The US economic calendar is very busy this week. GDP and inflation reports will be released and the crypto market is already in a major downtrend. The impact of these economic data on the markets is eagerly awaited, especially as major cryptocurrencies such as Bitcoin and Ethereum experience serious losses in value.
Critical Economic Developments and Markets’ Reaction
Following Donald Trump’s inauguration last week, Bitcoin reached an all-time high on January 20. However, since then, there has been a significant dissolution in the markets. Trump’s announcement that he would request interest rate cuts from the Federal Reserve caused mixed reactions in the markets.
To be announced this week Consumer Confidence data(Tuesday) and the first Fed meeting of 2025 (Wednesday) may provide clues about the new administration’s monetary policies. Additionally, the fourth quarter GDP growth rate, which will be announced on Thursday, is expected to decrease from 3.1% to 2.7%. This data could provide additional support for the Fed to lower interest rates or have the opposite effect.
Big Drop in Crypto Markets
As Asian markets opened this morning, the crypto market cap dropped 6.5% in the last six hours, dropping the total market cap to 3.37 trillion. While Bitcoin lost over 5% and fell below $100,000, Ethereum fell over 8% and fell to $3,000. Altcoins such as Solana (SOL), Dogecoin (DOGE) and Sui (SUI) suffered greater losses.
In the last 24 hours, more than 313 thousand investors were liquidated and total liquidated positions exceeded $853 million. This suggests that investors should be cautious in the face of increasing market volatility.
Other Developments of the Week
to be announced on Thursday Core Personal Consumption Expenditures (PCE)report is of great importance as one of the Fed’s inflation indicators. This data can provide clues about inflation pressures by reflecting consumers’ monthly spending habits.
That said, it’s going to be a big earnings week for the tech giants. Microsoft, Meta Platforms and Tesla will announce their earnings on Wednesday, while Apple will release its report on Thursday. These reports are expected to have indirect effects on the crypto market.
Prospects for the Crypto Market
If GDP and inflation data exceed expectations, expectations for Fed rate cuts could weaken, creating further pressure on the crypto market. On the other hand, disappointing data may cause the Fed to leave the door open to interest rate cuts, which may offer a chance for a short-term recovery for the markets.
The crypto market will continue to be affected by both macroeconomic data and global market dynamics this week. It seems especially important for investors to adopt more cautious strategies against market fluctuations.
