The Fed’s rate cut policy and risk sentiment will be driven by the new data flow.
After last week’s painful slump, the weekend was less agonizing for the crypto asset market, showing a brief recovery. However, whether the rebound holds will depend on the United States’ economic calendar, with a flow of information that could increase or decrease the probabilities of future interest rate cuts by the Federal Reserve (Fed).
The first warning signs appeared last week, with a stronger-than-expected US jobs report, causing expectations for a December rate cut to fall below 70%, a notable drop from the 90% recorded a month ago.
This uncertainty positioned the crypto market as a “proxy for speculation,” meaning its recent sell-off cannot be viewed in isolation from macroeconomic movements.
Despite the fluctuations, there was a brief recovery in crypto market capitalization, reaching a key level of $3 trillion during the early hours of Monday, November 24th. However, the total market value remains 32% below its October peak. Bitcoin, for its part, briefly touched $88,000, recovering from its Friday drop to $82,000, but is still 30% below its all-time high.
Due to the Thanksgiving and Black Friday holidays in the United States, the last week of November will be much shorter. However, the resolution of the recent US government shutdown generated multiple delayed economic reports that will be released all at once, presenting a crucial week for volatility.
Tuesday will be a key day with the release of the September Producer Price Index (PPI). This indicator is fundamental for measuring inflation in the initial stages of the supply chain and is closely watched by analysts. On the same day, September retail sales and CB consumer confidence data will be released.
Wednesday, on the other hand, will focus on the most influential reports for the Fed: third-quarter Gross Domestic Product (GDP) data and September’s Personal Consumption Expenditures (PCE) report. The PCE is the Fed policymakers’ preferred measure of inflation. In addition, the Fed’s “Beige Book,” a summary of current economic conditions, will also be published.
These economic data that will move the crypto market will determine investors’ risk appetite. If inflation reports are higher than expected or GDP growth is excessively strong, it could further decrease the chances of a rate cut and exert new downward pressure on risk assets like Bitcoin and altcoins, whose recovery has so far been weak (Ethereum, for example, has not managed to break above $2,850).
