The cryptocurrency market is set to enter the fourth quarter of the year next week, with high expectations. Historically, Q4 has been highly favorable to the market; in Q4 2023, the market achieved an impressive return of +56.6%. For the digital currency market to thrive, it requires a supportive macroeconomic environment. Let’s analyze the top macroeconomic factors that may influence the crypto market next week.
US Unemployment Data & Its Influence on Crypto
Recently, the United States Federal Reserve implemented a 50-basis point interest rate cut. Many believe that the recent rate cut was the first in a series of rate cuts the US Fed is set to execute. A crucial employment dataset is scheduled to be released next week. The US Unemployment Rate is currently 4.2%. It was 4.1% in June but sharply rose to 4.3% in July. As per the forecasts, there will be no change in the rate this time.
A rate cut is positive for the crypto market, as it encourages investors to choose riskier assets like cryptos over safer assets like bonds. A weak job market leaves the US Fed with no option but to go ahead with further interest rate cuts. If things progress in that direction, the crypto market can climb even higher.
Will European Financial Uncertainty Drive More Investors to Crypto?
Falling energy prices have brought the leading European economies to the brink of deflation. There are rumors that some European economies are considering additional rate cuts. The combination of deflation and rate cuts is one of the most unwelcoming things the Euro can expect right now. If executed, it will bring the Euro to a state of extreme weakness.
A weaker Euro is something that excites crypto enthusiasts, as it increases the chance of European investors opting for cryptos. The UK, which recently witnessed a political change with the victory of Labour Party leader Keir Starmer against Conservative Party leader Rishi Sunak in the 2024 general election, is struggling due to financial issues, like persistent inflation and low consumer confidence. Notably, it has not yet announced any strong action to tame the economic crisis. The country is expected to release a budget report next month.
Whenever there is economic instability in a major economy, its investors switch to cryptos as a hedge against the crisis.
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China’s Economic Stimulus: What It Means for the Global Crypto Market
There are rumors that the People’s Republic of China, once considered the symbol of economic prosperity, is going through its worst economic crisis. The country recently announced a hefty economic package as a measure to recover from the crisis. A key factor activity dataset is expected to be released next week. It is the first important date release since the announcement of the stimulus package.
If the stimulus impacts the Chinese economy positively, it will reflect on the global economy. In a thriving global economy, the crypto market will also benefit greatly.
Conclusion
In conclusion, the macroeconomic factors, which are expected to decide the course of the global economy next week, look favorable for the growth of the crypto market. Investors should stay informed and consider these factors when making their investment decisions. The interplay between these economic indicators and the cryptocurrency market could pave the way for significant opportunities.
