3 key macroeconomic factors to watch

• The cryptocurrency market is poised for a volatile week ahead due to the release of U.S. inflation data. 
• A testimony by Jerome Powell on monetary policy could also drive the prices.

The cryptocurrency market seems to be consolidating after last week’s heightened volatility. At press time, Bitcoin [BTC] was trading at $96,865 after a slight 0.06% drop in 24 hours, while the largest altcoin Ethereum [ETH] had dropped by 0.9% to trade at $2,631. 

The reduced volatility could end this week due to several key macroeconomic events that could influence trader behavior. 

U.S. CPI data could impact crypto market 

The U.S. Consumer Price Index (CPI) data for January 2025 is due for release on Wednesday. In December, the total CPI increased to 2.9%, while the core CPI dropped to 3.2%.

This spike played a role in the Federal Reserve’s decision to leave interest rates unchanged at 4.25%-4.5%. 

Market Watch has forecasted that the CPI rate will drop to 2.8%, while the core rate will fall to 3.1%. This decline could trigger a positive economic outlook. 

(Source: MarketWatch)

As inflation eases, the Federal Reserve could shift back to a dovish stance and resume interest rate cuts. This scenario could bode well for the crypto market. 

However, per the CME FedWatch Tool, investors anticipate that the Federal Open Market Committee (FOMC) meeting in March will leave interest rates unchanged. 

Fed Chair to appear before Congress 

The Federal Reserve Chair, Jerome Powell, is expected to appear before the House Financial Services Committee and the Senate Banking Committee this week for his semi-annual monetary policy testimony.

In his testimony, Powell will share a detailed outlook on the economy, inflation, and rate cuts.

If Powell signals toward easing monetary policy tightening and alleviates inflation concerns, it could bode well for crypto. However, a hawkish stance could cause negative sentiment.

As AMBCrypto reported, the Fed Chair recently made pro-crypto remarks after declaring that U.S. banks can serve crypto customers if they can mitigate risks. If the Chair makes similar remarks during his appearance in Congress, it could boost demand for digital assets.

Coinbase Q4 earnings 

U.S. exchange giant Coinbase will release its earnings report for the fourth quarter of 2025 later this week. If these results exceed expectations, it could help COIN stock extend gains after a 142% yearly gain.

While the stock’s performance does not directly impact cryptocurrency prices, it could bolster confidence in the crypto market and improve market sentiment. Positive market sentiment is often a catalyst for price gains.

At press time, the fear and greed index dropped to 43, showing neutral sentiment. This could lead to cryptocurrency prices stagnating until buyers or sellers step in.