Bitcoin and crypto face these key dates in the coming week

by Arthur · February 20, 2023

Once again, this week will bring big macroeconomic data for the Bitcoin and crypto markets, which investors should pay attention to. While Bitcoin has steadily managed to break its correlation with the S&P 500 and the Dollar Index (DXY) in recent weeks, it is likely that the Federal Reserve’s monetary policy will continue to have a strong impact on crypto.

And although the week has a quiet start, there are two macros events this week it could be significant. First, however, the US stock market begins with a day off due to President’s Day, while quarterly results continue Tuesday through Friday.

In particular, major retailers could test the strength of the US stock market rally in the coming week as investors get a look at the health of consumer spending and the impact of inflation on corporate profits. On Tuesday, Walmart and Home Depot will release their report.

A dampener on the Bitcoin rally?

But on Wednesday January 22 at 2:00 PM EST comes the first key event, the FOMC Minutes. This is a detailed report from the FOMC’s last meeting on 1 February, and provides an in-depth insight into the economic and financial conditions that influenced the interest rate vote.

Financial and Bitcoin investors are likely to be watching extra closely this time, as several Fed speakers last week said the rate decision was not unanimous and that they supported a 50 basis point hike. There were also elevated CPI revisions and a high January report last week.

Based on this negative data, some voices are suggesting that the Fed may use the minutes to make some sneaky corrections. The Fed minutes may hint at an imminent steep interest rate hike and tank the financial markets.

In addition, Powell indicated that the minutes will provide insight into what the Fed will decide when to pause the rate hike cycle – also an extremely important data point for the financial markets.

Also, the Fed is likely to reflect its desire for multi-month inflation data, signaling that the Fed is well on its way to reaching its 2% target. Here, the focus will be on the still extremely tight labor market, as wage pressure is not compatible with inflation of 2%.

Bitcoin investors should therefore pay close attention to the FOMC minutes to see if the Fed doubles down on its hawkish stance. If so, the recent decoupling of Bitcoin will likely be put to the test.

The second big event of the week follows on Friday 24. February, when the core PCE price index is released. The PCE price index is the Federal Reserve’s preferred measure of inflation because it reflects spending habits in a more timely manner than the Consumer Price Index (CPI).

Core means it excludes the more volatile and seasonal food and energy prices compared to PCE. Since October 28, Core PCE has fallen from 5.1% to 4.4% year-over-year, most recently in January.

This time it is expected to have risen 0.4% in January, up from 0.3% in December and 4.3% year-on-year. In the event that there is a negative surprise and PCE comes in above expectations, fears of sticky inflation are likely to become more entrenched. This could also be a dampener on the Bitcoin price.

At press time, the Bitcoin price stood at $24,520 after being rejected at the crucial $25,223 resistance once again.