By Frank Martin (MoneyAmped.com)
Bitcoin has set a new all-time high today after peaking at $106,319. Traders are optimistic that the coin could rally further before the end of the year as they expect positive macroeconomic data this week.
Here are some macroeconomic events that could propel Bitcoin to new heights this month:
S&P Manufacturing PMI and Flash Services Data
Today, December 16th, the S&P Manufacturing Purchasing Managers’ Indices (PMI) and the Flash Services data will be released. This data is collected through business surveys. It measures the economic health of the United States.
Last month, the manufacturing PMI was 56.1, while Flash Services stood at 49.7. Analysts expect December’s Flash Services data to show a decline to 49.6. Additionally, they predict the manufacturing PMI to plunge to 55.3. If the PMI remains above 50, it will signal that the US economy is healthy, while a dip below that mark indicates a declining economy.
A positive manufacturing PMI report will boost economic confidence, thus increasing investor appetite for risky assets like cryptocurrencies.
Retail Sales Data
The release of the retail sales data is another economic event that crypto investors and traders should focus on. Economists expect the reading to rise from 0.4% in October to 0.6% in November.
Typically, a strong retail sales reading indicates that consumers’ spending power is increasing. This is considered a positive sign for the US economy. If consumers have the ability to spend more, then they may want to invest in various assets, including digital currencies.
It is worth mentioning that strong retail sales data influences inflation. That is because it shows growing demand, which causes commodity prices to be inflated. With Bitcoin being considered the shield against inflation, a positive retail sales report on December 17th could drive many US investors to the crypto space.
Fed Interest Rate Decision
The major event happens on Wednesday as the US Federal Reserve announces its decision on interest rates. Crypto market participants are waiting to see whether the Central Bank will cut or hike rates.
Data from the CME FedWatch Tool shows that 93% of traders anticipate a 25 bps-rate cut, while 6.6% predict interest rates to be slashed by 50 bps. If the Fed cut rates by 25 bps, then it could be a sign that the progress in bringing inflation to 2% has stalled. As such, the Central Bank may go slow on cutting rates in 2025.
Another sign that the Fed may not announce many rate cuts next year is last week’s Producer Price Index and Consumer Price Index readings, which both increased. Given that situation, a 25 Bps rate cut seems likely on December 18th.
After the interest rate decision is announced, Fed Chairman Jerome Powell is expected to hold a press conference. The crypto market will likely experience high volatility during that time.
Third Quarter GBP Data
The United States Bureau of Economic Analysis will publish the GDP data for the third quarter on Thursday. This report will provide in-depth insight into the American economy’s health as the year comes to an end.
Economists foresee a reading of 2.9%, up from 2.8% in the second quarter. So, how will the crypto markets react if the predicted reading becomes actual? Well, a 2.9% reading will represent growth from the previous quarter. As such, investors will deem the US economy healthy, thus encouraging them to inject funds into risky financial instruments like digital assets. That said, crypto markets could trend upward if the US Bureau of Economic Analysis releases a positive report.
PCE Inflation Data
The PCE (Personal Consumption Expenditure) inflation data comes out on December 20th. It measures consumer spending. That is, goods and services purchased by American households.
The Federal Reserve takes the PCE data into consideration when deciding on its future monetary policies. So, if this week’s reading shows a rise in inflation, the Fed may refrain from cutting rates in the coming months. Meanwhile, investors may shift their focus toward crypto to shield themselves from rising inflation.
