3 Factors That May Influence Cryptocurrency Markets in the Coming Week

Last week, stock markets experienced considerable gains, while the cryptocurrency sector witnessed a slight decline and exhibited some cooling trends.

Weaker-than-anticipated readings on the consumer price index and inflation expectations have kept the markets elevated, and recent diplomatic deals in the Middle East under the former administration have positively impacted the AI industry.

Moreover, US Treasury yields are on the rise once more. “Trade agreements, fears of recession, reduced inflation, and decelerating GDP could not drive yields lower,” noted one financial publication, which emphasized, “At the same time, Fed Chair Powell insists on maintaining current interest rates.”

Moody’s decision to downgrade the US credit rating last Friday also favored assets viewed as stores of value, including Bitcoin and gold.

Economic Events May 19 to 23

The market may react to Moody’s downgrade on Monday, potentially paving the way for increased volatility throughout the week.

Preliminary readings for May’s S&P Global Manufacturing and Services PMI are scheduled for Thursday. These key economic indicators assess the activity within the manufacturing and services sectors, reflecting both business and consumer sentiments.

While most official economic reports have indicated that the US economy is faring relatively well, they mostly reflect past conditions and haven’t fully accounted for the effects of widespread tariffs introduced by the Trump administration in early April. The PMIs are expected to provide a clearer understanding of the current situation.

Additionally, there are reports regarding home sales set to be released this week, which will offer insights into the US housing market, but these reports will have minimal influence on cryptocurrency markets.

Key Events This Week:

1. Market Response to Moody’s Downgrade – Monday

2. US Crude Oil Inventory Figures – Wednesday

3. S&P Global Manufacturing PMI Data – Thursday

4. Existing Home Sales for April – Thursday

5. New Home Sales for April – Friday

6. Total of 14 speeches from Federal Reserve officials…

“Soft data,” such as activity and confidence surveys, may indicate a bleaker outlook, particularly in the US, where both consumer and business confidence are on the decline, as cited by Citigroup analysts.

In Asia, market participants will be monitoring developments in trade negotiations between the US and neighboring countries, in addition to important data releases from China and a rate announcement from the central bank.

Crypto Market Outlook

The cryptocurrency markets kicked off the week with Bitcoin achieving its highest daily and weekly close just under $106,500.

However, during Monday morning trading in Asia, Bitcoin began to retract, falling back below the $103,000 mark following its recent peak.

“As the US Dollar weakens and uncertainty increases, Bitcoin and gold are flourishing,” commented an analyst.

Ethereum saw a notable decline, dropping nearly 3% and falling below the $2,400 threshold following a strong performance the previous week.

Performance among altcoins was varied, with Dogecoin, Shiba Inu, and Litecoin showing gains, while Tron, Leo, and wrapped Ethereum derivatives faced losses.