5 US Economic Data Reports Shaping Crypto Markets This Week
2025-01-06
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This week is packed with US economic data that can influence the portfolios of crypto market participants. From jobs data to insights from Federal Reserve policymakers and sentiment reports, the market may be primed for a volatility-filled week.
Meanwhile, Bitcoin BTCUSD remains below the $100,000 level. While there are prospects for more gains, traders and investors should remain open to revising their trading and investment strategies around these macroeconomic data.
Crypto Market Braces For 5 US Economic Data
The following US macroeconomic data could inspire volatility in the crypto market this week.
ADP Employment
The ADP National Employment Report, tracking US non-farm private employment, will be released on Wednesday. Based on payroll data from 400,000 US businesses, December’s job growth is forecasted at 130,000, down from 146,000 in November.
In November, ADP data showed year-over-year pay growth for job-stayers increased for the first time in over two years. A higher-than-expected December reading would signal a stronger job market, which could boost the US dollar.
Stronger employment data may also impact Bitcoin and cryptocurrencies. Positive job numbers can improve consumer confidence, leading to more spending and investment, including in Bitcoin. Some investors might view Bitcoin as a hedge against inflation.
However, robust job data could push the Federal Reserve to raise interest rates to prevent economic overheating. Higher rates make non-yielding assets like Bitcoin less attractive, possibly prompting investors to shift to traditional assets.
FOMC Minutes
Markets will also be watching for the minutes of the Federal Open Market Committee (FOMC) on Wednesday, as one of the most important US economic data this week. It will entail minutes for the Fed’s December 17-18 meeting, with speakers including Thomas Barkin, Jeffrey Schmid, and Patrick Harker.
What these Fed policymakers have to say could help markets further gauge the Fed’s interest rate outlook. Already, the Federal Reserve has signaled fewer rate cuts this year in the face of sticky inflation and a resilient economy.
“Globally, the FOMC’s December minutes will dominate discussions, as the Fed’s cautious tone for 2025, with just two rate cuts projected, reflects a shift from prior optimism. This, coupled with Trump policy announcements, could keep markets on edge,” one X user remarked.
Initial Jobless Claims
On Thursday, the weekly jobless claims report will provide more insight into the US labor market. For the week ending January 3, initial jobless claims fell to 211,000, an eight-month low. This marked a drop in unemployment filings after Christmas and capped off a year of low layoffs, reflecting the US economy’s recent resilience.
Jobless claims have steadily declined over recent weeks, following their highest levels in over a year in October. While initial claims are decreasing, continuing claims are rising. This suggests that employers are holding onto workers, but those who lose jobs are facing challenges finding new employment.
Amidst a slow hiring and low firing dynamic, the general sentiment is that the trend could continue in early 2025. This is until businesses get a sense of how President-elect Donald Trump’s policies will affect the economy.
A decline in weekly jobless claims typically indicates a stronger labor market and greater economic stability. Fewer claims suggest more people are employed and earning income. This optimistic outlook can boost investor confidence, potentially increasing interest in assets like Bitcoin.
Consumer Sentiment
The US Consumer Sentiment Index, specifically the preliminary report released by the University of Michigan, reflects consumers’ overall confidence and optimism regarding the economy. A positive reading on Friday can lead to increased optimism in financial markets, including the cryptocurrency market. This could result in higher demand for Bitcoin as investors seek assets with growth potential.
Similarly, if consumer sentiment is strong, it may indicate that consumers are more willing to spend and take risks. This positive outlook can translate into increased risk appetite among investors, potentially leading them to allocate more funds to cryptocurrencies like Bitcoin.
Nevertheless, it is impossible to ignore that consumer sentiment data often includes information on inflation expectations. Therefore, the FOMC minutes on Wednesday will be crucial. If consumers anticipate higher inflation, they may look for alternative stores of value to protect their wealth. Bitcoin, often referred to as “digital gold,” may benefit from increased interest as a hedge against inflation.
US Employment Report and Unemployment Rate
The US employment report and unemployment rate, set for release on Friday, are critical indicators of the economy’s health. The employment report is forecasted to show 155,000 new jobs, down from 227,000 in the previous month, while the unemployment rate is expected to remain at 4.2%.
Strong job growth and a declining unemployment rate typically boost investor confidence and market optimism. This positive sentiment could extend to the cryptocurrency market, attracting interest in assets like Bitcoin.
Employment data also affects investor risk appetite. A strong report signaling a robust labor market may encourage risk-taking, potentially increasing demand for higher-risk assets, including cryptocurrencies. Conversely, weak data could prompt more cautious behavior, impacting crypto demand.
Changes in the job market and unemployment rate can influence inflation expectations. If employment data points to strong economic growth and rising wages, it may raise inflation concerns. In such cases, investors might view Bitcoin as a hedge against inflation, driving increased interest in the cryptocurrency.