The crypto ecosystem, weakened by two crypto-crashes, has its eyes riveted on three major announcements in July, from the United States.
The cryptocurrency market, which has experienced two recent crypto crashes, is increasingly correlated with traditional financial markets. It is for this reason that the crypto-community has its eyes on three upcoming announcements from the United States, on July 13, 26-27 and 28. Announcements that could have an impact on the cryptocurrency market.
• July 13: All eyes on the CPI
On July 13, the US Bureau of Labor Statistics will release its monthly Consumer Price Index (CPI). As a reminder, in mid-June, the organization announced that the CPI in the United States rose by 8.6% in May compared to the same period a year ago, being at its highest for 40 years. An announcement that greatly weakened the cryptocurrency market, which entered a second crypto-crash.
According to investing.com, the CPI forecast for June is 8.7%, up slightly from May. For The Crypto Academy co-founder, a lower-than-expected CPI could be “the catalyst for a rebound,” as noted by the specialist media CoinTelegraph.
Similarly, Michael van de Poppe, the boss of crypto firm EightGlobal, said on Twitter on Monday that “all eyes are on the CPI data next week,” hinting at a potential upside for bitcoin, s’ it had to go back above 20,000 dollars.
• End of July: new Fed announcements and US GDP
In addition, on July 26 and 27, the US Federal Reserve will make its decision on a new interest rate hike. In mid-June, the Fed raised its key rates by 75 basis points. This is the largest rate increase since 1994 in the United States.
As a reminder, tech stocks and cryptocurrencies are among the most sensitive assets to central bank policies, and in particular the US central bank (the Fed). Overall, over the years 2020 and 2021, there was strong liquidity in the markets injected by central banks to support economies in the midst of a pandemic.
This caused the cryptocurrency and Nasdaq market and other risky assets to rise. But the year 2022 is different and the economic context has changed: the US central bank has indeed started raising rates to fight inflation. Faced with the tightening of monetary policy by the US central bank, investments in the riskiest assets are down. There is less money in circulation in the financial markets, and this penalizes the Nasdaq and therefore cryptocurrencies.
Finally, on July 28, estimates of the gross domestic product (GDP) for the second quarter of 2022 in the United States will be made public. In the first quarter, the GDP of the United States fell 1.5%. We speak of a recession when the GDP declines for two consecutive quarters.