Crypto: The American Growth Shakes The Markets!

Recently, U.S. PMI data showed a moderate recovery in economic growth, causing chain reactions in financial markets, including the crypto market. Volatility continues to climb, and investors are wondering what the real impact of this recovery will be.

A crucial indicator for markets

The PMI (Purchasing Managers’ Index) is a key barometer for assessing the state of the economy. It reflects the decisions made by purchasing managers, those on the front lines of a company’s economic movements.

Indeed, their behavior reveals economic health: if a company plans for expansion, its purchases of raw materials increase. Conversely, in times of contraction, these expenditures decrease. This cycle reflects macroeconomic trends, making the PMI indispensable for understanding growth dynamics.

The latest PMI data show moderate growth for the U.S. economy. The services PMI reached 55.7, exceeding expectations, while the composite index stands at 54.6.

These figures are encouraging as they indicate that the economy continues to grow, even if this growth remains moderate.

However, a modest decline in employment is worrying, with some employers hesitating to replace vacant positions due to costs. This situation highlights the persistent challenges despite the recovery.

This slight recovery has calmed recession fears, a prospect that would have had devastating effects on the markets.

For cryptocurrencies, a recessionary environment would be particularly detrimental as it would create additional uncertainties and limit the liquidity available for riskier investments.

Impact on cryptocurrency volatility

The volatility of cryptocurrencies is steadily increasing in response to economic data like the PMI.

Crypto investors are increasingly sensitive to macroeconomic indicators that influence the decisions of the U.S. Federal Reserve, particularly regarding interest rates.

An economy that continues to grow, even moderately, reduces the pressure on the Fed to further tighten its monetary policies, which could stabilize or even strengthen crypto markets.

However, it is essential to note that volatility is not always negative. Crypto traders often take advantage of these fluctuations to maximize their gains, and a moderate recovery can bring investment opportunities.

But this same volatility carries increased risks, especially for less savvy investors who do not closely follow economic indicators. When data such as the PMI reveals an economic improvement, markets often react disproportionately, leading to sudden fluctuations in the prices of digital assets.

Furthermore, volatility can also be seen as a sign of persistent uncertainty in global markets. Investors are trying to assess whether this recovery is sustainable or merely temporary. For cryptos, which heavily rely on market sentiment, these uncertainties can amplify sharp movements either upward or downward, depending on the interpretation of macroeconomic data.

Despite the increased volatility, the recent PMI data offers a glimmer of hope for crypto investors. A recession would be particularly harmful for this market as it would lead to reduced liquidity and a less favorable investment climate for speculative assets. In contrast, a moderate recovery suggests that the U.S. economy can continue to grow without causing major disruptions in the crypto market, despite the September storm.