3 US Economic Events Driving Crypto Market Sentiment This Week

This week, three US economic events will be on crypto traders’ and investors’ watchlists. The interest comes amid the continued influence 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 retracting to the $95,000 range over the weekend.

Minutes of 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 to see if the FOMC minutes shed some more light on how the policymakers assessed the economy leading up to the November meeting.

The minutes may also show at least some discussion about possible economic implications following the US election outcome. They will come after policymakers voted to cut interest rates by 25 basis points (bps), following an initial 50 bps reduction in September. Investors will be looking for any clues on whether the pace of rate cuts could drop from here.

Meanwhile, data continues to suggest the US economy is holding up well. Still, fears abound that President-elect Donald Trump’s proposed policies may be inflationary, potentially reducing the need for lower rates.

“Experts say Donald Trump’s election victory could shift interest rate policy in the US as his promised policies risk higher inflation…Tradition tells us that that increase in tariffs will increase inflation in the US,” The Canadian Press reported, citing Sheila Block, an economist with the Canadian Centre for Policy Alternatives.

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

Initial Jobless Claims

Another key US economic event this week is the release of initial jobless claims on Wednesday, November 27. Labor market weakness was a concern through the summer and fall, with rising jobless claims, an increased unemployment rate, and slower monthly job gains. 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 come in better than expected, with the unemployment rate falling from a peak of 4.3% to 4.1%. The previous initial jobless claims data came in at 213,000 for the week ending November 16, below the estimate of 220,000, which was a good sign.

“US initial jobless claims fell by 6,000 to 213,000 last week, the lowest since April. The labor market is strong,” the publisher of the Lead-Lag Report noted.

Weekly unemployment claims have been steadily decreasing after reaching a peak in over a year this past October. While initial jobless claims are falling, the rise in continuing claims indicates that employers are striving to retain workers. However, those who lose their jobs are facing challenges in securing new employment.

“Initial jobless claims remain very slow but continuing claims hit a three-year high. This reinforces that employers aren’t actively laying workers off, but they aren’t hiring, either,” Sevens Report commented.

For now, things appear to be okay on the labor side of the Federal Reserve’s dual mandate. If the trend continues, it would suggest that economic hardship is reversing and that the labor market is gaining strength. This could lead to increased consumer spending and investment in traditional assets like Bitcoin and crypto.

US PCE Inflation

Crypto market participants will also watch Wednesday’s October US PCE (Personal Consumption Expenditures) inflation data, as this is the Fed’s preferred gauge. The November PCE index on Wednesday is also a good watch. The data will show whether inflation continued to slow in November. 

“Expectations: Monthly PCE expected to rise by 0.2% Annual PCE expected at 2.3% Core PCE monthly increase at 0.3% Core PCE annual increase at 2.8%,” data on MarketWatch shows.

Rising PCE figures often raise concerns about higher inflation levels in the economy. If PCE inflation exceeds expectations, it could weaken the US dollar as investors anticipate potential monetary policy actions, such as interest rate hikes. A weaker dollar tends to benefit Bitcoin and other cryptocurrencies, which often show an inverse correlation with the USD.

In such scenarios, investors may turn to alternative assets like Bitcoin as a hedge against inflation. Cryptocurrencies are frequently seen as a store of value, similar to gold, during periods of inflationary pressure.

Currently, the Federal Reserve remains optimistic that inflation is nearing its 2% target. Policymakers have maintained interest rates at historically high levels to combat the inflation surges of the past two years. In this context, traders and investors are closely monitoring price data for positive signs that could prompt the Fed to begin easing interest rates.