As investors gear up for the week ahead, the anticipation of upcoming macro events is fueling volatility and creating an electrifying atmosphere in the crypto sphere.
As April is drawing to a close, market participants are eagerly awaiting a new week filled with a series of potentially shocking macro events. From central bank interest rate decisions to the release of crucial economic data, these events could have a significant impact on the stock and crypto markets.
In recent days, the crypto market has seen dramatic fluctuations amid concerns about possible interest rate hikes in the coming week. However, the picture quickly changed when the collapse of the First Republic Bank sent ripples through the market.
US Federal Reserve Interest Rate Decision (May 2nd and 3rd)
As the Federal Reserve continues on its path of monetary policy normalization, the potential impact of interest rate hikes on the crypto market has become a topic of intense debate. Next week, the US Federal Reserve will convene for a pivotal meeting where voting on possible interest rate hikes will take center stage.
The highly anticipated FOMC meeting will take place on May 2-3, culminating in Fed Chairman Powell’s decision announcement on May 3. Market participants eagerly await the likely outcome (a 25 basis point rate hike) in this crucial May FOMC event. Subsequently, the Federal Reserve is anticipated to halt its rate-raising trajectory, beginning with the FOMC meeting on June 13-14.
Therefore, an increase in interest rates can significantly sink the cryptocurrency market and strengthen the dollar. Furthermore, the global crypto market capitalization may witness a massive sell-off by investors.
ECB Monetary Policy (May 4th)
The European Central Bank (ECB) plays a key role in shaping the economic landscape of the Eurozone through its decisions on monetary policy and interest rates. As the crypto market continues to interact with traditional financial systems, the potential influence of ECB policy on digital assets becomes increasingly relevant.
As the European Central Bank prepares for its next meeting on May 4, it may be forced to enact another interest rate hike if inflation persists following the economic forecasts set out in March. In anticipation of ECB moves, market projections suggest a 25 basis point increase for the 3% deposit rate during the May 4 meeting, followed by a further 25 basis point increase in mid-2023.
US Nonfarm Payroll (May 5th)
A crucial indicator of the nation’s economic health, the US Non-Farm Payrolls (NFP) report provides information on the change in the number of people employed, excluding the agricultural sector. A strong NFP report generally increases market confidence and encourages risk-taking, while a weaker-than-expected report can trigger risk aversion.
US Unemployment Rate (May 5th)
In March, the US economy added jobs at a strong pace, bringing the unemployment number down to 3.5%. This trend indicates lasting rigidity in the labor market. More robust growth on May 5 may affect the strength of the US dollar, as better-than-expected labor market data may lead to a stronger dollar. Since cryptocurrencies are often priced in USD, fluctuations in the value of the dollar can affect cryptocurrency prices.
By Audy Castaneda
