June 12, 2023 at 16:35 GMTModified date: June 13, 2023 at 14:17 GMT
June 12, 2023 at 16:35 GMT

Crypto crunch: This week’s key market events

It promises to be a rollercoaster week for crypto going by the line-up of crucial economic data and key events scheduled for release. Here’s what to look for!

Crypto crunch: This week’s key market events

It promises to be a rollercoaster of a week in the crypto market going by the line-up of crucial economic data and key events scheduled for release.

Last week set the stage with regulatory actions from the SEC, triggering widespread long liquidations and a tumultuous period for altcoins over the weekend. While some stability is returning to the altcoin market, this week’s events means that the market is poised to experience significant volatility with the potential to either expedite the recovery process or inflict further damage. 

It is therefore imperative for traders and market participants to closely monitor these factors and adapt their strategies accordingly to capitalise on the opportunities they may present.

Here are some of the anticipated events scheduled for this week and how the could potentially impact the market…

United States’ CPI Data

The United States’ Bureau of Labour and Statistics will release the Consumer Price Index (CPI) report for May 2023 tomorrow (13 June). The index tracks changes in the prices of goods and services and is one of the measures of inflation and overall economic growth and stability. Since Bitcoin is widely touted as a hedge against inflation, this indicator has a potential impact on the market direction.

Higher-than-expected inflation from the CPI data may lead to concerns of currency devaluation, causing investors to lean more towards Bitcoin as a safer store of value. This is however not foolproof as such a situation could lead to panic-induced mass sell-offs amongst different asset classes including cryptocurrencies.

Ahead of the CPI data release, Cleveland Fed’s Nowcasts predicts slower headline inflation across all categories and core inflation to be above the Fed’s target. Should this play out, concerns may be raised about persistent inflationary pressures, leading to tightening of monetary policies. The resulting change in monetary policies devised could impact investor sentiment.

It is important to monitor these sentiments while keeping an eye on the CPI data release to improve decision making.

Hinman’s document release deadline 

The two-year legal brawl between Ripple Labs and the United States’ SEC could be winding down soon. Following the court’s ruling, the SEC must hand over unredacted emails of Hinman’s internal communications on or before 13 June.

The document in question holds significant importance as a crucial piece of evidence that could potentially favour Ripple. It features essential statements made by former SEC Director of Corporate Finance, William Hinman. Within the document, Hinman categorises both Ether (ETH) and Bitcoin (BTC) as non-securities, aligning with Ripple’s position. This statement carries substantial weight and has the potential to be leveraged by Ripple to strengthen their legal argument.

As regulatory pressure intensifies and more companies grapple with lawsuits, the Ripple vs SEC case is drawing significant attention. This high-profile case has the potential to establish a precedent for the entire industry and shape the outcomes for Coinbase, Binance, and 13 cryptos labelled as ‘securities’ by the SEC in the past week. The verdict will carry far-reaching implications for the involved parties and the wider crypto community.

While the crypto world awaits a verdict by Judge Analisa Torres, the document’s public release is widely viewed as a prelude. This could lead to a spike in the price of XRP and other altcoins. It is however important to consider other factors before opening a position.

Binance US hearing 

A hearing for the SEC’s motion to freeze assets of Binance US is scheduled for 13 June. The request came two days after it filed a lawsuit against Binance Holdings, its affiliates and founder Changpeng Zhao for violations of securities law.

Binance was given until 12 June to respond to the SEC’s request for a temporary restraining order. The exchange last week denied the allegations and vowed to fend off the regulatory onslaught.

The hearing could further impact the market standing as SEC continues its efforts to crackdown on industry players. Should the court approve the SEC’s request for a temporary restraining order, negative sentiments will cloud the industry which may again lead to mass sell-offs.

US Financial Services Committee to discuss the future of crypto

The ongoing efforts to achieve regulatory clarity in the United States have shown some promising results. To address the pressing issue, the US Financial Services Committee scheduled a meeting on 13 June specifically dedicated to discussing and providing much-needed clarity for the cryptocurrency and blockchain space. This development marks a significant step forward in the quest for a clear regulatory framework that can foster innovation and confidence in the industry.

Committee chairman, Patrick McHenry made the announcement for the meeting tagged ‘The Future of Digital Assets: Providing Clarity for the Digital Asset Ecosystem’. News of the meeting sparked waves of optimism and has instilled a glimmer of hope in the country’s digital asset landscape. 

The meeting’s outcome, if favourable, may uplift market sentiments and create profitable opportunities for traders.

FOMC meeting 

Ahead of the FOMC (Federal Open Market Committee) meeting slated for Wednesday this week, many traders are anticipating the committee’s stance on monetary policies, most notably the interest rates. 

Changes to interest rates is the one of the most important decisions taken during the meeting and its outcome could greatly impact the crypto market. Lowering interest rates is typically seen as beneficial for more high-risk assets such as cryptocurrencies since it encourages borrowing, investment, and overall economic expansion. This optimistic outlook can result in heightened demand and potentially push up the prices of crypto.

On the other hand, raising interest rates can have a suppressing impact on market sentiment, causing reduced demand and potentially leading to price decreases. While this pattern is not guaranteed to hold true in every instance, understanding the potential impact of interest rate changes is valuable knowledge for traders.

United States’ PPI data

Scheduled for release this Wednesday, the Producer Price Index (PPI) data calculates the change in selling prices received by domestic producers. Like the CPI, it also offers insights into the level of inflation.

If PPI shows a significant increase in producer prices, it may indicate potential inflationary pressures. Higher inflation expectations can lead to a decrease in the value of fiat currencies, which can drive investors towards alternative assets like crypto as a hedge against inflation.

Similarly, a decrease in producer prices may indicate lower inflationary pressures, an increase in fiat value and a reduced demand for cryptocurrencies.

It is important to note that there are exceptions to this trend and that using the PPI data in combination with other factors such as market sentiment offer increased chances of profitability.

Coinbase vs SEC rulemaking petition deadline

The United States Court Of Appeals For The Third Circuit ordered the SEC to respond to Coinbase’s rulemaking petition by 13 June or offer an explanation for not doing so.

In yet another move to force the regulatory watchdog’s hands and establish clear regulatory guidelines for the industry, Coinbase had earlier filed a rulemaking petition. The petition requests that the SEC provide clarity on the circumstances that determine an asset’s classification as a security. 

SEC’s response to the petition is yet another highly anticipated event this week as it could possibly set the precedent for regulatory in the United States. 

Other important data and events this week include the US Jobless Claims and Retail Sales data. These releases have the potential to introduce significant volatility to the market.

It is vital for traders to closely monitor these developments, assess market sentiments, and implement appropriate risk management strategies to navigate the potential fluctuations effectively.