Why this week’s US economic data could move Bitcoin prices

Amid the ongoing Bitcoin (BTC) regional movement, crypto traders and investors are focusing on key US economic events that will impact prices this week and set a directional trend.

Bitcoin continues to trade between the psychological $60,000 level and the $57,000 threshold. Despite the challenges typical of September, traders were optimistic that Uptober would bring better market conditions.

Key events on the US economic calendar

US markets are set to launch Donald Trump's decentralized finance (DeFi) project World Liberty Finance (WLFI) on Monday.

“Join me live on Twitter Spaces this September 16th at 8 p.m., the launch for global financial freedom. We're embracing the future in crypto, and we're leaving the slow and outdated big banks behind,” Trump said in a recent video message on X.

However, three key US economic data could impact crypto portfolios this week. Bitcoin is up nearly 7% over the past seven days, and whether these gains continue will depend on how the market reacts to these reports.

American retail sales

The Commerce Department's Census Bureau will release U.S. retail sales data on Tuesday, providing key insights into trends in consumer spending, a large part of the U.S. economy.

U.S. retail sales unexpectedly rose 1 percent in July from a month earlier, an improvement from June's 0.2 percent decline and well above economists' expectations for a 0.3 percent increase.

As consumer spending is a key driver of economic growth, strong August retail sales figures eased recession fears, pointed to a healthy economy and boosted confidence in risky assets like cryptocurrencies and stocks.

FOMC interest rate decision

The highly anticipated interest rate decision from the Federal Open Market Committee (FOMC) is set for Wednesday. Following the recent U.S. Consumer Price Index (CPI) reading and other key economic data, a rate cut appears certain as inflation eases.

However, the size of the cut remains unclear, with market participants keen to determine the Federal Reserve's preferred approach. According to the CME FedWatch Tool, there is a 59% chance of a 50 basis points (bps) rate cut and a 49% chance of a 25 bps cut.

The impact on Bitcoin and other risk-adjusted assets will depend on the price traders bought earlier. A 50 bps cut could surprise investors, leading to market volatility. Conversely, a 25 bps decline is in line with expectations, with a more measured response likely to come from Bitcoin.

Interestingly, JPMorgan supports a 50 bps cut despite the Fed's tight monetary policy as inflation nears its 2% target.

“We think there's a good case for them slowing down,” said Michael Ferroli, chief U.S. economist at JPMorgan Chase.

However, BeinCrypto noted that such a move would signal broader economic risks and cause investors to flee risky assets like Bitcoin. As a result, most analysts expect a 25 bps cut, the current actual federal funds rate given that the Fed's policy is already too restrictive.

“The current expectation is that the Fed will cut interest rates by 0.25%, which will be big for financial assets like stocks and crypto, because it will reduce the cost of borrowing money,” said Matty Greenspan, CEO of Quantum Economics.

After Wednesday's rate decision, markets will closely follow Fed Chairman Jerome Powell's press conference for insights into future rate cuts. Based on current data and market sentiment, it looks like it will be a soft landing for the rest of the year.

US unemployment claims

Initial jobless claims are also on the watch list this week, providing insight into the current state of the labor market. Although the labor market is shrinking, the unemployment rate is relatively low.

Job openings have decreased significantly, in line with the normal market. According to BeenCrypto, the US economy added 142,000 jobs in August, falling short of expectations.

However, the August unemployment rate met forecasts, standing at 4.2%, showing a slight improvement from the 4.3% recorded in July, indicating a decrease in unemployment.

Read more: How to buy Bitcoin (BTC) and everything you need to know

Thursday's data shows the latest growth in the U.S. labor market. While the impact may not be as direct or significant as other economic indicators, rising jobless claims can signal economic weakness. This may prompt some investors to turn to alternative assets, such as cryptocurrencies, as a hedge against traditional markets.