Here’s What Will Be Important

Bitcoin price is facing the most important week of the year so far. While BTC managed a slight rally of around 3% over the weekend, this week will have to show whether the gains of the past few weeks are sustainable or whether the Fed will issue its hammer and make the entire financial market feel its animosity for premature spikes.

However, it is not only the FOMC meeting of the US Federal Reserve that is coming this week, but also other important macroeconomic events. Given the close correlation between Bitcoin and the broader crypto market with the S&P 500 and US Dollar Index, it is likely to be a very volatile week.

What To Watch This Week In Bitcoin And Crypto

This week, some of the largest US tech companies will be presenting their latest company figures for the past Christmas quarter. Beyond Meta, results and prospects for Apple, Amazon, and Google parent Alphabet will be key.

Whether these four tech giants will be able to meet their revenue and profit expectations is hard to gauge. However, company numbers can have a big impact on the overall S&P 500. In addition, dozens of other top companies will report their numbers for the final quarter.

Before the US central bank publishes its interest rate decision on Wednesday, the latest US consumer confidence figures will be important. On Tuesday, the Conference Board (CB) will publish new US consumer confidence figures for December.

In the last release, optimism for economic development in the US increased significantly to 108.3, contrary to forecasts. A value of 109.0 is expected for December.

If the number turns out to be much better than expected once again, the US Dollar Index (DXY) could see an upside in the short term, which will negatively impact price performance in the crypto and Bitcoin markets due to the inverse correlation. If the forecast is off, this can in turn have a positive impact on the price of BTC.

In general, investors should keep their eyes on DXY again this week. At time of writing, it is at 101.94 and thus just above the all-important support at 101.

Interest Rate Decision by the US Federal Reserve

On Wednesday, February 1, 2023, at 2:00 PM EST, all eyes will be on the Fed’s interest rate decision when the US monetary watchdog announces its latest rate adjustment. According to the CME FedWatch Tool, 98.9% of analysts expect a gain of only 25 basis points.

Half an hour later, Fed Chair Powell will return to the cameras to explain the decision. Powell’s words likely carry as much value as the tariff decision itself. Although Powell will avoid the word ‘pivot’ like the devil avoids holy water, investors will probably expect some optimism in light of the recent positive data.

On the other hand, any deviation from what is considered a “certain” level adjustment of 0.25 bps to 4.75 bps could lead to a sharp decline in the S&P 500 and Bitcoin markets.

On Thursday, February 2 at 8:15 a.m. EST, the European Central Bank’s interest rate decision will also be released. With inflation still very high at 9.1% in the euro zone, the market expects an increase in interest rates by 0.5 bps to 2.5 bps.

If the ECB surprises with a 75 bps rise, the euro-dollar exchange rate could gain strength in the initial reaction, which could in turn depress DXY, ultimately benefiting Bitcoin and cryptos.

Closing out the week, on Friday, are the US non-farm employment figures for January. The figures are likely to be very important in assessing the probability of a recession in the US. In addition, it is well known that the Fed is keeping an eye on the labor market.

At press time, Bitcoin is trading at $23,339, having rejected at $24,000 yesterday.

Featured image from Kanchanara | Unsplash Chart from TradingView.com