Cryptocurrency market participants need to monitor three pieces of U.S. economic data this week that could impact Bitcoin (BTC) sentiment and lead to volatility. After experiencing a period of exhaustion in 2023, this year's U.S. macroeconomic data has had a significant impact on Bitcoin and the cryptocurrency market, generating interest.
Meanwhile, the price of Bitcoin remains slightly below $100,000, hovering around the $99,000 range throughout the weekend.
Three U.S. economic data points that may affect Bitcoin prices this week
This week's events will be very rich, with the following U.S. economic data expected to drive volatility in the Bitcoin and altcoin markets.
This week's U.S. economic data. Source: Market Watch
U.S. Consumer Price Index
The U.S. CPI (Consumer Price Index) is the focal point of U.S. economic data this week. It is expected to be released at 8:30 AM EST on Wednesday, December 11. This macroeconomic data is published by the U.S. Bureau of Labor Statistics (BLS) and measures the monthly changes in prices paid by consumers, effectively tracking inflation over time.
During the last release of the U.S. Consumer Price Index (CPI) data, the U.S. Bureau of Labor Statistics (BLS) reported an inflation rate rise to 2.6%. Specifically, the inflation rate stabilized at 0.2%, unchanged from the numbers in September. However, the 2.6% year-over-year growth rate marks the first increase in eight months.
This has sparked speculation about the Fed tightening its policy. However, institutional interest in Bitcoin has bolstered the value of the leading cryptocurrency, as it continues to attract demand as a store of value.
The median forecast is 0.3%, which means that according to economists' predictions, prices are expected to rise by 0.3% month-over-month. This would be higher than the 0.2% month-over-month increase in September. Wall Street economists also unanimously agree on this figure being 2.7%.
With U.S. inflation data in focus, all eyes will be centralized on the Department of Labor this Wednesday. In addition to overall data, core Consumer Price Index (CPI) inflation will also be a key focus this week, as it provides a more stable inflation measure by excluding food and energy prices in its calculations.
Core Consumer Price Index inflation is a focus of attention as goods prices tend to experience significant and unpredictable changes each month, often unrelated to consumer demand. In November, the core CPI is expected to rise 3.3% year-over-year. If this occurs, it would mark the fourth consecutive month of 3.3% growth.
At the same time, the core price monthly increase is expected to be 0.3%, consistent with the increase in October.
Due to its decentralized nature and limited supply, Bitcoin is considered a tool for hedging against inflation. On Wednesday, BTC could benefit from the upward trend in the U.S. CPI and core CPI.
For outsiders, if investors perceive that rising inflation poses a threat to the purchasing power of traditional currencies like the dollar, they may turn to alternative assets like Bitcoin as a store of value. This increase in demand could push up the price of Bitcoin.
Initial unemployment claims
The report on initial unemployment claims for the week ending December 7 will be released on Thursday. This data will provide insights into the health of the labor market and the overall economic situation.
Typically, high levels of unemployment claims indicate economic hardship and uncertainty. In contrast, low levels suggest a strong job market and economic stability.
For the week ending November 30, unemployment insurance claims rose to 224,000. This print was above the initial estimate of 215,000. It also exceeded the previous week's 215,000 claims (revised to 213,000).
However, according to U.S. Bureau of Labor Statistics employment data, the U.S. job market saw a slight rebound in November. The unemployment rate rose to 4.2%.
Specifically, following a weak labor market in October, the U.S. added 227,000 non-farm jobs (NFP) in November. This occurred amidst the aftermath of the Boeing strike and Hurricane Milton.
"The latest employment data indicates that the labor market remains strong. Following soft data in October due to weather and worker strikes, November saw a rebound with strong job growth and upward revisions. Elise Gould, a senior economist at the Economic Policy Institute, stated, 'The economy averaged an increase of 173,000 jobs over the past three months.'"
The high unemployment claims on Thursday may exacerbate negative market sentiment and uncertainty. This could lead investors to seek safe-haven assets such as gold or Bitcoin. An increase in demand for Bitcoin as a store of value may drive its price up.
Similarly, high unemployment claims may indicate weak consumer spending and economic growth. This could influence the central bank's implementation of expansionary monetary policy. Such an outcome may heighten concerns about inflation and currency depreciation, prompting investors to turn to alternative assets like Bitcoin to protect their wealth.
U.S. Producer Price Index
Additionally, on Thursday, the Bureau of Labor Statistics will release the Producer Price Index (PPI), which is a measure of wholesale inflation. This data measures the average change over time in the selling prices received by domestic producers for their output.
This week's CPI and PPI price data will be a key determinant for the Federal Reserve's interest rate decision this month. These data will mark important milestones in the calculation of the Fed's policy adjustments. Notably, this marks the last week of inflation data before the December Fed meeting.
"All eyes are centered on the CPI and PPI inflation data as the market hopes to solidify a 25 basis point rate cut again," stated the Kobeissi Letter.
