave of layoffs in the technology sector would be a possible catalyst for a rise in unemployment.

A weak NFP report on the labor market would also be a further indication that US economic growth is weakening and that the jobless rate is likely to continue rising in the coming months. Fed Chairman Powell had already stressed that a possible US recession could also push the unemployment rate toward 4.5%. US equity markets are likely to take this negatively, as US consumer behavior is also likely to weaken in the medium term. In contrast, if the unemployment rate remains at its current low level, this would indicate that the U.S. economy remains resilient, as it has been in recent times. Investors are likely to reward the unchanged strength, which should lead to more purchases. The crypto market could also continue to rise as a result.