Bitcoin Faces Crucial US Economic Tests This Week

Bitcoin (BTC) faces a big week ahead as various key macroeconomic events are scheduled on the US calendar. The impact of these data releases on the crypto market has regained importance after a period of diminishing influence in the second half of 2023.

Crypto traders and investors should prepare for potential volatility as the week starts, with multiple impactful events lined up on the economic calendar.

Bitcoin Braces for US Economic Data: What to Watch

While the week’s major US economic reports calendar is packed with events, those that could impact Bitcoin and digital assets make the bulk of it. Among them is Donald Trump’s interview with Elon Musk.

Trumps Interview With Musk

Trump will engage Musk on Monday, August 12 via X spaces at 8 p.m. ET. The interview is expected to be unscripted and open to all topics, with Musk inviting everyone to submit questions they would like to see discussed. Musk is pro-Trump, with reports that the CEO of X created a Super PAC focused on supporting candidates who favor a meritocracy and personal freedom.

“Am going to do some system scaling tests tonight & tomorrow in advance of the conversation with Donald Trump,” Musk said on Sunday.

This comment is made given the platform’s spotty performance last year during an interview with Florida Governor Ron DeSantis. Indeed, this interview could have implications for Bitcoin and crypto after Trump’s bullish assertions during the Nashville conference. Both Trump and Musk are pro-crypto, which means the subject will likely spring up in the interview.

Core PPI (Wholesale Inflation)

On Tuesday, the US Bureau of Labor Statistics (BLS) will report July’s Core Producer Price Index (PPI). This data determines price increases at the producer level and influences financial markets by measuring inflation at the wholesale level. Specifically, increases in PPI indicate increases in production costs.

These increases could lead to growing energy and hardware costs requisite for mining and processing cryptocurrencies. A higher core PPI on August 13 could negatively affect Bitcoin and crypto.

Economists forecast a 2.2% year-over-year increase, four-tenths of a percentage point less than in June. The core PPI, which excludes volatile food and energy prices, is seen rising 2.7%, compared with 3% previously.

US CPI

The BLS is also scheduled to release the July Consumer Price Index (CPI) this week. This data measures the price increases in consumer goods and services. While the consensus call is for the CPI to increase 2.9% year over year, the core CPI is expected to rise by 3.2%, with both estimates being one-tenth of a percentage point less than the June figures.

An increase in the CPI may decrease consumers’ purchasing power. This could negatively affect Bitcoin and crypto markets because consumers may tend to spend less when purchasing power decreases.

Read more: How to Protect Yourself From Inflation Using Cryptocurrency

From another perspective, the decreased purchasing power of fiat currencies could lead to more people turning to alternative assets like crypto. Here, they see it as a means to protect their wealth. In this scenario, an increase in inflation, as indicated by the CPI, would potentially drive up the demand for Bitcoin and crypto in general, ultimately driving up their prices.

Initial Jobs Claims

The Census Bureau will report on the US jobs claims on Thursday, detailing July’s retail and food services sales data. Economists predict a 0.3% month-over-month increase relative to a flat reading in June.

Retail sales could gain 0.1% minus the sale of autos, which is three-tenths of a percentage point less than previously. Amid recession fears that have kept investors spooked recently, the market hopes to see continued resilience in consumer spending.

“Bitcoin and Ethereum tend to underperform during periods that resemble or approach a recession in the United States. Additionally, investors are reducing their positions as prices have fallen below the average entry point for ETF investors, which is approximately $60,000,” Markus Thielen, Founder and CEO at 10x Research, recently told BeInCrypto.

Consumer Sentiment Survey

Markets also brace for the University of Michigan’s August consumer Sentiment survey, which will be released on Friday. This data reflects the gap between the US economy’s continued strength and how households feel about their financial situation.

In July, consumers’ expectations of the year ahead inflation was 2.9%, which signified a near a 3-and-a-half-year low. Expectations for the August 16 release are for a 67.5 reading, about one point higher than previously.

Noteworthy, consumer sentiment is much more sensitive to inflation, while consumer confidence is more sensitive to the labor market. If the data shows consumers still struggle with inflation and high interest rates while worrying more about their jobs, crypto could react differently.

Ultimately, the relationship between crypto and US macroeconomics is not always straightforward. The market reacts to data releases in unexpected ways, which is determined by what transpires in the days leading up to the data release date.

For instance, traders could front-run the data if markets anticipate an increase for specific data. This means the immediate reaction in crypto prices may be different than expected.

Bitcoin Price Outlook

Meanwhile, Bitcoin is back in the $58,000 range after topping out at $61,858 on Sunday. While this volatility could be attributed to low trading volumes on the weekend, this week’s US economic data also has traders and investors on alert.

As BTC retraces to the demand zone, this order block could provide a good buying opportunity. However, this is contingent on the $55,313 level holding as a support floor on the one-day timeframe. Momentum indicators such as the Relative Strength Index (RSI) suggest a lack of conviction among bulls.

Perhaps positive developments from the US macroeconomic front could inspire bullish optimism. This could drive Bitcoin price back up and, with it, the broader cryptocurrency market.

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

However, if the $55,313 threshold breaks as support, and the price closes below it on the daily timeframe, Bitcoin could roll over lower, potentially extending for a liquidity sweep below $52,398.