After the last few weeks filled with important new macro data and statements from the Federal Reserve (Fed), this week will be much quieter and less filled with important data that can affect Bitcoin and the crypto market. Still, crypto investors should keep in mind some economic and financial data this trading week.
In particular, since Bitcoin has returned to correlation with the US stock index and the dollar index (DXY), the price may be affected by this news.
Over the weekend, Bitcoin briefly corrected to a new 12-day low at $22,775, but still managed to end the week above $23,300. The new week should indicate whether the uptrend that has continued since January will continue or whether there will be a deeper correction.
This Will Be Important For Bitcoin And Crypto
Although there are many data releases coming again this week, as reported by Walter Bloomberg in the tweet below, Bitcoin investors should focus on a few data releases that can actually have a real impact on the price. This is the release of Consumer Confidence on Tuesday and the Purchasing Managers Index (PMI) on Wednesday and Friday.
Economy Release Scheduled for Sunday February 27, 2023 pic.twitter.com/598EhpQ714
— *Walter Bloomberg (@DeItaone) February 25, 2023
On Tuesday, February 28, the Conference Board (CB) will release its January US consumer confidence figures at 10:00 am EST. The number came in at 107.1 in January, below expectations of 109. For the month of February, analysts expect a slight increase to 108.5.
The textbook theory is that declining consumer sentiment should lead to looser monetary policy to boost consumer spending on durable goods and that rising consumer confidence should lead to looser monetary policy.
Thus, the US Dollar Index (DXY) may continue its upward movement from the previous week if the forecast is met or even exceeded. This may have a negative impact on the price action in the crypto market and Bitcoin, as it did last week.
On the other hand, it can be doubted that the textbook theory will be played if consumer confidence is lower than expected, because this also increases the possibility of a recession in the US. Still, Bitcoin may see a brief uptick as the Fed may slow down in its intentions of 50 basis point (bps) increases.
PMI Wednesday and Friday
On Wednesday, March 1, the US Purchasing Managers’ Index (PMI) for the manufacturing sector will be released at 10:00 AM EST. The forecast for February is for a reading of 48.0, with the index coming in at 47.4 in January, below the forecast of 48.0. The crypto market then rallied behind the drop in DXY.
The US Federal Reserve, chaired by Jerome Powell, may be looking closely at the PMI as they try to prevent continued negative performance in the manufacturing sector. A higher-than-expected PMI, on the other hand, could reinforce the Fed’s hawkish stance and put pressure on Bitcoin prices.
On Friday, March 3, the US Purchasing Managers’ Index for the service sector in the US will be released, which has been of particular interest to the Fed lately. In January, the PMI for the services sector was 55.2, higher than expectations of 50.4. As a result, DXY became very strong, and the crypto collapsed.
A similar scenario can be expected this week. For the month of February, experts predict a slight decline to 54.5, and if the index returns above expectations, DXY will be higher, sending Bitcoin lower. A reading below expectations can drive the price of Bitcoin up.
The underlying reason is that the service sector has recently been separated from other sectors such as manufacturing and real estate and has shown itself to be more resilient. If the service sector also collapses, this will be a positive surprise, as it will increase the likelihood of lower inflation rates in the coming months.
At press time, the price of BTC is at $23,429.
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