- The crypto market is poised for a volatile week as key events are expected to occur.
- These events include manufacturing and services activity, labour market numbers, trade data, and key inflation indicators.
- The biggest catalyst for the market is the PCE and Core PCE Inflation data.
As the first week of December unfolds, the crypto market is gearing up for a crucial period of macroeconomic flux. A packed schedule of economic data releases, including manufacturing and services activity, labour market numbers, trade data, and key inflation indicators like the PCE Index, will provide investors with fresh insights into the health of the economy and the Federal Reserve’s potential policy decisions.
With the crypto market increasingly intertwined with traditional financial markets, these macroeconomic trends will likely play a significant role in shaping investor sentiment and market direction. As rate-cut bets gain traction, even minor data surprises could send ripples through liquidity-sensitive assets like BTC and ETH. This makes the upcoming week a critical juncture for the crypto market.
What are the Upcoming Events?
As per the US Economic Calendar, the market is poised to watch major events and reports like the S&P Global’s financial manufacturing and services reports, labour data, dollar strength statistics and the PCE inflation data.
Manufacturing and Services PMI: A Key Economic Indicator
The week’s kickoff features crucial economic data with the release of S&P Global’s final manufacturing and services PMI reports, followed by the ISM manufacturing and services reports. These reports will provide valuable insights into the current state of the economy, with a focus on demand and economic momentum.
A weaker-than-expected reading, particularly if manufacturing continues to contract, could signal weakening economic conditions and increase expectations of the Fed rate cuts, potentially boosting crypto. Conversely, stronger-than-expected readings could pressure risk assets like crypto in the short term, as the market adjusts expectations of fewer rate cuts.
Labor Market Insights
The ADP private payrolls report and weekly jobless claims provide insights into the labour market’s current conditions. A slower labour market, indicated by lower job creation or higher jobless claims, may lead to expectations of monetary easing, which can positively impact the crypto market. On the other hand, if the reports show resilience, it may support the case for higher for longer interest rates, which can negatively impact the crypto market.
US Trade Deficit Data
The US trade deficit data, expected to be released next Thursday, will unveil details of global demand and the strength of the US dollar. A wider-than-expected trade deficit could signal a strong dollar and weak exports, potentially pressuring risk assets, including cryptocurrencies. Since crypto often exhibits an inverse relationship with the dollar, a positive trade deficit may lead to a temporary decline in major coins.
PCE Inflation Data
The week culminated with the release of the PCE and Core PCE Inflation data on Friday, which is expected to be the biggest catalyst for the market. As the Federal Reserve’s preferred inflation metric, this data will heavily influence expectations for upcoming rate decisions and, in turn, impact the crypto market.
Commenting on the Fed’s potential rate cut decision, Ark Invest’s Cathie Wood noted,
“We think we will get another cut in December, and that the Fed will shift from what seems to be a hawkish tone right now back into a more dovish tone as we approach that date.”
If the PCE data shows a decline in inflation, it could lead to increased expectations of rate cuts, boosting crypto prices. At the same time, if the data indicates that inflation remains stubbornly high, it could ass uncertainty to the market, potentially triggering a short-term dip.
