US economic events affect the sentiment of Bitcoin and Crypto

Three US economic events this week will be on the watch lists of crypto traders and investors. The demand comes amid the continued impact of US macroeconomic data on Bitcoin (BTC) and crypto prices in 2024 after drying up last year.

Meanwhile, Bitcoin remains just shy of the $100,000 psychological level, hovering above $98,000 after returning to $95,000 over the weekend.

Minutes of the Fed's November FOMC meeting

All eyes will be on the Federal Reserve (Fed) on Tuesday, November 26 for the minutes of the November 6 FOMC (Federal Open Market Committee) meeting. Traders and investors will be watching the FOMC minutes to see if they shed more light on how policymakers are assessing the economy leading up to the November meeting.

The minutes will likely feature at least some discussion of possible economic implications after the US election results. They come after policymakers voted to cut interest rates by 25 basis points (bps), down from an initial 50 bps. Decrease in September. Investors will be looking for any clues as to whether the pace of rate cuts could slow from here.

Meanwhile, the data continues to point to the US economy. It holds up well. Still, there are many concerns about the policies proposed by President-elect Donald Trump. It could be inflationary, which could reduce the need for lower rates.

“Donald Trump's election victory could change interest rate policy in the U.S. because of the risk of higher inflation, experts say… Tradition tells us that this rate hike will increase inflation in the U.S.,” The Canadian Press quoted economist Sheila Block as saying. With the Canadian Center for Policy Options.

One way the FOMC minutes can affect Bitcoin and crypto is through their impact on overall market sentiment. Any dovish or hawkish tone in minutes can affect market expectations and cause changes in investor behavior.

Initial unemployment claims

Another key U.S. economic event this week is the release of initial jobless claims on Wednesday, November 27. Labor market weakness was a concern over the summer and fall, with jobless claims rising, the unemployment rate rising and monthly job gains slowing. This data influenced the Federal Reserve's decision to cut interest rates by half a percentage point in September.

However, since then labor market data has been coming in better than expected and the unemployment rate has dropped from 4.3% to 4.1%. The previous initial jobless claims data came in at 213,000 for the week ending November 16, below estimates of 220,000, which was a good sign.

“U.S. initial jobless claims fell 6,000 to 213,000 last week, the lowest since April. The job market is strong,” said the publisher of the Lead-Lag Report.

After hitting a more than one-year high last October, weekly jobless claims have been slowing. While initial jobless claims are falling, the increase in claims shows that employers are struggling to retain workers. However, those who have lost their jobs are facing challenges in finding new jobs.

“Initial jobless claims are very slow but sustained claims are at a three-year high. This reinforces that employers are not actively recruiting, but simply not hiring,” the Sevens report commented.

For now, things look good on the labor side with the Federal Reserve's double mandate. If the trend continues, it indicates that the economic crisis is returning and the labor market is getting stronger. This could lead to increased consumer spending and investment in traditional assets such as Bitcoin and crypto.

US PCE inflation

Crypto market participants will be watching Wednesday's October US PCE (Personal Consumption Expenditures) inflation data, as this is the Fed's preferred measure. The November PCE index on Wednesday is also a good watch. The data shows whether or not inflation continued to decline in November.

“Expectations: Monthly PCE is expected to increase by 0.2% Annual PCE is expected to increase by 2.3% Core PCE is expected to increase by 0.3% Core PCE is expected to increase by 2.8% annually,” according to data on MarketWatch.

A rise in PCE figures raises concerns about higher inflation in the economy. If PCE inflation is higher than expected, it could weaken the US dollar as investors anticipate monetary policy actions such as interest rate hikes. A weak dollar tends to benefit bitcoin and other cryptocurrencies, which often exhibit an inverse correlation with the USD.

In such situations, investors may turn to alternative assets such as Bitcoin to hedge against inflation. Cryptocurrencies are seen as a store of value similar to gold in times of inflation.

Currently, the Federal Reserve is optimistic that inflation is moving closer to its 2% target. Policymakers have kept interest rates at historically high levels to combat inflation over the past two years. In this context, traders and investors closely monitor price data for positive signs that the Fed may start easing interest rates.