This article delves into the economic factors that amplify crypto market volatility, highlighting key events that could impact the market in the coming week.
Points
- Impact of S&P Final US Services PMI on traditional and crypto markets.
- Influence of the US trade deficit on crypto investments.
- Role of consumer credit data in market sentiment.
- Effect of Federal Reserve policies on market dynamics.
- Broader macroeconomic and geopolitical factors influencing crypto.
The economic events that will fan the flames
S&P Final US Services PMI: A Positive Signal for Traditional Markets
On Monday, all eyes will turn to the S&P Global Services PMI, covering sectors such as finance, insurance, real estate, and business services.
In July, this PMI exceeded expectations, rising to 56 points from 55.3 in June, indicating growth in the services sector. This growth suggests increased demand for services, a good omen for traditional markets that could also positively influence the crypto market.
The US Trade Deficit: An Indirect Influence on Crypto
On Tuesday, the US trade deficit will reveal its secrets. In June, this deficit showed an increase in exports of services and cars, indicating an economy more oriented towards services.
Ram Ahluwalia, CEO of Lumida Wealth, asserts that this transition could create new investment opportunities and improve economic conditions.
A thriving economy could encourage investors to take risks, potentially benefiting cryptocurrencies. After all, when the cat is fat, the mice dance!
Consumer Credit: An Indicator of Economic Confidence
On Wednesday, the consumer credit data for June will be in the spotlight. In May, this credit increased at an annual rate of 2.7%, with a 6.3% rise in revolving credit.
This shows increased consumer confidence and a willingness to go into debt, generally a good sign for the economy.
If June data reveals similar trends, it could boost economic activity and corporate profits, hence strengthening stock markets.
However, high levels of credit carry risks of defaults and financial instability, which could increase volatility in traditional financial markets and, by extension, benefit the crypto market.
Tom Barkin’s Speech: Monetary Policy Outlook
On Thursday, Tom Barkin, president of the Richmond Fed, will share his vision of the monetary policy outlook, a speech that could influence traditional markets and the crypto industry.
However, figures like Elon Musk criticize the Fed’s reluctance to lower rates, especially after a disappointing jobs report. It seems that great minds don’t always agree on the course of action.
Macroeconomic Effects: The Massive Crypto Sell-Off
Some analysts attribute this crash to the Japanese stock market experiencing its worst losses since 1987.
Zach Jones, market analyst, links this drop to Japan defending its currency, the Yen, by selling its US Treasury holdings.
According to Jones, Japan had to choose between letting its currency collapse or printing money to defend it, ultimately opting for the latter. It shows that even major economies sometimes have to choose between a rock and a hard place.
解説
- Economic Indicators: The S&P PMI and US trade deficit provide insights into economic health, impacting investor confidence and risk appetite in both traditional and crypto markets.
- Consumer Behavior: Increased consumer credit indicates economic confidence but also carries the risk of defaults, adding to market volatility.
- Monetary Policies: Federal Reserve speeches and policies significantly influence market dynamics, affecting both traditional and crypto investments.
- Geopolitical and Macro Factors: Global events, such as Japan’s economic decisions, highlight the interconnectedness of financial markets and their collective impact on crypto volatility.