Three things that should impact cryptocurrencies this week

The cryptocurrency market continues to face volatility. In this sense, investors are keeping an eye on economic events this week that could have significant impacts on digital assets.

After a brutal week for the markets, with losses that extended into the weekend, expectations are focused on US economic data that could influence the Federal Reserve’s (Fed) decisions and, consequently, the future of the cryptocurrency market.

Analyst Martin Young pointed out three factors that deserve attention and could shape the performance of cryptocurrencies in the coming days. Firstly, he cited the Inflation report – Consumer Price Index (CPI).

On Wednesday, the Consumer Price Index (CPI) for August, one of the Fed’s main inflation indicators, will be released. This report measures changes in consumer prices for goods and services and plays a crucial role in determining the U.S. central bank’s monetary policy.

The CPI result could directly affect expectations for a rate hike or cut at the Fed’s next meeting, scheduled for September. Lower-than-expected inflation could increase the chances of more aggressive rate cuts, which could be positive for the cryptocurrency market, as lower rates generally encourage risky assets.

Factors that can affect cryptocurrency prices

Second, Young mentioned the Producer Price Report (PPI). On Thursday, the Producer Price Index (PPI) for August will be released. This indicator measures the prices that producers pay for raw materials and inputs, and serves as an early signal of inflationary pressures at the consumer level.

The PPI is relevant to the cryptocurrency market because a significant increase in production costs could signal persistent inflation, which would prompt the Fed to maintain or raise interest rates, hurting risk assets like Bitcoin and Ethereum.

Finally, Young highlighted the Jobless Claims Data. Also on Thursday, initial jobless claims data will be released. These numbers provide a window into the health of the U.S. labor market. As such, the numbers help assess the resilience of the economy.

A weaker labor market could encourage the Fed to cut interest rates more aggressively to stimulate growth. This could benefit the cryptocurrency market. On the other hand, robust data could support the central bank’s cautious stance, keeping rates high, which tends to be negative for risk assets.

With the Fed closely monitoring inflation and employment data, the cryptocurrency market is eagerly awaiting monetary policy decisions. A more aggressive interest rate cut could provide a boost to cryptocurrencies, which have been on a downward trajectory since early September.

“However, the overall sentiment still remains bearish, with the market struggling to recover from recent declines,” he said.

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