The Bitcoin and crypto market is in for what could be the most important week of 2023 so far. While all eyes are on the Federal Open Market Committee (FOMC) meeting on Wednesday, this week is once again packed with plenty of crucial macro data. Add to that the still unresolved situation over First Republic Bank.
Furthermore, the Bitcoin price is back at a pivotal juncture. After BTC first rose to $29,975 on Sunday, the bears unleashed another onslaught just before the end of the month, pushing BTC towards $28,500. Still, they failed to prevent the fourth consecutive green monthly candle.
Key Events For Bitcoin And Crypto This Week
On Tuesday, May 2, at 10:00 am EST (4:00 pm CET), the U.S. Bureau of Labor Statistics will release the JOLT Job Openings report. In March, the number of job openings fell below 10 million for the first time since May 2021. As of April 04, a total of 9.93 million available jobs were reported.
Forecasts suggest that 9.683 million jobs were available in April, indicating a further slowdown in the U.S. labor market. If the jobs data comes in better than expected as the US economy proves to be resilient, it can be expected that US equity prices will continue to perform well. Similarly, the crypto market is likely to benefit from good labor market data.
On Wednesday, May 3, 2023 at 2:00 pm EST (8:00 pm CET), the focus will be on the US Federal Reserve (Fed) interest rate decision. According to the latest data from the CME FedWatch tool, 84.5% expect another 25 basis point rate hike to 5.25%.
However, this decision is likely to be priced in already. What will be more important is the FOMC press conference at 2:30 pm EST, when Fed Chairman Jerome Powell will deliver his remarks for the coming months. During the press conference, volatility is expected to surge in the Bitcoin and crypto markets.
The market will be hoping for a comment from Powell that this was the last rate hike and that there will be first rate cuts later this year. However, the latter seems very unlikely, especially since Powell philosophized about two more rate hikes and continued tight monetary policy this year in a conversation with a fake Volodymyr Zelenskyy. It will also be interesting to see how Fed Chairman Powell will respond to the FDIC’s emergency intervention at First Republic Bank.
Powell remains under pressure given the ongoing problems in the U.S. banking sector and the credit crunch that continues to worsen. Goldman Sachs therefore believes:
We expect the FOMC to signal that it anticipates pausing in June but retains a hawkish bias, stopping earlier than it initially envisioned because bank stress is likely to cause a tightening of credit.
On Friday, May 5, 2023, the focus will once again be on the U.S. labor market. At 8:15 am EST (2:15 pm CET), the Bureau of Labor Statistics will present nonfarm payrolls (NFP) employment figures for April. Most recently, the numbers deteriorated slightly.
The forecast of 180,000 new jobs created for April is well below the average for the last few months of trade. As recently as the beginning of the year, 517,000 new jobs had been created. Confirmation of this forecast would make the risk of a recession in the United States in the coming months more likely, and a correspondingly negative reaction is likely on the financial markets. On the other hand, a positive surprise could be a catalyst for a rally in the crypto market.
Also at 8:30 am EST, the U.S. unemployment rate for April will be announced. The estimate is 3.6%. In March, the unemployment rate had fallen from 3.6% to 3.5%. Fed Chairman Powell has stressed several times that a possible U.S. recession could also lead the unemployment rate toward 4.5%. An unchanged unemployment rate should therefore be viewed positively by the market.
Other Events This Week
A positive impulse, like last week, could also come from the stock market this week. 25% of the S&P 500 companies report their earnings. After strong quarterly figures from the Internet giants Microsoft, Alphabet and Amazon, the U.S. stock market has closed the last trading week with a plus.
The First Republic crisis could also be of significance. As Bitcoinist reported, the next domino in the banking system could be a catalyst for Bitcoin. According to reports from various sources, the sale of First Republic Bank has already taken place. Two of the most promising bidders are reportedly JP Morgan and Bank of America.
At press time, the Bitcoin price traded at $28,600.
Featured image from iStock, chart from TradingView.com