TLDR 📝

• This week's macroeconomic calendar is packed with pivotal events, from job openings to interest rates and earnings reports.
• Significant data points to watch include JOLT's Job Openings, Initial Jobless Claims, Non-Farm Payrolls, and the Unemployment Rate.
• The Treasury Refunding Announcement and Apple's Earnings also substantially influence market dynamics.
• In the context of Bitcoin, it's crucial to observe if it maintains its "safe haven" status amidst potential shifts in risk asset correlations.

Disclaimer: Not financial or investment advice. Any capital-related decisions you make are your full responsibility.

Key events to watch this week

This week is huge for macro, with many different events and possible pivot points we must know about. Listed below:

• Wednesday - JOLT’s Job Openings
• Wednesday - FED Interest Rate Decision & Press Conference
• Wednesday - Treasury Refunding Announcement
• Thursday - Initial Jobless Claims
• Thursday - Apple Earnings
• Friday - Non-Farm Payrolls
• Friday - Unemployment Rate

Let’s dive into it all and then translate this into how they may affect BTC.

Expected outcomes 

Firstly, let’s look at the hard macro/economic data. 

Jobs data

We have ‘JOLT’s Job Openings’ on Wednesday, ‘Initial Jobless Claims’ on Thursday and then ‘Non-Farm Payrolls’ and the ‘Unemployment Rate’ on Friday. 

JOLTs came in last month at 9.6 million, far greater than the consensus. JOLTs had been nicely down-trending for approximately 7 months before last month's whopping 9.6m figure came out. 

This indicated that employers were still actively looking to employ new workers. The markets took this as an increasing sign of strength in the labour market despite the predictions and the data suggesting the labour market was weakening. This month's figure is expected to come in at 9.2m. 

A large upside or downside surprise on the jobs data could see markets move. On Thursday, we have ‘Jobless Claims’, which tracks the number of Americans filing for unemployment benefits. It is expected that this will come in around the 200k to 210k mark– where it’s been for some months now.

Unemployment rate

Perhaps the more exciting data this week will lie in the ‘Non-Farm Payrolls’ and the ‘Unemployment Rate’. The expectation is that ‘Non-Farm Payrolls’ will fall to 180k, which is still a relatively healthy number. The ‘Unemployment Rate’ is expected to remain at 3.8%. If either of these data points comes in significantly higher or lower than the consensus, this will also move the markets. If Unemployment goes up meaningfully, we think the markets will worry and sell-off. However, the consensus is for 3.8%.

Regarding the other macro events, the standout event is the Treasury Refunding Announcement, not the Fed Rate Decision and the Press Conference. The reason is that the market has a good idea that the Fed are currently on pause and is expecting Powell to keep his cards close to his chest, resulting in no real fireworks. The focus is probably now on Janet Yellen and the Treasury Refunding Announcement. 

The proxy wars

Remember, the US is already in a large fiscal deficit, and Biden has now signed the U.S. to fight in two proxy wars… with the war in Gaza now arguably not even a proxy war but a direct war. It is expected that out of the $100 billion “aid package” that Congress is expected to pass, $60 billion will fund Ukraine, and $14 billion supporting Israel. Essentially, the markets are preparing for a large increase in U.S. debt issuance to continue funding wars and paying interest on the existing US debt. However, suppose Yellen doesn’t increase bond issuance by as much as the markets currently expect and are fearful of. In that case, this may see bonds catch a bid, sending Yields lower, particularly the longer duration bonds. 

The last macro event to watch is Apple’s Earnings on Thursday. If these disappoint or hint at a weakening US consumer, this may drive a sell-off in risk assets across the board. 

What’s all this got to do with BTC? 

We can see above that a lot is happening this week on the macro front. 

For us, the key thing to watch out for this week, assuming Bitcoin doesn’t show any material weakness in price action, is if Bitcoin can continue to trade like a “safe haven” asset rather than a “risk asset”.

In the past month or so, BTC has been positively correlated to gold and inversely correlated to the S&P. In the above macro events, some potential catalysts could push risk assets lower despite the S&P looking good for a bounce on the chart. 

We expect the bounce to play out, but if the macro events we’ve outlined above do drive risk assets lower, it’ll be interesting to see if Bitcoin trades lower also or if it remains correlated to gold. 

For now, we’re tracking BTC as a “safe haven” asset rather than a risk asset, which is how it’s essentially traded over the last few years. This is a big shift and something important to be aware of, particularly when we’re just 6 months from the next Bitcoin halving. 

Cryptonary’s take 🧠

The aim for this week is to see how markets digest the macro events and data. 

There may be a catalyst that brings risk assets lower. However, the market (S&P) seems set up to bounce here. Regarding Bitcoin, a positive week would see it stabilise around the $34,500 to $35,000 area before pushing higher to $37,700. This assumes that there isn’t a macro event that sees risk assets sell off more meaningfully. 

One of the main things we will be assessing this week is how risk assets digest the macro events/data and how they then trade. We will then look to BTC to see if it trades/moves similarly. We’re looking to see if BTC continues to trade correlated to “safe havens” like gold or if it moves back to trading with a positive correlation to risk assets. 

This week is a key week to assess this. And our answer will be critical for moving forward in the coming months. A move back to being positively correlated to risk assets will mean we have to factor in what a possible recession may bring in 2024 to BTC’s price. 

However, if we continue to trade similarly to a “haven” asset, this will set us up positively in the environment where we have wars and potential recessions on the horizon.

As always, thanks for reading.

Cryptonary, OUT!