Biggest week for bitcoin and crypto in 2023 ahead

The Bitcoin and crypto markets are in for what could be the most important week of 2023 so far. While all eyes are on the Federal Open Market Committee (FOMC) meeting on Wednesday, this week is once again packed with a lot of important macro data. Add to that the still unresolved situation over First Republic Bank.

Furthermore, the Bitcoin price is back at a pivotal moment. After BTC first rose to $29,975 on Sunday, the bears unleashed another onslaught just before the end of the month, pushing BTC towards $28,500. Still, they were unable to prevent the fourth green moonlight in a row.

Key Bitcoin and Crypto Events This Week

Tuesday 2 May, at At 10:00 EST (16:00 CET), the US Bureau of Labor Statistics will release the JOLT Job Openings report. In March, the number of job vacancies fell below 10 million for the first time since May 2021. As of April 4, a total of 9.93 million job vacancies were reported.

Forecasts indicate that 9.683 million jobs were available in April, indicating a further slowdown in the US labor market. If the jobs data comes in better than expected as the US economy proves to be robust, US stock prices can be expected to continue to perform well. Similarly, the crypto market is likely to benefit from good labor market data.

Wednesday 3 May 2023 at 14:00 EST (20:00 CET), the focus will be on the interest rate decision from the US central bank (Fed). According to the latest data from the CME FedWatch tool, 84.5% expect another rate hike of 25 basis points to 5.25%.

However, this decision is likely priced in already. What will be more important is the FOMC press conference at 2:30 PM EST, when Fed Chairman Jerome Powell will deliver his remarks for the coming months. During the press conference, volatility is expected to increase in the Bitcoin and crypto markets.

The market will hope for a comment from Powell that this was the last rate hike and that the first rate cut will come later this year. However, the latter seems highly unlikely, especially since Powell philosophized about two more rate hikes and continued tight monetary policy this year in a conversation with a fake Volodymyr Zelenskyy. It will also be interesting to see how Fed Chairman Powell will respond to the FDIC’s emergency intervention in First Republic Bank.

Powell remains under pressure given the ongoing problems in the US banking sector and the credit crunch that continues to worsen. Goldman Sachs therefore mean:

We expect the FOMC to signal that it expects a pause in June, but retain a hawkish bias, stopping earlier than originally envisioned because bank stress is likely to lead to a tightening of credit.

Friday 5 May 2023, the focus is again on the American labor market. At 08:15 EST (14:15 CET), the Bureau of Labor Statistics will present non-farm payrolls (NFP) employment figures for April. Most recently, the numbers got somewhat worse.

The forecast of 180,000 new jobs created for April is well below the average for the past few months of trade. As recently as the beginning of the year, 517,000 new jobs had been created. Confirmation of this forecast will make the risk of a recession in the US in the coming months more likely, and a correspondingly negative reaction is likely on the financial markets. On the other hand, a positive surprise can be a catalyst for a rally in the crypto market.

Also at 8:30am EST, the US unemployment rate for April will be announced. The estimate is 3.6%. In March, unemployment had fallen from 3.6% to 3.5%. Fed chairman Powell has emphasized several times that a possible recession in the US could also push unemployment towards 4.5 per cent. Unchanged unemployment should therefore be viewed positively by the market.

Other events this week

A positive impulse, like last week, can also come from the stock market this week. 25% of S&P 500 companies report earnings. After strong quarterly figures from internet giants Microsoft, Alphabet and Amazon, the US stock market has ended the last trading week with a plus.

The First Republic crisis may also be of importance. As Bitcoinist reported, the next domino in the banking system could be a catalyst for Bitcoin. According to reports from various sources, the sale of First Republic Bank has already taken place. Two of the most promising bidders are reportedly JP Morgan and Bank of America.

At press time, the Bitcoin price was trading at $28,600.

Featured image from iStock, chart from TradingView.com