Possibly the most important week of 2023 so far for the bitcoin and crypto market. With all eyes on Wednesday’s Federal Open Market Committee (FOMC) meeting, this week is once again packed with plenty of crucial macro data. Added to this is the still unresolved situation surrounding the First Republic Bank.
Furthermore, the bitcoin price is again at a crucial point. After BTC first surged to $29,975 on Sunday, the bears unleashed another rush just before the end of the month, pushing BTC towards $28,500. Nevertheless, they failed to prevent the fourth green monthly candle in a row.
Key events for bitcoin and crypto this week
On Tuesday, May 2, at 10:00 a.m. EST (4:00 p.m. CET), the US Bureau of Labor Statistics will release the JOLT Job Openings Report. In March, the number of vacancies fell below 10 million for the first time since May 2021. As of April 4th, a total of 9.93 million vacancies were reported.
Forecasts say 9.683 million jobs were available in April, signaling a further slowdown in the US job market. Should the jobs data come in better than expected as the US economy shows resilience, expect US stock prices to continue to do well. Likewise, the crypto market should benefit from good labor market data.
On Wednesday, May 3, 2023 at 2:00 p.m. EST (8:00 p.m. CET) the focus will be on the US Federal Reserve’s (Fed) interest rate decision. According to the latest data from the CME FedWatch tool, 84.5% expect another rate hike of 25 basis points to 5.25%.
However, this decision should already be priced in. More important will be the FOMC press conference at 2:30pm EST when Fed Chair Jerome Powell will deliver his remarks for the coming months. During the press conference, volatility is expected to increase in the bitcoin and crypto markets.
The market will be hoping for a comment from Powell that this is the last rate hike and that there will be rate cuts later this year. However, the latter seems very unlikely, especially since Powell philosophized in a conversation with a fake Volodymyr Zelenskyj about two further interest rate hikes and continued tight monetary policy this year. It will also be interesting to see how Fed Chairman Powell will respond to the FDIC’s emergency intervention at First Republic Bank.
Powell remains under pressure given the ongoing problems in the US banking sector and the worsening credit crunch. Goldman Sachs therefore believes:
We expect the FOMC to signal that it expects a pause in June, but maintains its hawkish bias and pauses earlier than originally projected as bank stress is likely to lead to a credit crunch.
On Friday, May 5, 2023, the focus will once again be on the US job market. At 8:15 a.m. EST (2:15 p.m. GMT), the Bureau of Labor Statistics will present non-farm payrolls (NFP) numbers for April. Recently, the numbers have deteriorated slightly.
The forecast of 180,000 newly created jobs for April is well below the average for the last few months of trading. At the beginning of the year alone, 517,000 new jobs were created. A confirmation of this forecast would make the risk of a US recession more likely in the coming months and a correspondingly negative reaction on the financial markets. On the other hand, a positive surprise could be a catalyst for a rally in the crypto market.
Also at 8:30 am EST, the US Unemployment Rate for April will be released. The estimate is 3.6%. In March, the unemployment rate fell from 3.6% to 3.5%. Fed Chair Powell has repeatedly emphasized that a possible US recession could also push the unemployment rate towards 4.5%. An unchanged unemployment rate should therefore be viewed positively by the market.
Other events this week
A positive impulse, like last week, could also come from the stock market this week. 25% of S&P 500 companies report their earnings. After strong quarterly figures from Internet giants Microsoft, Alphabet and Amazon, the US stock market ended the past trading week with a plus.
The crisis of the First Republic could also be significant. As Bitcoinist reported, the next domino in the banking system could be a catalyst for Bitcoin. According to reports from various sources, the sale of First Republic Bank has already taken place. Two of the most promising bidders are reportedly JP Morgan and Bank of America.
At press time, bitcoin price was trading at $28,600.
BTC price 1 hour chart | Source: BTCUSD on TradingView.com
Featured image from iStock, chart from TradingView.com
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