- Markets remain uncertain
- But future metrics may change trends
Traditionally, we start a new trading week with a review of the general situation.
The capitalization of the cryptocurrency market amounted to $1.12 trillion, which is 1.8% more than a week ago. Bitcoin traded below $27,000 for most of the week.
Investor sentiment is at zero due to the prospect of a potential US default. Other negative news also affects the market – network congestion, the ambiguous situation with Ledger wallets, and Biden’s plans to increase the tax for miners.
In the coming days, all attention will revolve around negotiations on the US debt ceiling. On Wednesday, the Federal Open Market Committee’s minutes will be released, which will give a picture of the state of the state economy. And the week will end with key metrics that investors take into account in the stock markets.
Monday. Biden and McCarthy meeting
U.S. President Joe Biden and opposition Republican chief negotiator Kevin McCarthy will meet again today to debate the national debt. Timing is of the essence: in early June, the US government faces a default if by that time the Biden team does not agree with the Republicans in Congress to raise the ceiling.
Meanwhile, the controversy around this topic has reached a climax. Biden rejected some Republican proposals to cut government spending. He also announced plans to raise taxes for the “wealthiest Americans and crypto traders.” This news greatly influenced the mood of crypto investors.
Economists and analysts still predict that the most likely scenario is that the Republicans and Democrats will agree “at the last minute.” However, the prospect of a default has a strong effect on investor sentiment. The worse the data will come in the economy, the greater the selling pressure on Wall Street and the crypto market will be.
By the way, here is a chart that shows the volatility of the stock and bond market. She is now at a very high level.
Tuesday. US New Home Sales
Tomorrow will be announced the latest data on new home sales in the US. This is an important indicator of the current level of consumer spending. It gives a good indication of the state of the US housing market.
Analysts predict 663,000 properties sold in April. If they are lower, this indicates a negative trend in consumer spending and weakness in the housing market. Then we expect a negative impact on the dollar exchange rate, which will positively affect the strength of cryptocurrencies.
Wednesday. Fed meeting minutes
At 20:00 Kyiv time, the US Federal Reserve publishes the protocol of the last decision on the interest rate of May 3. Investors are hoping to get more information on whether the monetary authorities may suspend or possibly cut interest rate hikes at the next meeting on June 14.
Recently, Powell has emphasized hawkish rhetoric. But lower inflation gives the Fed more leeway on interest rate policy.
In addition, the publication of the minutes may contain additional information on how Fed members will deal with the US banking crisis and liquidity shortage. And also what intervention options the Fed plans to take in the event of a further deterioration in the situation with monetary policy in the United States.
Thursday. A number of macros from the USA
On May 25, the following US data will be released:
- GDP (Q1) — 15:30;
- Initial Jobless Claims – 15:30;
- Chicago Fed National Activity Index (Apr) – 15:30;
- Pending Home Sales – 5:30 pm;
- Kansas City Fed manufacturing index (May) – 18:00;
- Fed balance – 23:30.
We will pay special attention to the Pending Home Sales metric. Home sales fell 5.2% last month, confirming the heightened risk of long-term distortion in the US real estate sector. Analysts now expect growth of +0.5%. A lower result will put pressure on the stock market and therefore the crypto sector. On the other hand, if sales figures meet or exceed expected forecasts, this will be a sign of initial stabilization. We look forward to stabilization in the real estate sector, which will also benefit the crypto sector.
Friday. US PCE Core Inflation
26 May The Bureau of Economic Analysis releases the latest core inflation data for April. Growth of +0.3% on a monthly basis is expected. If core inflation turns out to be higher than expected, the market will react negatively, as the Fed will have to maintain a tight rate policy. This means that investors can reduce positions in equity and cryptocurrency.
If core inflation rises less than analysts expected, the financial market could end the trading week more amicably. We are waiting for positive reactions on the BTC chart.