Why US economic events are important for Bitcoin prices this week

Cryptocurrency traders and investors are closely following key events on the US economic calendar this week. As Bitcoin (BTC) holds a price above 64,000 dollars, these events can cause significant market changes.

The crypto market, which is largely driven by retail investors, is vulnerable to economic pressures and regulatory uncertainty. With these factors in play, traders are eager to see how the week unfolds.

Key US economic events this week

Bitcoin is seeing further gains, supported by the recent dovish tone of the Federal Reserve. This week's US economic events could have a significant impact on retail sentiment, potentially setting the stage for further price action in crypto markets. Several key factors on the economic calendar have the potential to impact Bitcoin and broader crypto prices, making them critical for traders to watch.

Consumer confidence index

The Conference Board will release its US Consumer Confidence Index on the last Tuesday of the month, August 27. This index provides insight into spending trends by reflecting consumer attitudes, purchasing plans and vacation time.

Higher consumer confidence is typically associated with increased spending, which can boost economic activity. Such optimism can lead to huge investments in assets like Bitcoin. On the other hand, lower consumer confidence, which indicates a reduction in spending, could prompt the Federal Reserve to tighten, allowing for more liquidity in the financial system.

In this scenario, Bitcoin could benefit as investors turn to it as an alternative store of value and hedge against inflation. Against this backdrop, Tuesday's data will be critical for crypto markets, providing a snapshot of consumer sentiment regarding the economy. The current forecast stands at 100.5, a slight increase from 100.3.

Read more: How to protect yourself from inflation using cryptocurrency

Initial unemployment claims

Crypto markets are closely watching Thursday's initial jobless claims, which will provide new insights into the health of the US labor market. Recently, the number of Americans filing new jobless claims has risen, indicating that the labor market is slowing — a factor that has fueled the Fed's cautious stance on rate cuts.

The last reported figure was 232,000, with a median forecast of 234,000 for upcoming data. According to the Labor Department, initial jobless claims rose 4,000 to a seasonally adjusted 232,000 in the period ending August 17, while economists had expected 230,000.

A higher-than-expected increase in jobless claims could signal economic uncertainty, prompting investors to turn to bitcoin as a hedge against traditional markets. Conversely, a decline in claims could increase confidence in traditional assets, potentially diverting capital away from cryptocurrencies. With the Fed closely monitoring activity, these numbers will be key for both traditional and crypto investors.

Domestic production

The second gross domestic product (GDP) data of the week, scheduled for Thursday, is a crucial release for markets. Gross domestic product (GDP) measures the overall economic output and health of a country by calculating the total value of goods and services.

A positive review indicates strong economic growth, which can drive investors to risk-adjusted assets like Bitcoin and other cryptocurrencies. On the other hand, a downward correction could dampen sentiment, causing crypto prices to pull back as investors grow cautious.

In the previous report, gross domestic product grew at a 2.8% annual rate in Q2, outpacing the 1.4% pace recorded in Q1. This steady growth has helped ease recession fears, signaling stability in the broader economy. If confirmed by Thursday's data, investor optimism could spill over into the crypto market, bolstering Bitcoin's appeal as a high-reward asset.

Personal income and PCE index

The US Bureau of Economic Analysis (BEA) is set to release personal income, spending, PCE index and core PCE data on Friday. These figures provide important insights into inflation and consumer behavior, with a direct impact on the Federal Reserve's ongoing activities.

Weaker personal income and spending data, combined with lower inflation, could pave the way for a 50-basis-point rate cut in September. Such a lax approach from the Fed could increase demand for risky assets like Bitcoin. However, if spending power declines significantly, recession fears could resurface, reducing demand for Bitcoin.

The Personal Consumption Expenditure (PCE) index, specifically the core PCE excluding food and energy prices, will be a key measure of inflation. A higher-than-expected core PCE reading indicates persistent inflation, leading investors to look for alternative assets such as Bitcoin, which are often viewed as inflation-adjusted. On the flip side, a lower core PCE index could reduce demand for cryptocurrencies as investors shift to more stable investments.

Consumer sentiment

Markets will report to the University of Michigan's consumer sentiment survey for August on Friday. This data shows a gap between the continued strength of the US economy and how households feel about their personal financial situation.

The data shows that if consumers are still struggling with inflation and high interest rates and are also more concerned about their jobs, crypto may respond in different ways. In particular, consumer sentiment is more vulnerable to inflation, while consumer confidence is more vulnerable to the labor market.

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

Finally, the relationship between crypto and US macroeconomics is not always straightforward. The market reacts to data releases in unpredictable ways depending on what happens in the days leading up to the data release. It is worth mentioning that all of the above data will affect the S&P500 index (SPX) and therefore affect Bitcoin as well.

US Government Bitcoin Supply Overhang

The US government's holdings of Bitcoin continue to be a concern for the market. According to Arkham Intelligence, the government currently holds around 203,239 BTC. Any big move from this stock could cause the Bitcoin price to drop below $60,000.

According to BeinCrypto data, Bitcoin is currently trading at $64,067, which represents a 0.23% decrease since the market opened on Monday. Further developments this week may determine the next directional move.