- Bitcoin price action this week will depend on the Federal Reserve’s interest rate decision, U.S. economic data releases, and central bank actions in Japan and the U.K.
- Market reactions to inflation data and economic performance reports could lead to increased volatility.
Bitcoin (BTC) is trading above $103,000, boosted by strong market sentiment and sustained adoption expectations. However, this week’s packed economic events are likely to impact its movement. Global markets are currently preparing for central bank decisions, inflation data, and updates on economic performance.
Federal Reserve Interest Rate Decision
The Federal Reserve’s decision regarding the interest rate on Wednesday will be in the spotlight. A rate cut of 0.25% is widely expected to lower the target range to 4.25%–4.50%. Futures markets have factored in a 95% probability of this move, thus representing a shift from the aggressive rate hikes of the last year.
Following persistent inflation – edging up to 2.7% in November from October’s 2.6% – a strong labor market, adding 227,000 jobs in November, complicates matters. If rate cuts fail to align with market expectations or signal uncertainty, BTC can look forward to increased volatility.
U.S. Economic Data Releases to Influence Bitcoin Price
On Monday, the S&P Global Services PMI report will shed light on the health of the U.S. services sector, which has been driving economic growth. A decline in December’s PMI to 55.0 from November’s 56.1 could indicate a slowdown, which might affect risk appetite across markets.
Retail sales data, expected on Tuesday, will reveal the consumer spending tendencies of November’s holiday season. While a modest rise of 0.2% to 0.4% is expected, much weaker results might weigh on sentiments and exert downward pressure on the Bitcoin price.
Meanwhile, Thursday brings the final Q3 GDP estimate, which is expected to be revised down slightly to 4.7% from 4.9%. Existing home sales data due Thursday could highlight the continued weakness in the housing market. A forecasted 2% decline might further reflect economic challenges that can ripple into crypto markets, reported CNF.
Global Central Banks in Focus
Central banks will also influence Bitcoin markets in the Japanese and U.K. economies. The Bank of Japan is unlikely to raise its rates this week due to political gridlock and further calls for wage growth confirmation. The Bank of England, which is likely to keep its rate at 4.75%, will release inflation data ahead of time.
Economists expect annual CPI inflation to increase to 2.5%, while services inflation may reach 5%. However, any unanticipated policy shifts or inflation trend changes could increase volatility, given that Bitcoin price is still very sensitive to macroeconomic influences.
Bitcoin Price Shows Resilience Amid Uncertainty
The psychological level of $100,000 for BTC is one point that traders are closely following. Positive economic signals would likely strengthen risk-on sentiment and support the momentum of Bitcoin. Disappointing data or unexpected central bank actions, however, could lead to corrections.
With major events unfolding this week, Bitcoin traders will closely monitor macroeconomic developments to gauge potential price movements. As of writing, Bitcoin price holds strong at $103,520.40, gaining 0.57% on Monday, December 16. Per the CNF report, BTC touched an all-time high of $106K on the continuation of the Trump rally.
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