In the past, the crypto market has many similarities with the traditional economic market through macro events. In particular, the US economic indicators influence the dollar index (DXY) and the price of Bitcoin (BTC) due to their correlation and increasing closeness with each other.
Featured Financial Events
Announcement of CPI
At 8:30 pm (GMT+7) on December 13, 2022, the US Bureau of Labor Statistics will release the CPI - an index that measures the change in prices of goods and services from consumers. That is an important indicator to assess consumers' purchasing power and the economy's inflation level.
Previously, CPI was announced in November at 7.7% - lower than the forecast of 8%. This month, CPI is forecast at 7.3% - lower than last. If the actual CPI is higher than the forecast, it will be a positive signal for DXY, and for BTC, it will be negative. Conversely, if the actual CPI is lower than forecast, DXY will decrease, and BTC will increase.
Fed Announces Interest Rates
The Federal Reserve is set to disappoint Wall Street by keeping interest rates at their peak through 2023, dashing market expectations for rate cuts in the second half and increasing the likelihood of a recession.
That is the forecast of economists polled by Bloomberg ahead of the FOMC's decision and forecast on Thursday (December 15, 2022). According to the survey, policymakers would raise rates by 50 basis points after four consecutive 75 basis point increases and then by a quarter point at the next two meetings. Policymakers will announce their decisions and forecasts at 2 pm in Washington, corresponding to around 2 am (Vietnam time) on December 15, 2022.
According to the FOMC's median projection, the policy benchmark will peak at 4.9% in 2023, reflecting a 4.75%-5% target range. That would surprise investors, who are currently betting on a half-point cut in rates in the second half of next year, with rates peaking around 4.9%.
Chair Jerome Powell has stated that: "He is willing to subject the economy to some pain in order to reduce inflation near 40-year highs, which should be reflected in the new forecast".
Crypto Market
In the days of big news affecting the financial markets, the BTC price will often be sideways to wait for the financial news and fluctuate about 1-2 hours before the news release, and when the report is released, there is often a considerable fluctuation.
In general, the crypto market is "holding its breath" to wait for the following decisions from the Fed's policy to combat inflation. Currently, Bitcoin is sideways in the 16500 - 17500 zone, and the critical price points for BTC to watch out for are around 16600 and 17300. In the case of a 16600 puncture, BTC will most likely bottom out in the lower price zones around the 15900-16200 region, and if it breaks through 17300, BTC could be seen at 18k.
Besides, the rest of the crypto or altcoin market will react according to the BTC price. In the scenario that BTC finds a bottom like the above, altcoins will also "bleed" a lot, and vice versa; the market can see a series of altcoins that can fly x2-x3 along with BTC.
Personal Reviews and Summary
This is probably the most critical week in the financial and crypto markets. Every decision from the policy of the financial world directly affects the economy, especially the crypto market.
The Fed's decision to raise interest rates will probably live up to market expectations at a 0.5% increase with a predicted rate of nearly 75% on CME FedWatch. The current interest rate is around 3.75%-4% and is expected to continue rising next year to reach the Fed's peak interest rate target of approximately 4.9%.
The Fed continues to raise interest rates, and the DXY will also increase, which will significantly affect the price of Bitcoin, making it challenging to rise sharply. However, there is still a possibility that the market has gotten used to the Fed's rate hike policy, so the money inflow still flows into risk assets like Bitcoin, gold, etc, when the economy gradually stabilizes in 2023.
Disclaimer:
The information, statements and conjecture contained in this article, including opinions expressed, are based on information sources that Holdstation believes those are reliable. The opinions expressed in this article are personal opinions expressed after careful consideration and based on the best information we have at the writing's time. This article is not and should not be explained as an offer or solicitation to buy/sell any tokens/NFTs.
Holdstation is not responsible for any direct or indirect losses arising from the use of this article content.
