Markets
The three threats to watch closely this week
2:00 p.m. ▪ 4 min reading ▪ by Evans S.
The crypto market is a turbulent sea where every wave of news can cause repercussions. This week, several factors are likely to shake up this sector. Crypto investors and enthusiasts must remain vigilant against three major threats: US economic decisions, inflation indicators, and the continued dominance of Bitcoin.
The decision of the American Federal Reserve
All eyes are on the American Federal Reserve (Fed) this week. On Wednesday, June 12, the Fed will announce its interest rate decision, an event that could have significant implications for cryptocurrency markets.
Historically, Fed decisions heavily influence market movements, and cryptos are no exception.
The Fed is likely to keep interest rates unchanged following the release of strong jobs data in May.
Policymakers appear inclined to keep rates in a range between 5.25% and 5.5%, a stability that has lasted for seven consecutive meetings.
However, any hint of change could sow doubt and cause increased volatility in cryptocurrency markets.
Additionally, the possibility that the Fed will reduce the number of rate hikes planned for this year adds a layer of uncertainty. Investors should prepare for sharp moves, particularly those related to altcoins, which are often more volatile than Bitcoin.
Inflation indicators: CPI and PPI
Inflation indicators play a crucial role in monetary policy decisions. June 12 will see the release of the baseline report on the Consumer Price Index, a key indicator of inflation.
A rise in the CPI could prompt the Fed to adjust its interest rate policy, which would have immediate repercussions for cryptocurrencies.
The one-year CPI figure is expected to remain steady at 3.4%, suggesting the Fed may not change rates this week.
However, past correlations between CPI data and Bitcoin prices show that unexpected numbers can lead to big moves. A higher than expected CPI could be bearish for the leading crypto (Bitcoin), while a lower CPI could be bullish.
The next day, June 13, the producer price index (PPI) will be published. Another important inflation indicator is the PPI, which measures the average change in prices received by domestic producers. The cryptocurrency market’s reaction to this data will be closely watched, as it provides clues about the future direction of the Fed’s monetary policy.
The dominance of Bitcoin and its implications for other cryptocurrencies
Finally, Bitcoin’s continued dominance in the cryptocurrency market is a crucial factor to watch. Bitcoin, often nicknamed digital gold, maintains a dominant position that influences the entire market.
This dominance may harm the idea of an altcoin season, where alternative cryptocurrencies outperform Bitcoin.
On June 9, the crypto trader known as “Emperor” shared his thoughts on the state of the market with his 390,000 followers on X.
According to him, the current sideways trend could continue, with little short-term volatility. However, altcoins could suffer from Bitcoin’s strong dominance, discouraging a significant rotation into these assets.
Investors should therefore closely monitor Bitcoin’s movements. Bitcoin’s strong performance may drain capital from altcoins, exacerbating their volatility. Conversely, Bitcoin’s weakness could provide an opportunity for altcoins to shine, but this requires constant vigilance and a well-defined strategy.
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Evans S.
Fascinated by bitcoin since 2017, Evariste has never stopped researching the subject. If his first interest was in trading, he is now actively trying to understand all the advances centered on cryptocurrencies. As an editor, he aspires to continually deliver high-quality work that reflects the state of the industry as a whole.
DISCLAIMER
The views, thoughts and opinions expressed in this article belong solely to the author and should not be considered investment advice. Do your own research before making any investment decisions.