While the next US Federal Reserve FOMC meeting is still more than two weeks away, there are important macroeconomic and crypto and Bitcoin intrinsic events this week that investors should keep an eye on. As in previous weeks and months, it is very likely that the macro environments will drive sentiment in the crypto market.
After releasing the December 2022 CPI at 6.5% last Thursday, the crypto market turned sharply bullish. Bitcoin rose more than 18% after its release and stopped just below the USD 21,450 level. The entire cryptocurrency is poised to recapture the $1 trillion market cap in the wake of this recovery.
Which Marco Events Will Bitcoin Lead This Week?
This week, China is releasing economic data for 2022, which is unlikely to have much of an impact unless there is a major surprise affecting the US dollar. Still, it’s worth keeping an eye on China this Monday when its annualized GDP growth rate (YoY) is announced at 9 p.m. EST.
Also, the Bank of Japan (BoJ) interest rate decision could only become relevant if there is a surprise like last time. At 10 p.m. EST on Tuesday, the BoJ will announce its interest rate decision.
Interest rates are expected to remain unchanged. Surprisingly, when the Japanese central bank decided to raise its benchmark interest rate from 0.25% to 0.5% on December 20, BTC decided experienced a green daily candle.
In the US, the Producer Price Index (PPI) is probably the most important data point this week. While the PPI hasn’t had much impact on the overall financial market and Bitcoin in particular lately, the PPI could either confirm or put a damper on bullish sentiment about rising inflation.
December 2022 PPI data will be released on Wednesday, January 18 at 8:30 AM EST.
Watch out for the DXY
Perhaps the most important indicator right now of whether Bitcoin and crypto will continue to rise is the US Dollar Index (DXY). The reverse correlation between Bitcoin and the DXY has been particularly high in recent weeks.
The latest Bitcoin rally was fueled by a weakening US dollar. However, the DXY has moved into a historically significant support zone.
If the DXY bounces out of the support zone, it is likely that BTC will experience a retracement – which would be healthy given its current oversold status with an RSI of 89 on the daily chart.
Should the DXY drop below 101, the doors are wide open for a continued Bitcoin rally. On that note, the macroeconomic situation is likely to remain the all-determining factor for BTC price, provided there is no catastrophic crypto instinct news.
First and foremost, Digital Currency Group (DCG), Grayscale, and Gemini continue to be in the spotlight with their unresolved conflict about Gemini Earn client funds at Genesis Trading, which could derail a rally even if the DXY continues to fall.
At the time of writing, the BTC price was at $20,861.
Featured image from Kanchanara / Unsplash, charts from TradingView.com
