Here’s what will be important
Bitcoin price is facing the most important week of the year so far. While BTC has managed a slight rally of around 3% over the weekend, this week will have to show whether the last few weeks’ rally has been sustainable or the Fed will bring out its hammer and make the entire financial market feel resentful for the premature peak.
However, not only the US Federal Reserve FOMC meeting will take place this week, but also other major macroeconomic events. Given the close correlation of Bitcoin and the broader cryptocurrency market with the S&P 500 and the US dollar index, it is very likely to be a very volatile week.
What to watch this week in Bitcoin and crypto
This week, some of the biggest US tech companies will present their latest corporate data for the past holiday quarter. In addition to Meta, the results and prospects of Apple, Amazon and Google’s parent company Alphabet will be of key importance.
Whether these four tech giants will be able to meet their revenue and profit expectations is difficult to gauge. However, the company numbers could have a big impact on the entire S&P 500. Additionally, dozens of other reputable companies will be reporting their data for the most recent quarter.
Before the US central bank releases its interest rate decision on Wednesday, the latest US consumer confidence data will become important. The Conference Board (CB) is to release new US consumer confidence data for December on Tuesday.
In the latest release, optimism about economic development in the US had risen significantly to 108.3, contrary to forecasts. A value of 109.0 is expected for December.
If the figure once again turns out to be significantly better than expected, the US dollar index (DXY) could register a short-term rally, which would have a negative impact on the price performance in the cryptocurrency and Bitcoin markets at due to the inverse correlation trend. If the forecast is not met, this could in turn have a positive impact on the price of BTC.
Overall, investors should keep an eye on DXY this week. At press time, it was at 101.94 and thus just above the all-important support at 101.
US Federal Reserve interest rate decision
On Wednesday, February 1, 2023, at 2:00 PM EST, all eyes will be on the Fed’s rate decision as the US monetary watchdog announces its latest interest rate adjustment. According to the CME FedWatch Tool, a whopping 98.9% of analysts expect an increase of just 25 basis points.
Half an hour later, Fed Chairman Powell will go on camera again to explain the decision. Powell’s words are likely to have at least as much weight as the rate decision itself. While Powell will avoid the word “pivot” like the devil avoids holy water, investors are likely hoping for optimism in light of the recent upbeat data.
On the other hand, any deviation from what is considered a “certain” rate adjustment of 0.25 bps to 4.75 bps could cause a sharp pullback in the S&P 500 and the Bitcoin market.
The European Central Bank’s interest rate decision is also expected on Thursday, February 2 at 8:15 am EST. With inflation still very high at 9.1% in the Eurozone, the market expects rates to rise by 0.5 basis points to 2.5 basis points.
If the ECB surprises with a 75 basis point hike, the euro-dollar exchange rate could strengthen in an initial reaction, which in turn could put pressure on the DXY, ultimately benefiting Bitcoin and cryptocurrencies.
Closing out the week on Friday is US nonfarm payrolls data for the month of January. The numbers are likely to be particularly important for assessing the likelihood of a US recession. Also, the Fed has been known to keep a close eye on the job market.
At press time, Bitcoin was trading at $23,339, after being rejected yesterday at $24,000.
Featured Image from Kanchanara | Unsplash, Chart from TradingView.com