Will Crypto Market Momentum Continue on This Week’s Inflation Data?

Crypto markets have shown signs of recovery over the weekend but a busy week ahead on the economic calendar in the United States may refuel momentum for the bears.

The Federal Reserve’s key inflation metric, which could impact monetary policy going forward, will be in the spotlight.

Macroeconomics outlet the Kobeissi Letter highlighted the key events for the coming week.

Key Events This Week:

1. March New Home Sales data – Tuesday

2. Durable Goods Orders data – Wednesday

3. US Q1 2024 GDP data – Thursday

4. March Pending Home Sales data – Thursday

5. March PCE Inflation data – Friday

6. ~20% of SP 500 companies report earnings this week…

— The Kobeissi Letter (@KobeissiLetter) April 21, 2024

 

Inflation Data Eyed

Tuesday will see the release of new home sales figures, which offer a wider perspective on the overall economy and confidence but have no relation to crypto markets.

April’s SP Global Manufacturing PMI and SP Global Services PMI preliminary readings are also revealed on Tuesday. These reports reveal business conditions in the manufacturing and services sectors, which together comprise most of the nation’s GDP.

The Q1 GDP Growth Annualized preliminary estimate will be released on Thursday, providing an initial glimpse of the economy’s health in the previous quarter. The Atlanta Fed predicts a slight increase to 2.9% for the period.

The Core Personal Consumption Expenditures (PCE) report is due out on Friday reflecting consumer spending for the period.

This report is a primary gauge for inflation for the central bank. The Bureau of Economic Analysis (BEA) estimates the March figure to remain at 2.8%, which is above the Fed’s 2% target.

March’s Michigan Consumer Sentiment Index and Consumer Inflation Expectations reports are also due on Friday.

Federal Reserve policymakers are at a crossroads with inflation remaining stubbornly high. Therefore, any deviation from expectations could strongly affect market sentiment.

Additionally, around 20% of  SP 500 companies will report their quarterly earnings this week, including Microsoft and Alphabet (Google).

Crypto Market Outlook

Crypto market cap returned to and held the $2.5 trillion level over the weekend with Bitcoin leading the charge following its fourth halving event .

The asset was trading above $66,000 at the time of writing after dipping below $65,000 during the Monday morning Asian trading session. Overall, BTC prices have been range-bound since the end of February.

Ethereum recovered to reclaim $3,200 and was changing hands for $3,225 at the time of writing following a minor retreat.

The altcoins were predominantly in the green as well this Monday morning, with impressive gains from LINK, NEAR, and DOT.

More market volatility is expected if the PCE figures are way off expectations later this week.