What’s important for Bitcoin and the crypto market this week?
Crypto investors should watch the following data during this trading week of September 12 through September 16.
Crypto investors should keep an eye on the following data in this trading week of September 12 through 16.
The European Central Bank ECB raised its key interest rate last Thursday by 0.75 percentage point, a historically strong move to tackle persistently high inflation. As expected, the rate hike boosted the euro against the U.S. dollar, just as on the day of the ECB’s last rate hike. The euro’s recovery pushed the U.S. dollar index, DXY, down by roughly 2 percentage points for a time. That price correction then led to a notable rebound in both European and U.S. stock indices and in the crypto market. Bitcoin price momentum continued in the following days and pushed back up to the key resistance level near USD 21,892. The second-largest cryptocurrency, Ethereum (ETH), also posted big gains and hit a new monthly high of USD 1,789, a few days ahead of the planned date for “The Merge” between September 14 and 15. Ethereum’s shift to Proof-of-Stake should be seen as a major milestone for the entire crypto sector. In addition to this key event, market participants will also be watching fresh inflation data from the U.S. and the eurozone this trading week. On Tuesday, September 13, the U.S. Bureau of Labor Statistics will publish the CPI for August for the first time. On Friday, September 16, Eurostat will release the updated CPI for the euro area. Market participants expect that the fresh data will provide new insights into the current inflation trend in the world’s two leading economic regions. In the next overview article you can read which data in the current trading week are likely to influence the price development of Bitcoin, Ethereum and others as well.
CPI: New insight into US inflation
The flood of data in the coming trading week kicks off with the U.S. Consumer Price Index (CPI) for August. On Tuesday, September 13, the U.S. Bureau of Labor Statistics will release the CPI data for August at 14:30 CET. In July, the year-over-year CPI rose to 8.5%, down from 9.1% previously. If inflation in the U.S. drops again and comes in under analysts’ expectations of 8.1%, the chance of a continued trend rally in U.S. equities rises. As in the prior month, a further drop in the CPI could have a constructive effect on the price action of risk assets like the crypto market.
Ethereum’s switch to proof-of-stake is expected midweek
All crypto investors are eyeing Ethereum’s “The Merge” midweek. Between September 14 and 15, the Ethereum network is expected to complete the long-delayed transition from Proof-of-Work (POW) to Proof-of-Stake (POS). During this period, volatility in Ethereum, and in the broader crypto space, is anticipated to rise sharply. If the Beacon chain merge with the Ethereum mainnet goes smoothly, it could buoy Ethereum and all ERC-20 and ERC-21 tokens. On the other hand, renewed delays due to unexpected bugs and issues could trigger a sharp sell-off in Ethereum. Market participants should also consider a potential “sell the fact” event. It’s not unusual for financial markets to trim assets after a major innovation is successfully implemented.
US PPI (Producer Price Index) on Wednesday
On Wednesday, September 14, at 14:30 (CET), the US Producer Price Index (PPI) will be released. Analysts expect a decline of -0.1 percentage point. Last month’s PPI drop was -0.5 percentage points, much better than the +0.2% forecast. The PPI measures prices at the wholesale level for goods and services produced in the US. A further decline in the PPI would signal cooler inflation and should push the U.S. dollar index, DXY, lower again. A weaker dollar would, in turn, support a continued recovery in equity and crypto markets.
Fresh US retail sales data on Thursday
On Thursday, September 15, at 14:30 CET, data on August retail sales in the U.S. will be released. These figures are a key gauge of consumer spending. Retail sales had been flat in the prior month. Consumer appetite has been easing over the past months. For August, markets expect a small rise of 0.2 percentage points. If the published retail sales miss expectations again and indicate weaker consumer sentiment in the U.S., that could prompt the Fed to rethink its approach even sooner. Although Fed Chair Powell reaffirmed last week that he wants to bring inflation back to a sustainable level, even if it weighs on a recession, room for further rate hikes remains limited.
Big drop and new EU CPI seal the trading week
On Friday, September 16, and in the days leading up to it, markets on traditional financial venues are expected to show elevated volatility due to the large expiry on the last trading day of the week. On the so-called witching Friday, the third Friday of each quarter marks the expiration of options and futures on indices, stocks, and commodities on global exchanges. Options writers push prices in the world markets during expiry week to try to let as many bets expire worthless.
Friday morning, at 11:00 CET, eurozone CPI data are also released. Analysts expect a year-over-year rise of 9.1%. That matches the eurozone’s prior inflation print. If inflation comes in higher than forecasts, the ECB would need to consider tightening further at its next rate decision.
