This week could be a turning point for Bitcoin’s bull market. From Wednesday through Friday, all eyes will be on the U.S. as we receive critical economic data that might reveal whether 2024 will wrap up with a recession or a softer, smoother economic landing.
At the moment, it isn’t looking that good after Bitcoin dipped 4% and is trading under $57,000 at the time of writing, following speculation of another interest rate hike in Japan. The last one, about a month ago, caused global markets to crash and Bitcoin to drop to below $50,000. So let’s keep our fingers crossed that the U.S. data coming out will be positive.
Why a Soft Landing Matters for Bitcoin
For Bitcoin, it’s vital that we close 2024 with what’s called a “soft landing.” In simple terms, this would mean the U.S. Federal Reserve successfully manages to lower inflation to its 2.0% target without tipping the economy into a recession.
The key player here is the U.S. labor market. If it stays strong, there’s a good chance that the economy won’t slide into a downturn.
Starting Wednesday, we’ll get a look at key figures like U.S. job growth, job openings, and the unemployment rate. These are the same reports that led to a big market dip last month, so this week could be crucial for Bitcoin’s future.
The Right Time for Rate Cuts?
Just a couple of weeks ago, on August 23, the Federal Reserve announced that the time for rate cuts has finally arrived. The reasoning? Inflation is easing toward the 2.0% goal, and the job market is cooling down faster than they expected.
However, the Fed is walking a fine line. They’re worried that the labor market might slow down too quickly, which could still nudge the economy toward a recession.
Last month, the unemployment rate was 4.3%, and the next report, due Friday, is expected to show a slight dip to 4.2%. For Bitcoin, it would be encouraging if the labor market stays in line with this forecast. After all, a recession doesn’t mix well with a bull market.
As you can see in the above chart, the pattern is clear: rate cuts without a recession tend to be good news for markets, including Bitcoin. On the other hand, rate cuts that happen alongside a recession have historically led to downturns in stocks and other risk assets.
That’s why this week’s data is so important. We need to see solid confirmation that the U.S. labor market remains strong. Keep an eye on these reports as they could set the tone for Bitcoin’s path forward.
As always, stay with us at HowToBuyBitcoin.org for the latest updates and insights