Key Economic Indicators to Watch in the Upcoming Crypto Week
Following a period of increased volatility last week, the crypto market appears to be stabilizing. Currently, Bitcoin (BTC) is trading at $96,865 with a minor 0.06% decrease in the last 24 hours, while Ethereum (ETH), the leading altcoin, has dipped by 0.9% to reach $2,631.
This week, we anticipate a potential return of volatility driven by significant macroeconomic events likely to impact trader sentiments.
Potential Impact of U.S. CPI Data on Crypto Markets
The release of the U.S. Consumer Price Index (CPI) data for January 2025 is scheduled for Wednesday. In the previous month, the overall CPI rose to 2.9%, while the core CPI declined to 3.2%.
This upward trend influenced the Federal Reserve to maintain interest rates at 4.25%-4.5%.
Projections from Market Watch suggest a decrease in the CPI rate to 2.8% and the core rate to 3.1%. This anticipated decline could signal a positive economic forecast.
If inflation subsides, the Federal Reserve might pivot towards a more accommodative stance, possibly resuming interest rate reductions. Such a scenario could be favorable for the crypto sector.
However, based on the CME FedWatch Tool, investors are predicting that the upcoming Federal Open Market Committee (FOMC) meeting in March will retain the existing interest rates.
Expected Testimony by Fed Chair to Congress
Jerome Powell, the Federal Reserve Chair, is set to testify before the House Financial Services Committee and the Senate Banking Committee during the week regarding the semi-annual monetary policy.
In his testimony, Powell will provide insights into the economy, inflation, and potential rate adjustments.
If Powell indicates a shift towards a looser monetary policy and addresses inflation concerns, it could positively impact the crypto market. Conversely, a hawkish stance may induce negative market sentiments.
Recently, Powell made pro-crypto statements by permitting U.S. banks to cater to crypto clients with proper risk management. Continued positive comments from the Chair during the congressional testimony could drive increased interest in digital assets.
Upcoming Coinbase Q4 Earnings Report
The prominent U.S. exchange, Coinbase, is scheduled to unveil its Q4 earnings report later this week for 2025. Strong performance exceeding expectations could potentially propel COIN stock further following its impressive 142% annual growth.
While the performance of the stock itself does not directly influence crypto prices, it can enhance confidence in the market and bolster overall sentiment. Positive sentiment often acts as a catalyst for price appreciation.
At present, the fear and greed index has dropped to 43, reflecting a neutral sentiment. This neutrality may result in stagnant cryptocurrency prices until decisive buying or selling activity occurs.