Three things that could impact the cryptocurrency market this week

Last week was a tough one for the cryptocurrency market, with losses continuing into the weekend.

A slew of employment data from the US failed to prevent stocks from falling, making the “slump period” a phenomenon that lives up to its name. A wealth of inflation data is due out this week, and more information on unemployment claims is also due.

“This is the final week of inflation data before the long-awaited September Fed meeting,” the Kobeisi letter noted.

Economic events from September 9th to 13th

Wednesday sees the release of the August Consumer Price Index (CPI), one of two main inflation measures used by the central bank. Fed policymakers are closely watching the data because it reflects price trends in the economy, shapes consumer spending and influences interest rate decisions.

The Producer Price Index (PPI) report for August is due out on Thursday. It reflects input prices for producers and manufacturers. It is also a leading indicator of inflationary pressures because it measures the production costs of consumer goods, and serves as a leading indicator for the following month's CPI report.

Initial jobless claims data, which will provide a broader picture of the labor market, will also be released on Thursday.

Key events this week:

1. OPEC Monthly Report – Tuesday

2. August CPI Inflation Data – Wednesday

3. Initial Jobless Claims Data – Thursday

4. Producer Price Index (PPI) inflation data for August – Thursday

5. Continuing Jobless Claims Data – Thursday

6. MI Consumer Confidence Data – Friday

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— Kobeissi Letter (@KobeissiLetter) September 8, 2024

Preliminary readings of the Michigan Consumer Confidence Index Consumer Inflation Expectations for September will be released on Friday. These reports provide the results of a monthly survey of consumer confidence levels and long-term inflation outlooks. They are also used as factors in the calculation of the Fed's Inflation Expectations Index.

Following last week's weak economic data, markets are assessing the possibility of a 25 or 50 basis point rate cut at the September Fed meeting, and the CPI report is likely to play a key role in that process.

A weaker than expected CPI report could increase the likelihood of a 50bps rate cut at the meeting on September 18. The CME Fed Watch tool currently rates the likelihood of a significant rate cut at 31%.

Cryptocurrency Market Outlook

In theory, a bigger rate cut would be good for the cryptocurrency market, but for now it still doesn't seem like it would be enough to dispel bearish sentiment.

The market has fallen back to levels not seen since the Black Monday crash on Aug. 5, with total market capitalization falling below $2 trillion by the end of last week. It has since recovered to $2.3 trillion, but remains at its lowest level since early February.

Bitcoin hit a low of $53,300 over the weekend but has since recovered, reaching $55,000 during Monday morning's Asian trading session. Ethereum fared even worse, dropping below $2,200 over the weekend. The asset has recovered to the $2,300 level but remains weak.