- We’re introducing a new “macro week summary”
- This summarizes the economic calendar
Friends, every Monday we put together for you an economic calendar announcing important macro events. Let’s summarize and see what these metrics were. And how they affected the BTC chart.
So, on Friday, Bitcoin is trading at $29,115.35. During the day its price has not changed a lot.
The world’s largest cryptocurrency has added more than 70% since the start of the year, but is down about 6.6% from its 30-day high of $31,005 reached on April 14.
Bitcoin has remained highly volatile all week. The market was digesting some key news.
Monday. Strong U.S. Labor Market Data
The week began with the ADP Nonfarm Employment Change metric. It shows the number of people employed in the non-agricultural sector.
Contrary to predictions (148,000), the number of jobs was much higher at 296,000..
Apparently, the Fed read this as insufficient monetary tightening. And decided to raise rates on Wednesday.
Wednesday. U.S. rate hike
The U.S. Federal Reserve expectedly raised its rate by 0.25% on Wednesday. This was followed by a hawkish press conference by Fed Chief Powell.
He said that the regulator was not considering a rate cut for the foreseeable future. Moreover, if inflation doesn’t fall, the Fed could raise rates again at its next meeting on June 14.
In response, the BTC exchange rate rallied slightly on Wednesday. Then the price went up on the chart, breaking $29k.
Thursday. EU rate hike
Following the U.S., the ECB decided Thursday to raise its interest rate by another 25 basis points to 3.25%. And Christine Lagarde signaled a further tightening of monetary policy.
Friday. The labor market data
The U.S. updated the number of initial claims for unemployment benefits. The number was higher than forecasted (242,000).. versus 240,000).
The number of unemployed rose by 13,000 during the week (it was 229,000).. That points to a slowdown in the labor market.
This is what the Independent Commodity Intelligence Services wrote about it in its report:
“Given restrictive interest rates, tightening credit due to regional bank turmoil and weakness in several leading indicators, the US economy could enter a mild recession in the third or fourth quarter of 2023.”
In a global perspective this is good for Bitcoin, which will increasingly be seen as a backup asset.
New banking crisis
The “black swans” of the week were the regional banks in the United States.
It started with the Fed cheerfully reporting on Tuesday that the banking system was completely healthy. On the same day, the shares of two banks fell.
This is PacWest и Western Alliance Bank. And Metropolitan Bank trading has been completely halted.
After that, Bloomberg wrote that PacWest had considered strategic options, including selling the brand. The bank itself denied such news.
But it’s done: PacWest stock fell more than 50% again on Thursday. We also see a decline in several regional banks. And Europe’s UBS started thinking about reselling Credit Suisse:
The total market capitalization loss in the U.S. banking sector this year exceeded $2500 billion. How will this help bitcoin?
Long-term problems in the banking sector may increase concerns about TradFi’s ability to withstand financial turmoil. This will increase the number of investors interested in digital assets.
“The cryptocurrency market has already benefited from a surge in inflows during previous bank failures this year.
And it will continue to do so if new crashes occur,” comments a CPT Markets spokesman in an interview with Forkast.
Crypto philosopher Arthur Hayes, however, is confident that the US will bail out the banks again.
“This weekend, we should find more crappy US banks to buy put. I wouldn’t hold the risks over the weekend.
You never know what will be the trigger that makes Yellen or Powell give in and bail everyone out.
It’s all politics now, and politics is more about power than rational decisions.”
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The week will end with non-farm payrolls in the US (to be released at 3:30 pm). And we will have a new economic calendar for you on Monday. Have a nice weekend, everyone.