The “economic mechanism”, which is at the basis of today’s world, consists of a very complex system and there are many different small wheels, that is, factors that enable the wheels of the system to work. Some indicators/data interpreted and collected in economic markets affect the course of many different economic units, especially crypto assets. In this article, we have compiled the most striking of these indicators for you. It may be good for you to follow these indicators before making your next investment.
Consumer Price Index (CPI)
After the recent developments, the concept of CPI is one of the concepts that many people have heard recently. Consumer Price Index (CPI)is data that tracks changes in prices of a basket of consumer goods and services. To ensure price stability, the central bank pays attention to this statistic (especially in the US this data is critical). It is a measure to measure the developments in the economy and it is also the data that measures the inflation in a country’s economy.
According to a report by Bloomberg, JP MorganAnalysts featured in . There is an ongoing debate over whether inflation is good or bad. According to some views in the capitalist system, although a certain rate of inflation is important for the continuity of production, it can be dangerous if inflation gets too high and gets out of control.
Koinfinans.com As we reported, the record inflation rate in the US in May 2022; found a ‘negative’ response in stock, crypto-assets and bond prices. High inflation figures have consistently lowered markets as investors cashed in their holdings.
Consumer Confidence Index
Consumer Confidence Index, as the name suggests, is a data-measured response to consumers’ optimism regarding the country’s economic and financial situation. As you can imagine, this indicator also affects the price and demand for stocks and crypto assets. Consumer Confidence increases with higher stock returns; however, high Consumer Confidence is followed by low stock returns.
Morning Consult A recent report by cryptocurrencies found that consumer confidence among crypto holders is higher than the average American adult. Additionally, people who earn more than $100,000 a year are more likely to own crypto.
Non-Farm Employment Data
Non-farm employment dataThis data, which is especially critical for the USA, represents the change in the number of people employed in the previous month. However, it does not cover employment in the agricultural industry and some other fields. A higher number in this indicator means strong employment growth. Also, this could cause more foreign investors to throw their cash into the country. Conversely, a lower number means a weaker economy.
Employing more people increases investment, so stock prices go up, depending on the correlation. historically, bitcoin (or other crypto assets) wins when the US dollar falls. This makes non-farm employment data a critical indicator to be monitored. If the number in the data is lower than expected, not only crypto, but also commodities such as oil, gas and gold will increase.
DJI, SPX, Nasdaq Composite Index
Supply and demand are the main factors affecting stock prices, and this factor can even be adapted to many economic phenomena in today’s world. But this data sometimes so happens that they also affect the cost of crypto. Stock indices and crypto are interrelated, and many analysts have pointed out that Bitcoin is traded similarly to a technology stock.
Bitcoin and Ethereum Prior to the COVID-19 pandemic, cryptoassets such as crypto-assets had little relevance to major stock indices. They were recognized as helping to diversify risk and acting as a buffer against fluctuations in other asset groups. But things changed after the massive central bank crisis responses in early 2020. Both the price of cryptocurrencies and US stocks rose due to the accessible state of the world economy and increasing investor risk appetite.
It can be seen that there is a higher correlation between cryptocurrencies and stocks in developing countries leading the adoption of crypto assets. Usually, crypto assets gained when stock prices fell. But sometimes, the two rise and fall together.
You can follow the current price action here.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.