Two pivotal days this week for cryptocurrency enthusiasts. The initial occurrence transpired on Wednesday. Federal Reserve day proved neither favorable nor unfavorable as anticipated. For the first time, an approaching interest rate cap announcement was hinted at. Nevertheless, today promises to be as crucial as when the Fed resolutions were disclosed. What lies ahead for investors?
Notable Cryptocurrency Developments
Friday, May 5th is upon us. The Fed Chairman, on Wednesday evening, expressed that hourly wages and employment statistics would be under close scrutiny. Consequently, the data to be unveiled in roughly 13.5 hours carries critical significance. This accounts for the diminished volume in Bitcoin‘s valuation. Investors endeavor to mitigate risk by adapting their positions in accordance with impending information. So, which data will be disclosed today?
- 15:30 US Average Hourly Earnings (Projection: 0.3%)
- 15:30 US Non-Farm Payrolls (Projection: 180K Prior: 236K)
- 15:30 US Unemployment Rate (Projected: 3.6% Prior: 3.5%)
At 20:00 this evening, Fed member Cook is scheduled to speak. Post-data release, US markets will commence trading at 16:30. As a result of Apple’s favorable earnings report, the stock market is predicted to exhibit a positive opening today. Should the data fulfill expectations, we may witness an expeditious ascension in cryptocurrencies around 17:00. However, unfavorable data could yield an adverse outcome.
What is the desired data outcome?
- Average Hourly Earnings: If earnings escalate, expenditure follows suit, and in a demand-driven inflationary climate, this is contrary to the Fed’s desires. The optimal scenario? Hourly wages should have increased at or beneath projections. A sub-0.3 increase would bode well for Bitcoin, while any rise exceeding this could provide the Fed with pretext to insinuate readiness for further rate hikes.
- Non-Farm Payrolls: The ADP exceeded expectations, prompting a $500 decline in Bitcoin value. As a forerunner, this data suggests a higher-than-expected TDI announcement. Should this not occur this month, the subsequent month will likely reveal an above-expectation announcement. Generally, ADP serves as a leading indicator for TDI. Weaker employment is necessary, and the Fed perceives robust employment as a hindrance in combating inflation. Conversely, strong data is required to mitigate recession risks. For cryptocurrency investors, data below 180K will be favorable. Additionally, a figure lower than the previous month (236K) may be deemed the lesser of two evils.
- Unemployment Rate: A Bitcoin surge necessitates this data exceeding expectations. A surprise increase could lead to a Bitcoin price hike.
US Banks in Challenging Circumstances
Although less significant than the forthcoming crucial data, investors should monitor small and medium-sized bank stocks upon the stock market’s 16:30 opening. We will provide real-time updates as data is revealed, during stock market commencement, and throughout critical events. Increased price volatility will prompt site visitations for pertinent information.
Interest rates have attained 5-5.25%, with the Fed’s ceiling target at 5.75%; however, credit tightening resulting from the banking crisis is causing an equivalent 25-50bp increase (potentially more). Should the banking crisis persist while the Fed remains vigilant, a June rate ceiling announcement may be issued to placate markets. In this scenario, shortly prior to the meeting, the market (particularly cryptocurrency) begins pricing in the most favorable outcome, as has frequently transpired in the past.
Is the situation genuinely unfavorable? In truth, we must examine empirical data rather than fanciful notions. Herein, observe the substantial losses incurred by several prominent banks’ shares within the past week. The initial pair of banks are purportedly engaged in negotiations for sale, as asserted by mainstream media.
- PacWest (PACW): -70.64%
- Western Alliance (WAL): -52%
- HomeStreet (HMST): -42.57%
- First Horizon (FHN): -42.51%
- Metropolitan Bank (MCB): -37%
- First Foundation (FFWM): -34%
- Zions (ZION): -24%
- Comerica (CMA): -23.7%
- WesBanco (WSBC): -20.4%
