Three Major Events This Week That May Impact the Cryptocurrency Market: Tariffs, Employment Data, and Earnings Season

In the rapidly changing cryptocurrency market, macroeconomic events and policy changes are always key drivers of price volatility. This week, economic uncertainty brought about by trade tariffs, weak employment data, and a busy earnings season will be the three focal points affecting the cryptocurrency market. Below, we will analyze these events and their potential impacts on the market, as well as look ahead to the short-term trends in cryptocurrency.

1. Trade Tariffs Trigger Economic Uncertainty, Pressuring the Crypto Market

Recently, U.S. President Trump introduced a new "reciprocal" tariff policy through an executive order, imposing tariffs ranging from 10% to 41% on imports from several countries, which has drawn widespread attention from global financial markets. These tariffs not only increase trade costs but also exacerbate concerns about inflation expectations and economic growth slowdown, leading to a decline in investors' risk appetite, with high-volatility assets like cryptocurrencies being the most affected. Last weekend, the total market capitalization of the cryptocurrency market fell to a three-week low, with Bitcoin briefly touching the support level of $112,000, while Ethereum dropped below $3,400.

Although the market saw a slight rebound during the Asian trading session on Monday, with Bitcoin rising to $114,500 and Ethereum bouncing back to $3,560, the overall market has not yet shaken off the shadow cast by the tariffs. In particular, trade negotiations with China are set to resume before the critical review period on August 12, when the 90-day tariff suspension will expire, potentially further increasing market volatility. Analysts point out that the uncertainty surrounding tariff policies makes investors more inclined to turn to traditional safe-haven assets like gold, while Bitcoin's status as "digital gold" has not yet been fully recognized by the market, which may continue to pressure it in the short term. However, if trade negotiations make positive progress or Trump suspends more tariffs, market confidence may recover, boosting cryptocurrency prices.

2. Weak Employment Data, Fed Policy Signals Under Close Watch

Last week's U.S. non-farm payroll report (NFP) for July showed weak performance, with new job numbers falling short of expectations and previous months' data being revised down, indicating that the labor market may be slowing. Bill Adams, chief economist at Comerica Bank, stated that the weak employment data increases the pressure on the Federal Reserve to cut interest rates later this year. The initial jobless claims data set to be released this Thursday will further reveal the health of the labor market; if the data continues to be weak, it may reinforce market concerns about economic slowdown, thereby affecting the performance of risk assets like cryptocurrencies.

Additionally, Federal Reserve Chairman Jerome Powell will speak at the Kansas City Fed's annual policy forum this week, and investors will closely monitor his remarks regarding the prospects for interest rate cuts at the September meeting. Currently, the federal funds rate remains in the range of 4.25% to 4.50%, and the Fed chose to hold steady at the July meeting, partly due to inflation pressures that tariffs may exacerbate. If Powell signals a clear intention to cut rates, market liquidity is expected to increase, benefiting cryptocurrencies like Bitcoin; conversely, if the Fed maintains a cautious stance, a stronger dollar may exert further pressure on the crypto market.

3. Earnings Season and PMI Data: A Litmus Test for Market Sentiment

This week, more than half of the companies in the S&P 500 index have reported their second-quarter earnings, with strong performances from tech and AI giants boosting market sentiment. Earnings reports from companies like Palantir and AMD will be released this week, and the Kobeissi Letter notes that the arrival of the August earnings season will bring new volatility. The cryptocurrency market has a strong correlation with the stock market (especially the Nasdaq), and if tech stock earnings are disappointing, it may further drag down cryptocurrency prices. For example, Coinbase recently saw its stock price drop 16% due to declining trading volumes and second-quarter revenues falling short of expectations, negatively impacting sentiment in the crypto market.

Meanwhile, the July S&P Global Services PMI and the ISM Non-Manufacturing PMI data will be released on Monday and Tuesday, respectively. These indicators reflect the expansion or contraction trends in the services sector and are important signals of economic health. Last week's manufacturing PMI data already showed signs of economic weakness; if the services PMI data is also below expectations, it may exacerbate market concerns about economic slowdown, prompting investors to further withdraw from high-risk assets like cryptocurrencies. However, if the PMI data exceeds expectations and shows economic resilience, it may alleviate market pressure and provide support for a rebound in cryptocurrencies.

Cryptocurrency Market Outlook

Last weekend, the total market capitalization of the cryptocurrency market fell to $3.8 trillion, but a mild rebound was observed in early trading on Monday. Bitcoin held the support level of $112,000 and is currently trading at $114,500, down 6.7% from its historical high. Ethereum has rebounded to $3,560 after stabilizing at $3,400, showing some technical resilience. Although August has historically been a bearish month for Bitcoin, market analysts believe that key support levels and institutional demand in the short term may limit further downside.

In the long run, the fundamentals of the cryptocurrency market remain solid. The approval of Bitcoin and Ethereum spot ETFs in the U.S. continues to attract capital inflows, the gradual clarification of stablecoin regulatory frameworks, and the rise of innovative applications like RWA (real-world assets) all inject confidence into the market. Wu Chen, co-founder of EX.IO, mentioned in a recent interview that the RWA market, by improving the efficiency of traditional financial assets (such as daily dividends), is expected to become a breakthrough for compliant exchanges to attract traditional capital, which may indirectly boost sentiment in the crypto market. Additionally, if expectations for Fed rate cuts rise, liquidity easing will further benefit cryptocurrency prices.

Conclusion

This week, the uncertainty surrounding trade tariffs, employment data, and Fed policy signals, along with the performance of earnings season and PMI data, will collectively shape the trends in the cryptocurrency market. Investors need to closely monitor these macroeconomic events and adjust their strategies flexibly. Although the market may be pressured in the short term due to economic slowdown and risk-averse sentiment, the long-term trend towards compliance and accelerated institutional adoption provides solid support for cryptocurrencies. As Wu Chen of EX.IO has called for, the industry and regulatory bodies should work together to explore a compliant path for Web3, injecting more vitality into the future of the digital asset market.

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