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Several key economic data are due to be released this week, raising expectations for the Federal Reserve’s interest rate policies. And these releases could mark the beginning of significant gains in cryptocurrency prices.
Upcoming data on PPI and retail sales
This week, investors and analysts will be eagerly awaiting publication of producer price index (PPI) and retail sales data. The PPI measures the change over time in the prices received by local producers for their products. On the other hand, the retail sales data shows the total value of retail sales in the country.
The data will be available on Wednesday and investors expect both indicators to decline on reduction in the price of petrol. This has allowed manufacturers to reduce factory costs, and as manufacturing costs have fallen, manufacturers have been able to adjust prices.
Furthermore, the decline in commodity prices should offset the expected decline in retail demand.
In November, US retail sales recorded the largest drop in 11 months. A similar drop in December 2022 will add to recent indications that the Federal Reserve’s aggressive interest rate hikes have begun to cool the economy. After a decline of 0.60% in November, economists expect a 0.80% decline in Wednesday’s figures.
Why are cryptocurrency prices ready to go up?
Like all markets, cryptocurrency investors will be on high alert as PPI and retail sales data is released on Wednesday. However, here are three more reasons why crypto price are poised to make leaps and bounds at least in the short term:
Hope for lower interest rates
The main problem remains interest rates at the moment. The Federal Reserve has used sharp rate hikes to curb rising inflationand, as expected, the strategy seems to have worked.
The data of With the consumer price index (CPI) being much weaker than expected on Thursday, cryptocurrency prices have rallied significantly. Bitcoin has exited the “Fear” region on Bitcoin Index of fear and greed for the first time in nine months, with the asset briefly breaching the $21,000 mark on Monday — for the first time in three months.
However, all eyes will be on the Federal Open Market Committee (FOMC) meeting later this month, where the Fed will outline its interest rate targets.
The difficulty of mining increases
If the price rally wasn’t enough to excite investors, the fundamentals of the Bitcoin network should also inspire optimism.
The difficulty of mining on the Bitcoin network has jumped by 10% in the past week, marking its largest increase since October 2022. In the past week, miners’ balances also declined in response to the rapid increase in the price of bitcoin. The data by Glassnode show that the miner balance stood at 1.8 million BTC as of Jan. 16, the lowest level in a month.
The next Ethereum update in Shanghai
For ETH investors, the Shanghai update is one of the major improvements. This update is expected to be one of the biggest blockchain developments since ethereum mergerAnd it should help investors who have their assets locked up in the Beacon chain withdraw them smoothly.
Many experts believe so The Shanghai update will make staking ETH more attractivedespite the sell-off risks of unlocking such a large supply of ETH. However, with ETH Sharks having already taken over the asset and its price surpassing $1,500, things appear to be looking up for the market’s leading altcoin.