This past week has seen crypto markets jump in the wake of lower-than-expected U.S. inflation rates and Fed interest rates being raised in line with expectations. Bitcoin jumped by over 5% to top US$18,356 and Ethereum jumped by over 7% to reach US$1,350.
Why?
At the end of the day, cryptocurrencies are still considered risky assets and tend to trade in line with stocks. Economic indicators such as inflation and interest rate changes move markets because they reflect changes to the entire economy.
Here’s a list of economic indicators that may impact market prices:
- U.S. CPI
- Fed interest rate changes
- Unemployment numbers
- GDP numbers and outlook
- Consumer Confidence Index
- Small Business Optimism Index
As traders, you can bet on these decisions by looking at an economic calendar such as MarketWatch’s U.S. Economic Calendar. Such a calendar gives insights as to when we can expect big swings in market prices.
Now, the biggest concern in the global economy is inflation. Both the U.S. CPI and Fed interest rate hikes have weighed heavily on both stock and cryptocurrency prices throughout 2022. The schedule for Fed meetings can be found here.
How can traders take advantage of economic indicators?
Traders can capitalize on the release of key economic indicators by taking long or short positions with Bitcoin or Ethereum futures, closing them out shortly after the economic indicators are released and the market moves. We recommend using Bitcoin and Ethereum futures because of their large volumes.
With futures on BTSE, you can leverage your positions by 20x or 100x, juicing your gains. By doing so, you could turn a 7% jump in Ethereum prices into a 140% (7 x 20) gain.
What to look out for in December
We now have two weeks remaining until the end of the year. The good thing is that stock markets tend to trend upwards at the end of the year, especially in mid-term Congressional election years. This is because post-election, there tends to be more clarity as to what the political situation is and what the Congressional agenda is going forward.
This optimism, combined with the recent inflation and interest rate numbers, could very well result in an end-of-year rally for the market.
Summary
- Markets tend to experience big swings when key economic indicators are released, such as inflation rates and interest rate changes
- Traders can use an economic calendar to predict when these swings in market prices will happen
- Traders can use crypto futures to bet on swings in the market, employing leverage to maximize their gains within a short time frame
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Note: BTSE Blog contents are intended solely to provide varying insights and perspectives. Unless otherwise noted, they do not represent the views of BTSE and should in no way be treated as investment advice. Markets are volatile, and trading brings rewards and risks. Trade with caution.
