- The crypto market, and Bitcoin in particular, remains sensitive to the various U.S. economic reports as it inches closer to breaking the 90,000 barrier.
- Some of the reports that one needs to watch out for this week include the job claims reports, the S&P Global US Manufacturing PMI, and the consumer sentiment.
The U.S. economy is registering growing volatility and a far-reaching impact on the cryptocurrency market. The entire economic mainstream indicators, including the Leading Economic Index (LEI), Purchasing Managers’ Indexes (PMIs), job claims, and consumers’ sentiment towards spending, are having an influence on investors’ disposition and direction within the market this week.
Initial Jobless Claims
The release of the Initial Jobless Claims report is due on Thursday. The report gauges the number of people claiming unemployment benefits for the first time, giving an indication of how healthy the job market is. The U.S. labor market had strength in early April. Initial jobless claims during the week ended April 12 decreased by 9,000 to a seasonally adjusted 215,000, which was better than economists’ expectations of 225,000.
A strong labor market is considered a good economic indicator, indicating stability that can drive consumer spending and support overall economic growth. A strong labor market improves the confidence of investors and leads to more liquidity. This can reduce yields in traditional markets, which is beneficial to the crypto market.
U.S. Consumer Sentiment
The final April U.S. consumer sentiment report, to be published by the University of Michigan’s Surveys of Consumers, is scheduled for release on Friday. The initial Consumer Sentiment Index registered a sharp decline to 50.8, 11% less than March’s 57.0 and a whopping 34% less than April 2024’s 77.2.
According to a post by Global Market’s Investor on X, this is the second-lowest reading since the survey started in 1952, with only the 50.0 level seen in June 2022 being lower. A decline in consumer confidence could have far-reaching effects on all asset classes. As investors get more worried, they will shift to safer assets like government bonds, reducing the demand for Bitcoin and other altcoins.
Leading Economic Index Decline
The U.S. Leading Economic Index (LEI), published by the Conference Board, is a crucial tool used to forecast future economic conditions. A sustained decline in the LEI can signal weakening investor sentiment, affecting both traditional and digital markets. The report for March 2025 showed a sharp 0.7% drop, bringing the index down to 100.5. This marks the twelfth consecutive monthly decline, following a smaller 0.2% dip in February. The decline was steeper than expected, sparking concerns that the U.S. economy may not be in good shape.
Over the past six months, the LEI has fallen by 1.2%, extending the prior six-month decline of 2.3%. This persistent weakness points to a prolonged period of economic uncertainty, further compounded by the Conference Board lowering its projection for U.S. GDP growth in 2025 to just 1.6%. Reduced confidence in the broader economy will result in decreased liquidity in the crypto market, driving prices down.
Services PMI
The health of America’s services sector remained strong in March, with the S&P Global Services PMI rising to 54.4 from 51.0 in February. While this expansion signals growth, it is tempered by higher input prices. Companies paid 60.9% for inputs, the highest level since April 2023, largely driven by Donald Trump’s tariffs and increasing staffing expenses.
Although the performance of the services sector paints a positive picture for the U.S. economy, these inflationary pressures could dampen future growth. A stronger-than-expected services PMI tends to support the U.S. dollar and lowers expectations for Federal Reserve rate cuts.
When the Fed is less likely to ease monetary policy, interest rates typically remain elevated. This often reduces the demand for Bitcoin as investors move toward assets offering better returns.
Manufacturing PMI
The S&P Global U.S. Manufacturing Purchasing Managers’ Index (PMI) for last month came in at 50.2, a decline from February’s 52.7. While the index remains above the neutral 50 level, indicating marginal expansion, the drop underscores ongoing challenges within the manufacturing sector. For the cryptocurrency market, these weak manufacturing figures suggest reduced investor appetite for risk, which could further drive down demand. As a result, Bitcoin may drop past $85,000, as it trades at $87,033.
“S&P Global Services/Manufacturing PMI (Wednesday): The pulse of the economy. Watch for a dip or rise in the numbers… it could hint at whether the recovery is running out of gas or shifting into overdrive,” Shubhvan remarked, emphasizing the importance of the upcoming data in shaping market sentiment.
