3 This week in Crypto Implications Reports
The impact of US economic data on cryptocurrencies and Bitcoin (BTC) is becoming clearer as investors see the pioneering crypto as a flight to safety in times of economic uncertainty.
Therefore, crypto traders and investors should keep an eye on the potential impact of three U.S. macroeconomic data releases this week that could impact volatility in digital assets.
Initial unemployment claims
Amid fears of climate-related disasters, unemployment figures were explosive in October, a record level that will last until August 2023. This data will be released on Thursday, updating the weekly unemployment figures for the week ending October 19. It shows the number of people who filed for unemployment last week.
With an average forecast of 250,000 on MarketWatch, these unemployment numbers are expected to rise amid hurricane damage and labor stagnation. Specifically, the consensus estimate among economists is that initial jobless claims will come in higher at 245,000. Because last week, some residents were still without power in the hurricane affected areas.
A higher-than-expected unemployment rate could indicate a weakening labor market after these natural disasters. It can hurt him. No sentiment for the Fed's rate plan. The agency has a dual mandate:To achieve price stability and high employment. Fed officials said they will prioritize the labor market due to recent inflation.
Read more: How to protect yourself from inflation using cryptocurrency.
So higher unemployment claims could revive hopes for a big interest rate cut, possibly supporting Bitcoin. On the other hand, a lower-than-expected number of jobless claims could indicate a strengthening economy. This boosts investor confidence and can increase demand for risky assets like Bitcoin.
US manufacturing PMI
This data, which will be released on Thursday, October 24, will provide insights into the health of the manufacturing sector. With interest rates being one of the areas under focus, the manufacturing industry may be poised to benefit from the easing cycle. Economists predict a recovery in manufacturing, which will boost earnings growth for the S&P 500 through 2025.
However, with an earlier reading of 47.3, the manufacturing PMI is expected to rise slightly to 47.5. However, anything below 50 indicates a contraction in manufacturing and a negative outlook for manufacturers. The index has been negative for 22 of the past 23 months, marking the longest negative streak since the Great Recession of 08-09.
A PMI reading above 50 indicates expansion in the manufacturing sector, which can be interpreted as positive for the overall economy. This could lead to increased demand for cryptocurrencies as a hedge against inflation.
US services PMI
Like the manufacturing PMI, the Services Purchasing Managers' Index (PMI) provides insights into the health of the services sector. The services PMI is expected to ease slightly to 55 after a previous reading of 55.2.
Given crypto's relationship with macroeconomic trends, investors closely monitor these economic indicators for clues about future price movements. A positive result from jobless claims and PMI data could strengthen sentiment and bring more fuel to Bitcoin and other digital assets.
However, this week is quiet on the US economic data calendar, with all of the above macro reports coming on the same day. Against this backdrop, Neil Sethi, managing partner at Sethi Associates, urged investors to take advantage of light releases this week as next week could bring more volatility.
“Remember, this week will include what's missing in key reports next week, and then some. We'll get all of October's employment reports, including the first reading on Q3 GDP and ECI (including September's personal income and PCE prices). This is higher than most Magnificent 7 earnings, Treasury borrowing announcements, etc. So take full advantage of the light week.” Sethi wrote.
Read more: How to buy Bitcoin (BTC) and everything you need to know
According to data from BeInCrypto, bitcoin is trading at $69,026 as of press time, up a modest 1.15 percent since the opening of Monday's session.
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