Key indicators for Bitcoin and Crypto - Trading Week 8
- 5 minute read
In one week, the Bitcoin price has risen from $21.5k to $25k. What developments are affecting the price of Bitcoin and the rest of the crypto market this week?
✔️ New sales figures for existing homes in the US;
✔️ Fed minutes provide more detailed information on monetary policy;
✔️ EU consumer prices and GDP for the US;
✔️ Publication of US PCE core inflation rate.
New figures on US existing-home sales will be released on Tuesday, Feb. 21. A day later, the minutes of the February 1 FOMC meeting will be released. On Thursday, the latest EU consumer prices will be released first and the US GDP presentation is scheduled. The trading week concludes with the latest PCE price index data for the US.
Table of Contents
- New sales figures for existing homes in the US
- Fed minutes provide more detailed information on monetary policy
- EU consumer prices and US gross domestic product
- Publication of US PCE core inflation figure
New sales figures for existing homes in the US
On Tuesday at 16:00 (CET), the updated sales figures for existing homes for the month of January will be presented. The collected data describe the state of the housing market in the US. If the sales figures exceed experts' expectations, this indicates rising consumer spending in the US. Should forecasts fall short, it would confirm a cooldown in the all-important US real estate sector. The forecast for the previous January was 4.10 million home sales.
If the published figures reach or even exceed the forecast, the US dollar could correct, as it did when it was last published on 20 January. Positive figures from the real estate sector had a positive impact on equity and crypto markets last month. In contrast, weak data from the housing market could have a negative effect on financial markets. The US central bank Fed had repeatedly said it would not change its monetary policy despite poor economic data.
Fed minutes provide more detailed information on monetary policy
This Wednesday, at 20:00 (CET), the meeting minutes of the past interest rate decision will be released. Taking the market reaction to the Federal Reserve's last interest rate hike as a guide to investor sentiment, investors are done with inflation. What the market wants to hear from the Federal Reserve and what the US central bank wants to communicate have been widely divergent lately. Investors seem to want to trade with more risk, even though the Fed is not seeking a rate cut for now.
Recently, several Fed members rejected investors' bullish market interpretation, pointing out that interest rates are likely to stay higher for longer than investors had hoped. Whether the new statement contains updated insights on how long Fed officials will keep interest rates at current levels remains to be seen. An adjustment in interest rates could create volatility in financial markets.
EU consumer prices and US gross domestic product
Next Thursday at 11:00 (CET), the final consumer prices for the eurozone for the month of January will be presented first. In the pre-release on 1 February, inflation data in Europe came in at 8.5%, well below the expectation of 9%. Market experts have now revised this expectation to 8.6%. If last month's figures come out at this level, the market is likely to react positively.
However, if the inflation rate comes in above analysts' expectations, financial market prices could fall. As core prices had recently risen from 5.1% to 5.2% year-on-year, against expectations, this shows that while pressure on overall prices has eased, there are few signs that core inflation is also easing.
At 14:30 (CET) follows the release of US GDP for the final quarter of 2022. After a weak first half of the year, the US economy held up well with strong growth in the third and fourth quarters, despite several interest rate hikes. The preliminary release for the fourth quarter showed economic growth of 2.9%, 0.4% above the forecast of 2.5%. If the final figures confirm the 2.9% figure, the market reaction should again be positive. The bitcoin price should then react bullish as well.
Publication of US PCE core inflation figure
To conclude, the core inflation rate (PCE) for the US in the month of January is scheduled for next Friday at 14:30 (CET). As in the previous month, another rise to 0.4% is forecast. If experts' expectations are met or even exceeded, hawkish Federal Reserve members are likely to see their strategy of further interest rate hikes confirmed.
At the next Fed meeting on 22 March, the Fed would then have to raise the key interest rate again. The crypto market is likely to correct as a result. If, contrary to expectations, the PCE price index comes in at 0.3% or even below, the disinflation story would gain further support. This usually has a positive effect on the Bitcoin price.