The influence of US economic data on cryptocurrencies and Bitcoin (BTC) in particular continues to become apparent, as investors perceive the pioneer crypto as a flight to safety during times of economic uncertainty.
Therefore, crypto traders and investors must brace for possible impact, with three US macroeconomic data releases this week likely to influence volatility for digital assets.
Initial Jobless Claims
Amidst concerns of climate-related catastrophes, unemployment figures have been explosive in October, recording levels last since August 2023. This data, recoding weekly unemployment figures for the week ending October 19, is due for release on Thursday. It will show the number of people who filed for unemployment last week.
With a median forecast of 250,000 on MarketWatch, these unemployment figures are expected to be high amidst storm damages and labor stoppages. Specifically, economists’ consensus estimate is that the initial jobless claims will come in elevated at around 245,000. This is because some residents were still without power last week in states affected by Hurricanes.
A higher-than-expected unemployment figure could indicate a weakening job market in the aftermath of these natural disasters. It may also affect sentiment toward the Fed’s rate plan. The agency has a dual mandate—to achieve price stability and maximum employment. Fed officials recently said they would prioritize the labor market due to inflation cooling.
Read more: How to Protect Yourself From Inflation Using Cryptocurrency.
Therefore, higher jobless claims could renew hopes for a larger interest rate cut, possibly supporting Bitcoin. On the other hand, a lower-than-expected number of jobless claims could indicate a strengthening economy. This would boost investor confidence and potentially drive up demand for riskier assets like Bitcoin.
US Manufacturing PMI
This data, due for release on Thursday, October 24, will provide insights into the health of the manufacturing sector. As one of the interest rate-sensitive sectors, the manufacturing industry may be poised to benefit from the easing cycle. Economists forecast recovery in manufacturing, boosting earnings growth for the S&P 500 into 2025.
However, with a previous reading of 47.3, the manufacturing PMI is expected to rise slightly to 47.5. Nevertheless, anything below 50 indicates a contraction in manufacturing and a negative outlook for manufacturers. The index has been negative for 22 of the last 23 months, indicating a longer negative streak than the great recession of 08- 09.
A PMI reading above 50 would suggest expansion in the manufacturing sector, which could be interpreted as positive for the overall economy. This could lead to increased interest in cryptocurrencies as a hedge against inflation.
US Services PMI
Like the Manufacturing PMI, the Services Purchasing Managers’ Index (PMI) will also provide insights into the health of the services sector. The Services PMI is expected to dip slightly to 55 after a previous reading of 55.2.
Given crypto’s blossoming relationship with macroeconomic trends, investors will be closely monitoring these economic indicators for clues on future price movements. A positive outcome from the jobless claims and PMI data could bolster sentiment and fuel further upside in Bitcoin and other digital assets.
Nevertheless, this week on the US economic data calendar is rather quiet, with all the above macro reports coming in on the same day. Against this backdrop, Neil Sethi, Managing Partner at Sethi Associates, urges investors to take advantage of the light releases this week as next week could bring even more volatility.
“Do note, what this week lacks in key reports next week makes up for and then some. We will get all of the key October employment reports, including the first read on Q3 GDP & ECI (plus Sept personal income and spending with PCE prices). This is on top of most of the Magnificent 7 earnings, the Treasury borrowing announcement, etc. So take full advantage of the light week,” Sethi wrote.
Read more: How To Buy Bitcoin (BTC) and Everything You Need To Know
BeInCrypto data shows Bitcoin is trading for $69,026 as of this writing, up by a modest 1.15% since Monday’s session opened.
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