As in the previous week, the price of Bitcoin (BTC) continues to consolidate in a downtrend. The cryptocurrency remains unable to benefit from rising prices on the U.S. equity indices Nasdaq and S&P500. A major reason is the continued strength of the U.S. dollar index DXY. Although the bulls were able to avert a pullback to last week's low at $25,800, they failed to initiate a liberation move toward $28,000. Despite new year highs for some major technology stocks such as Apple, Meta and Alphabet, the crypto market currently lacks sustained price momentum. Bitcoin ended the trading week virtually unchanged at just under $27,000.
✔️ On Tuesday, the latest US new home sales figures will be released. Real estate sales are considered an important indicator of households' current propensity to consume and provide good insight into the state of the US housing market.
✔️ On Wednesday, the minutes of the previous policy decision on interest rates on May 3 will be released. Investors are hoping for more insight into whether top U.S. monetary policymakers will pause or possibly already cut interest rate hikes at the next policy meeting on June 14.
✔️ Thursday the latest US existing-home sales figures will be released. After a huge sales decline of -5.2% in the last calculation period, analysts now expect an increase of +0.5%.
✔️ The trading week concludes on Friday with core US inflation figures at 2:30 p.m. (CET). The Bureau of Economic Analysis will then release the latest core inflation figures for the previous April. The latest forecast from experts was a +0.3% month-on-month rise in core inflation. Analysts also expect a +0.3% rise in April.
Table of Contents
- US home sales at the beginning of the week
- Fed meeting minutes midweek
US home sales at the beginning of the week
On Tuesday, May 23rd, investors can look forward to the latest US new home sales figures. These will be released at 16:00 (CET). Real estate sales are considered an important indicator of households' current propensity to consume and provide valuable insights into the state of the US housing market. In the previous month, sales figures stabilized and were significantly above the forecast of 630,000 home sales, with 683,000 homes sold. If this trend is confirmed, which usually has a negative effect on the Bitcoin price , the US dollar is likely to strengthen further. The forecast for April, with 663,000 homes sold, is slightly below last month's final sales figures. Failure to meet expectations indicates a negative trend in consumer spending and suggests weakness in the housing market. Poor sales figures would confirm the significant gap between consumer expectations and the latest University of Michigan survey results, which could have a negative effect on the US dollar. The BTC rate could benefit from a renewed correction in the US dollar index, DXY.
Fed meeting minutes midweek
On Wednesday, May 24, at 8 p.m. (CET), the U.S. Federal Reserve will announce the minutes of its previous policy decision on interest rates on May 3. Investors are hoping for more insight into whether top U.S. monetary policymakers will pause or possibly already cut interest rate hikes at the next policy meeting on June 14. At the last Fed meeting, Fed Chairman Powell reiterated that he does not plan to cut key interest rates in 2023, but the recent further decline in the inflation rate gives the U.S. central bank increasing room for maneuver as far as interest rate policy is concerned. "Quantitative Easing" (QE) measures could counter the growing problems on the credit front and reduce the risks of future defaults in the office real estate sector. Moreover, the minutes could provide further information on how Fed members will address the ongoing U.S. banking crisis and resulting liquidity shortages. Market participants will thus look to the minutes for clues as to what intervention options the Federal Reserve plans to use if the monetary policy situation in the U.S. deteriorates further.
Awaiting home sales in the U.S.
On Thursday, May 25, at 16:00 (CET), the latest US existing-home sales figures will be released. After a huge sales decline of -5.2% in the last calculation period, the increased risk of a continued disruption of the US housing sector has been confirmed. Although analysts expect an increase of +0.5%, less-than-expected numbers could put pressure on the stock market and thus the crypto sector. If expectations are correct or even better than expected, that would at least indicate an initial stabilization. Since home sales have been consistently better than forecast in the first three months, last month may have been just a one-time outlier. Financial markets are likely to welcome a stabilization in the housing sector, which should also benefit the crypto sector. Paradoxically, even a complete crash in the real estate market could lead to rising prices in the stock and crypto markets, as market participants could be bullish about the likelihood of a faster rate cut.
Core PCE inflation in U.S. at end of week
The trading week concludes next Friday, May 26, with US core inflation figures at 2:30 p.m. (CET). The Bureau of Economic Analysis will then release the latest core inflation figures for the previous April. The latest forecast from experts was a +0.3% month-on-month increase in core inflation . Analysts also expect a +0.3% rise in April. If core inflation exceeds the experts' forecast, investors are likely to view it negatively, as the Fed would have to maintain its hawkish monetary policy to fight inflation. Investors might then decide to reduce their equity and crypto positions. On the other hand, should core inflation rise less than analysts expect, the financial market could end the trading week on a good note. As in previous months, the Bitcoin price should benefit from falling inflation rates.