After the massive sell-off of altcoins and the resulting (moderate) Bitcoin price drop on Friday, the market for digital assets may be facing the most explosive week of the year. Traders should prepare for a sharp increase in volatility.
There are extremely important events coming up in the trading week starting today: the release of the U.S. Consumer Price Index (CPI) and Producer Price Index (PPI), the U.S. Federal Reserve Bank (Fed) interest rate decision, a long-awaited release in the Ripple v. SEC case, a SEC response to Coinbase`s rulemaking request and a U.S. District Court hearing on the SEC`s request for a preliminary restraining order against Binance US, and much more.
Tuesday Turns Into Blockbuster Day
Tuesday is packed with important events. At 8:30 a.m. EST, the U.S. Bureau of Labor Statistics releases the latest U.S. inflation data for the month of May. Over the past several months, annualized CPI (YoY) has shown a sharp downward trend, dropping to 4.9% in April.
For May, experts expect a further decline to 4.1%. If analysts’ expectations are met or even undercut, the chances of a pause in the Fed’s interest rate will improve. The U.S. financial market can be expected to benefit from declining inflation rates, and the Bitcoin and crypto markets will also profit.
However, a big focus will also be on the core inflation rate and month-on-month inflation rates. These numbers recently did not progress as expected by the U.S. monetary watchdogs and remained at elevated levels.
The consumer price index is expected to rise 0.2% in May, following a 0.4% gain in April. Core CPI is forecast to rise 0.4% in May, up from 0.4% in April. Any positive surprise in these numbers should boost the financial markets as well as Bitcoin and crypto.
However, there are also various crypto-related events in store on Tuesday as well, which are of utmost importance. The US Securities and Exchange Commission (SEC) must respond to Coinbase’s petition for rulemaking by that day.
Also, at 2:00 pm EST, the hearing on the SEC’s temporary restraining order (TRO) against Binance US will take place. The SEC last week asked a federal judge in Washington, D.C., to freeze the assets of Binance’s US subsidiary.
Also of paramount importance to the crypto market could be the purported unsealing of internal SEC Hinman documents in the Ripple case. The Hinman documents could provide insight into Ethereum’s (ETH) previous classification as a non-security, which is now being challenged by SEC Chairman Gary Gensler.
Last but not least, Tuesday also marks the end of the public comment period for the SEC’s proposed expanded definition of an exchange. The expanded definition could require DEXs to register as securities exchanges.
More Crucial Events For Bitcoin And Crypto This Week
On Wednesday, June 14, the Fed will announce its newest interest rate decision at 2:00 pm EST. Most recently, the Fed and Chairman Jerome Powell had stuck to their hawkish rhetoric and raised the key interest rate by another 25 basis points to 5.25.
Currently, according to the CME FedWatch tool, only 26% of market participants still expect another rate hike of 25 basis points. Considering the slowly cooling US economy and labor market, the majority assumes a pause in interest rate hikes by the Fed.
Both the stock and Bitcoin markets are likely to react positively if the Fed lives up to these expectations. However, what Fed Chairman Jerome Powell says about future projections at the subsequent press conference at 2:30 pm EST will also be crucial and could move the crypto market heavily.
Also on Wednesday, the Producer Price Index (PPI) will be released. Already at 8:30 am EST, the PPI could be another leading indicator of rapid disinflation. PPI inflation data for the U.S. showed a welcome drop in both core and headline numbers in April.
The year-over-year comparison for April showed a 2.3% increase versus expectations of 2.5%. May is now forecast to show an increase of only 1.5%. Core PPI came in at 3.2%, below expectations of 3.3% in April. In May, it is expected to be only 2.9%.
Other events worth mentioning are jobless claims on Thursday and customer sentiment on Friday. Thus, the week is jam packed with extremely important events. Bitcoin and crypto are likely to react in a highly volatile manner.
At press time, the Bitcoin price stood at $25,843, holding above the 200-day EMA (blue line).
Featured image from iStock, chart from TradingView.com