A lot has happened in the crypto markets in recent weeks, including important statements from the Federal Reserve (Fed). This week will be much quieter. Still, crypto investors should take note of some economic and financial data this trading week. Especially since the Bitcoin price is still highly correlated with the US stock market, the price could be affected by this news.
Last weekend, Bitcoin briefly fell to $22,775, its 12-day low. Nevertheless, the price managed to recover and ended the week above $23,300. It is still unclear whether the upward trend that has continued since January will continue or whether a more pronounced correction will take place. The new week will have to give a definite answer on this.
While a large number of data releases are taking place this week, Bitcoin investors should focus on a select few releases that may affect the price. In particular, this concerns the publication of the Consumer Confidence on Tuesday and the Purchasing Managers Index (PMI) on Wednesday and Friday.
US consumer confidence
On Tuesday, February 28, at 4:00 PM, the Conference Board (CB) will release data on consumer confidence in the United States for January. In January this figure stood at 107.1, just below expectations of 109. Analysts predict a slight increase to 108.5 for the month of February.
If consumer confidence falls, this is expected to lead to looser monetary policy, in order to stimulate consumer spending on durable goods. Conversely, an increase in consumer confidence is expected to lead to a tightening of monetary policy.
The US Dollar Index (DXY) could then continue last week’s upward trend, which is likely to have a negative impact on price movements in the crypto and Bitcoin markets, just like last week’s trading.
However, it is questionable whether this theory holds up against consumer confidence that is lower than expected, as this also increases the likelihood of a recession in the US. Nevertheless, Bitcoin could rise in the near term as the Fed could delay its plan to raise rates by 50 basis points.
PMI on Wednesday and Friday
On Wednesday, March 1, the US Manufacturing Purchasing Managers Index (PMI) will be released. The estimate for February was 48.0, while the index came in at 47.4 in January.
The US Federal Reserve, led by Jerome Powell, will closely monitor the PMI to prevent the manufacturing sector from continuing to underperform. On the other hand, a higher-than-expected PMI could reinforce the Fed’s aggressive stance and put pressure on Bitcoin’s price.
On Friday, March 3, the US purchasing managers index (PMI) for the services sector will be released, in which the Federal Reserve has shown a lot of interest recently. In January, the PMI for the services sector came in at 55.2, well above expectations of 50.4.
For the month of February, experts predict a slight decrease to 54.5. If the index comes in higher than expected, the DXY is likely to rise further, which could lead to a decline in Bitcoin. A lower value than expected, on the other hand, could push up the price of Bitcoin.
The reason for this is that the services sector has recently become disconnected from other sectors, such as manufacturing and the real estate sector. If the PMI for the services sector were to weaken, it would actually be a positive surprise, as it increases the likelihood of inflation declining in the coming months.