By Samer Hasn, Senior Market Analyst at XS.com
Bitcoin is once again attempting to hold above the $118,000 level, remaining confined within a sideways range after failing to sustain gains above $120,000 in recent days.
Today’s muted price action comes amid growing anticipation ahead of a packed economic calendar this week, which is expected to play a pivotal role in shaping market direction over the coming days and weeks.
According to CoinGlass data, open interest in Bitcoin futures has declined by nearly $3 billion compared to last Saturday, despite the absence of significant liquidations on either side. Additionally, perpetual Bitcoin futures recorded their lowest trading volume of the month yesterday, reflecting a broader sense of caution among traders.
This wait-and-see mood comes ahead of a series of key U.S. labor market indicators—including the all-important nonfarm payrolls report—along with the Fed’s preferred inflation gauge, GDP figures, and Consumer Sentiment readings. These will be released in parallel with the Federal Reserve’s interest rate decision, with markets expected to focus closely on Chair Jerome Powell’s accompanying remarks to gauge how policymakers are interpreting inflation risks in a higher-tariff environment.
Together, these data points will help clarify the current health of the U.S. economy during a period clouded by uncertainty over the trajectory of the trade war. While the announcement of a trade deal with the European Union helped lift crypto markets late over the weekend, the momentum quickly faded as the market entered this decisive week.
Moreover, despite the breakthrough with the EU, markets remain cautious as other key trade negotiations—with China, Canada, Mexico, and Brazil—are still unresolved. These upcoming talks are expected to be far more challenging, raising the possibility of prolonged market anxiety until broader trade clarity emerges.
Beyond crypto, the U.S. equity market continues to post record highs, yet some warning signs are beginning to surface. According to the Wall Street Journal, a rising number of S&P 500 stocks are now trading above their 50-day moving average, to levels last seen prior to the post-election rally, suggesting a broadening in market strength. Still, stretched valuations are sparking concern. The equity risk premium, which measures the gap between expected stock returns and 10-year Treasury yields, is nearing zero, offering virtually no risk compensation for equity investors, a historically bearish signal.
As such, elevated valuations may leave the market more fragile and less capable of sustaining gains in the event of further shocks particularly those stemming from trade policy. Since cryptocurrencies do not move in complete isolation from equities, any downturn in stocks could trigger an even sharper correction in high-risk digital assets.