Markets
The three threats to monitor closely this week
2:00 pm ▪ 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 expected to shake this sector. Investors and crypto enthusiasts need to remain vigilant in the face of three main 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 decision regarding interest rates, an event that could have significant repercussions on crypto markets.
Historically, Fed decisions heavily influence market movements, and cryptocurrencies are no exception.
The Fed is likely to keep interest rates unchanged following the release of robust employment data in May.
Political decision-makers seem inclined to keep rates in the 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 provoke greater volatility in crypto markets.
Furthermore, 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 sudden moves, especially those involved in altcoins, which are often more volatile than Bitcoin.
Inflation indicators: CPI and PPI
Inflation indicators play a crucial role in monetary policy decisions. On June 12th, the main report on the Consumer Price Index, a key indicator of inflation, will be released.
A rise in the CPI could lead the Fed to adjust its interest rate policy, which would have immediate repercussions for cryptocurrencies.
The annual CPI value is expected to remain stable at 3.4%, suggesting the Fed may not change rates this week.
However, previous correlations between CPI data and Bitcoin prices show that surprises in the numbers can cause significant movements. A higher than expected CPI could be bearish for the leading cryptocurrency (Bitcoin), while a lower CPI could be bullish.
The following day, June 13, the Producer Price Index (IPP) will be released. The IPP, which measures the average variation in prices received by national producers, is another important inflation indicator. 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.
Bitcoin’s dominance and its implications for other cryptocurrencies
Finally, Bitcoin’s continued dominance in the crypto market is a crucial factor to monitor. Bitcoin, often dubbed digital gold, maintains a dominant position that influences the entire market.
This dominance could undermine 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 volatility in the short term. However, altcoins may suffer due to Bitcoin’s strong dominance, discouraging a significant rotation into these assets.
Investors, therefore, need to closely monitor Bitcoin’s movements. Bitcoin’s strong performance could drain capital from altcoins, exacerbating their volatility. On the other hand, 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 was unable to document the subject. If the first interest is in trading, the unfortunate attempt to capture all the advances centered on cryptocurrencies. As a writer, he aspires to continually provide 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.