tl;dr
Traders and investors are preparing for significant market volatility in the crypto space this week, with key macroeconomic events set to impact portfolios. The week begins with Donald Trump's inauguration, potentially signaling positive regulatory shifts for cryptocurrencies. Later in the week, the...
Traders and investors anticipate a volatile week in crypto markets, with Bitcoin's stability above $100,000 contingent on upcoming macroeconomic data. Donald Trump's inauguration may impact crypto markets, with potential regulatory shifts and heightened interest among American investors. Initial jobless claims data could signal economic hardship, impacting consumer spending, confidence, and financial markets, including Bitcoin. The Bank of Japan's possible interest rate hike may disrupt global liquidity dynamics, affecting carry trades and potentially overshadowing the "Trump rally." US consumer sentiment report on Friday could influence investor confidence and investment in assets like Bitcoin. Bitcoin is currently trading at $102,461, down by 2.15% since the opening of the week. Traders and investors are preparing for significant market volatility in the crypto space this week, with key macroeconomic events set to impact portfolios. The week begins with Donald Trump's inauguration, potentially signaling positive regulatory shifts for cryptocurrencies. Later in the week, the release of initial jobless claims data and the Bank of Japan's possible interest rate hike decision will further influence market dynamics. Additionally, the US consumer sentiment report on Friday will provide insights into economic confidence and its potential impact on asset investments. Bitcoin is currently trading at $102,461, down 2.15% from the start of the week. Traders and investors brace for a wild week in crypto starting Monday, with multiple key macroeconomic data in the pipeline capable of affecting their portfolios. Meanwhile, Bitcoin (BTC) remains above the $100,000 mark. Whether this key level holds as support will depend on how traders navigate the economic data due for release this week. DONALD TRUMP INAUGURATION Monday, January 20, marks the Martin Luther King Jr. holiday in the US. Notwithstanding, it represents an important day for crypto market participants in the country because of Donald Trump’s inauguration. On his first day, Trump committed to signing a flurry of industry-favoring executive orders. In the run-up to the elections, Trump committed to a much lighter touch from regulators, particularly around cryptocurrencies, the cornerstone of his bid. Therefore, the pro-crypto candidate’s return to the White House has fueled speculation about potential positive regulatory shifts. Against this backdrop, there has been heightened interest in Bitcoin among American investors. Considering the markets will be closed for the holidays on Monday, the impact of this key development will only hit markets the next day. Nevertheless, some investors continue to exercise caution, bracing for impact in either direction. INITIAL JOBLESS CLAIMS Initial jobless claims on Thursday will reveal how many US residents filed for unemployment benefits last week, offering fresh insights into the labor market’s health. In the previous report, Initial Jobless Claims surpassed consensus and increased to 217,000 for the week ending January 10. This print missed initial estimates and was higher than the previous week’s tally of 203,000. If the trend of increased jobless claims continues, it will extend the trend of economic hardship and a weakening labor market. This could lead to reduced consumer spending and consumer confidence, which can harm various financial markets, including Bitcoin and cryptocurrency. When jobless claims increase, it suggests that more people are unemployed or unable to find work. This reduces disposable income and, by extension, investment in assets like Bitcoin. BOJ POSSIBLE RATE HIKE Another major focus this week is the Bank of Japan’s interest rate decision and economic outlook report on January 24. A rate hike could signal a shift in global liquidity dynamics, putting pressure on carry trades. A Bloomberg survey of most economists believes that Japan will raise interest rates, which may cause market turmoil. However, this decision hinges on whether there will be any market disruptions following Trump’s inauguration. In this absence, Japan’s central bank could reiterate its commitment to further rate hikes if the economy maintains its recovery, Reuters reported on Friday, citing sources familiar with the matter. The general perception is that BOJ’s potential decision to increase interest rates could impact global financial strategies like the yen carry trade. In this strategy, investors borrow in yen at low rates to invest in higher-yielding assets. This could disrupt liquidity and affect risk assets globally, potentially overshadowing the colloquial “Trump rally.”. Bitcoin has a reputation for being sensitive to global economic shifts. A rate hike by the BoJ could lead to a sell-off of risk assets, including BTC. This is because investors would need to cover positions in the yen carry trade, potentially causing price volatility in the pioneer crypto. CONSUMER SENTIMENT Further, the US consumer sentiment report on Friday is also critical, providing an aggregate measure of how individuals feel about their finances and the economy as a whole. Positive consumer sentiment can lead to increased confidence in the economy and potentially higher investment in assets like Bitcoin. On the other hand, negative sentiment may result in decreased investor confidence and a shift towards safe-haven assets, which could impact Bitcoin prices. BTC Price Performance BeIn