Why This Week’s US Economic Data Could Move Bitcoin Prices

Amid the ongoing range-bound movement of Bitcoin (BTC), crypto traders and investors are focusing on key US economic events this week that could influence prices and set a directional trend.

Bitcoin continues to trade between the psychological $60,000 level and the $57,000 threshold. Despite September’s typical challenges, traders remain hopeful that “Uptober” will bring better market conditions.

Key Events on the US Economic Calendar

The US market will wake up to the launch of Donald Trump’s decentralized finance (DeFi) project, World Liberty Financial (WLFI), on Monday.

“Join me live on Twitter Spaces at 8 PM, this September 16, for the launch of World Liberty Financial. We are embracing the future with crypto, and leaving the slow and outdated big banks behind,” Trump stated in a recent video message on X.

However, three key US economic data releases this week could also impact crypto portfolios. With Bitcoin up nearly 7% over the past seven days, whether those gains continue will depend on how the market reacts to these reports.

US Retail Sales

The Commerce Department’s Census Bureau will release US retail sales data on Tuesday, providing key insights into consumer spending trends, which make up a large portion of the US economy.

In July, US retail sales unexpectedly surged by 1% compared to the previous month, a sharp contrast to June’s revised 0.2% decline and far exceeding economists’ expectations of a 0.3% rise.

Since consumer spending is a major driver of economic growth, strong August retail sales figures would ease recession concerns, signaling a healthy economy and boosting confidence in riskier assets like cryptocurrencies and stocks.

FOMC Interest Rate Decision

The much-anticipated interest rate decision from the Federal Open Market Committee (FOMC) is set for Wednesday. Following the recent US Consumer Price Index (CPI) reading and other key economic data, a rate cut seems almost certain as inflation cools.

However, the size of the cut remains unclear, with market participants eager to learn the Federal Reserve’s preferred approach. According to the CME FedWatch Tool, there is a 59% probability of a 50 basis points (bps) rate cut and a 49% chance of a 25 bps cut.

The potential impact on Bitcoin and other risk-on assets will depend on what traders have already priced in. A 50 bps cut could surprise investors, potentially driving market volatility. In contrast, a 25 bps cut would align with expectations, likely causing a more measured response from Bitcoin.

Noteworthy, JPMorgan supports a 50 bps cut, despite the Fed’s tighter monetary policy as inflation nears the 2% target. 

“We think there’s a good case for hurrying up in their pace of rate cuts,” said Michael Feroli, JPMorgan Chase’s chief US economist.

However, BeInCrypto noted that such a move could signal broader economic concerns, prompting investors to shy away from riskier assets like Bitcoin. As a result, most analysts expect a 25 bps cut, given that the current real Federal Funds rate suggests the Fed’s policy is already quite restrictive.

“The current expectation is for the Fed to cut interest rates by 0.25%, which would be bullish for financial assets like stocks and crypto, as it reduces the cost to borrow money,” Mati Greenspan, CEO of Quantum Economics, told BeInCrypto.

After Wednesday’s rate decision, markets will closely follow Fed Chair Jerome Powell’s press conference for insights on future rate cuts. Based on current data and market sentiment, a soft landing for the remainder of the year seems likely.

US Unemployment Claims

Initial jobless claims are also on the watchlist this week, providing insight into the current state of the labor market. While the job market has softened, unemployment rates remain relatively low.

Job openings have dropped significantly, aligning with a more normalized market. As reported by BeInCrypto, the US economy added just 142,000 jobs in August, falling short of expectations.

However, the unemployment rate for August met forecasts, standing at 4.2%, marking a slight improvement from the 4.3% recorded in July, signaling a decline in unemployment.

Read more: How To Buy Bitcoin (BTC) and Everything You Need To Know

Thursday’s data will reveal the latest progress in the US labor market. While its impact may not be as direct or significant as other economic indicators, a rise in jobless claims could signal economic weakness. This might prompt some investors to turn to alternative assets, like cryptocurrencies, as a hedge against traditional markets.