The crypto market is a turbulent sea where every wave of news can cause ripples. This week, several factors are likely to shake up this sector. Crypto investors and enthusiasts need to stay vigilant in the face of three major threats: U.S. economic decisions, inflation indicators, and the continued dominance of Bitcoin.

The decision of the American Federal Reserve

All eyes are on the American Federal Reserve (Fed) this week. On Wednesday, June 12, the Fed will announce its decision regarding interest rates, an event that could have significant repercussions on the crypto markets.

Historically, Fed decisions strongly influence market movements, and cryptos are no exception.

It is likely that the Fed will keep interest rates unchanged, following the release of robust employment data in May.

Policymakers seem inclined to keep rates in the range of 5.25% to 5.5%, a stability that has lasted for seven consecutive meetings.

However, any hint of change could sow doubt and provoke increased volatility in the crypto markets.

Moreover, the possibility that the Fed will reduce the number of planned rate hikes for this year adds a layer of uncertainty. Investors must brace for sudden movements, particularly those involved in altcoins, which are often more volatile than Bitcoin.

Inflation indicators: CPI and PPI

Inflation indicators play a crucial role in monetary policy decisions. June 12 will see the release of the core Consumer Price Index report, a key inflation indicator.

An increase in the CPI could prompt the Fed to adjust its interest rate policy, which would have immediate repercussions on cryptocurrencies.

The year-on-year CPI figure is expected to remain stable at 3.4%, suggesting that the Fed may not change rates this week.

However, past correlations between CPI data and Bitcoin prices show that surprises in the numbers can cause significant movements. A higher-than-expected CPI could be bearish for the leading crypto (Bitcoin), while a lower CPI could be bullish.

The next day, June 13, the Producer Price Index (PPI) will be released. The PPI, which measures the average change in prices received by domestic producers, is another important inflation indicator. The cryptocurrency market’s reaction to this data will be closely watched, as they provide clues about the future direction of Fed monetary policy.

The dominance of Bitcoin and its implications for other cryptocurrencies

Finally, the continued dominance of Bitcoin in the crypto market is a crucial factor to monitor. Bitcoin, often dubbed digital gold, maintains a dominant position that influences the entire market.

This dominance can detract from the idea of an altcoin season, where alternative cryptocurrencies outperform Bitcoin.

On June 9, the crypto trader known as “Emperor” shared his thoughts on the state of the market with his 390,000 followers on X.

According to him, the current sideways trend might continue, with little short-term volatility. However, altcoins could suffer due to Bitcoin’s strong dominance, discouraging significant rotation into these assets.

Investors, therefore, need to closely monitor Bitcoin’s movements. Strong Bitcoin performance can drain capital from altcoins, exacerbating their volatility. Conversely, Bitcoin weakness could offer an opportunity for altcoins to shine, but this requires constant vigilance and a well-defined strategy.

Source : Cointribune EN - Jun 10, 2024