In recent days, I have been following the crypto markets very closely. The thing is, they are obviously stuck in a rut. Over the weekend, significant cryptocurrencies didn't do much in terms of movement, with the total market cap stuck around $2.54 trillion. The feeling is more or less that everyone is currently waiting for something to happen and shake things up. Well, the week that we've been waiting for, possibly on the back of some critical economic data from the United States.
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First up, why is this week remarkable? There is a US holiday on Wednesday, meaning there will be no stock market. Ordinarily, this paints a calm outline for the crypto markets, although I would not take it so quickly if I were you this week.
On Tuesday, we will get the May retail sales report back. This report is of high significance since it depicts the amount of consumption being consumed by their consumers, both on their durable, for instance, cars and appliances, and non-durable, for example, food and clothes, goods. Most importantly, this is one of the barometers by which the country's economy is measured and an indicator of how confident the consumer is in spending and consumption.
Right on the heels of that is the U.S. industrial production report coming out on Thursday. Historically, these figures are more aligned with estimates and seldom upset the markets, but the point is still worth mentioning. Of much greater importance will be the release of the June S&P Global Manufacturing PMI on Friday. It is an indicator that informs us about business conditions in the manufacturing sector, which comprises a big part of the American economy. Positive manufacturing data can indicate an increase in economic growth, while weak data might suggest a slowdown.
And what interests me is how these economic reports might impact the policy-related decisions of the Federal Reserve.
Recently, there has been widespread speculation that the Fed's is toward a much more conservative route.
Therefore, if it does come out that the forthcoming economic reports will indeed indicate that inflation pressures are starting to ease and prices are beginning to stabilize, then we could see the Fed moving towards a rate cut sooner than expected. It is generally positive for high-risk assets, like cryptocurrencies, since it contains the cost of borrowing money in a much cheaper manner.
Expectations, however, do need to be kept in check. The Fed has already signaled to the markets that there may just be one rate cut this year, which is lower than what they had anticipated. So, even if economic data points are strong, do not expect an immediate explosion in the crypto markets. Perhaps the most anticipated thing, or "alt season," is the breakout of altcoins. That is soon approaching, although we might see that effect early next year.
The crypto market, at the time of writing, was on a rollover of underwhelming sessions. Recently, Bitcoin dipped back under $66,000 after being severely rejected around the same level over the weekend. In the same résumé, Ethereum also has its recent gains erased back under $3,500 from an Asian-hour rally that at one point hit $3,645. Other altcoins like Shiba Inu, Avalanche, Uniswap, and Near Protocol registered more red than green, signaling an overall lack of momentum.
In such a sluggish market atmosphere at this time, I do feel optimistic about the long-term views of cryptocurrencies. In this light, there's much importance attached to economic data, such as data on retail sales and a PMI report, to portray the general economic situation. These may not be the elements that ignite prices in cryptos, but they give an insight into possible trends.
Who knows? Perhaps we are on the threshold of a new and thrilling phase for cryptocurrencies.
Thank you very much for reading, and let's hope for some good news! CheersCheers