Weekly Crypto Market Wrap, 18th September 2023

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Week in Review

• FTX gets court approval to sell its crypto assets – sues LayerZero Labs seeking to reclaim $21 million transferred before the bankruptcy.
• Binance.US cuts a third of its staff as CEO Brian Schroder leaves company – SEC states Binance.US is not cooperating with current investigations.
• Japan to allow startups to raise funds by issuing crypto instead of stocks.
• Following ban being ruled out, India begins working on 5-point crypto legislation.
• Telegram integrates crypto wallet to the platform.
• Ripple CEO states US is the “only country” crypto startups should avoid.
• Defi activity drops 15% in August; VanEck report.
• NRL and YouTube stars reach settlement in FTX class-action lawsuit.
• France launches an official certificate for “finfluencers”, including crypto.
• European Central Bank raises interest rates to highest level since Euro launched in 1999.
• UK jobs report shows unemployment and wages rising – m/m GDP shows economy shrinking at fastest pace in seven months.
• US August core inflation with higher-than-expected results – consumer sentiment slips again while inflation outlook improves.

Winners & Losers

Data source: TradingView

Market Highlights

• In the week ahead, the FOMC meeting takes centre stage as it deliberates on benchmark interest rates, widely anticipated to remain unchanged. August’s CPI surpassed expectations, with headline CPI surging by 0.6% from July, marking its most substantial monthly increase in 2023, chiefly driven by escalating energy expenses. Despite robust U.S. consumer activity and mounting energy costs, market consensus remains firmly anchored in the belief that the Fed will refrain from rate hikes next week. Presently, the market foresees interest rates remaining static until the potential initial cut in July 2024.
• Following an initial re-test of the 24,800 support level, a robust recovery ensued, bolstered by optimistic expectations surrounding the upcoming FOMC meeting. On September 14, Bitcoin ascended above the 20-day exponential moving average and surpassed the 26,000 mark, indicating diminishing selling pressure. Subsequently, bullish forces effectively thwarted attempts by bears to push the price below the 20-day EMA. It’s likely that the bulls will attempt to steer the market towards the 50-day Simple Moving Average (SMA). Should they successfully overcome this obstacle, we can anticipate a shift towards the 28,000 level. Nevertheless, formidable resistance is expected along the way. Conversely, if the bears seek to regain control, they must drive the price below the 20-day EMA, necessitating a successful retest of the 24,800 support for further downward price movement. The upcoming FOMC meeting in the coming week has the potential to introduce heightened volatility. While the prevailing consensus leans towards the Fed maintaining interest rates, it’s worth noting that unexpected developments could emerge during Fed Chair Jerome Powell’s press conference, which follows the rate decision.

Data Source: TradingView

• BTC’s robust recovery early in the week, stemming from the 24,800 support level, triggered a surge in buying interest within select altcoins. Nevertheless, for a sustained upward trajectory in alts, BTC’s ability to maintain levels above 26,500 is critical. It’s noteworthy that a year has elapsed since the Ethereum Merge, during which BTC has taken the lead in the market, causing ETH to lag behind by 28% in comparison. Consequently, it is reasonable to conclude that increased buying enthusiasm for altcoins will likely hinge on positive price developments in BTC, at least in the short term. However, it’s worth contemplating the possibility of this divergence expanding as institutional capital inevitably enters the market through the introduction of ETFs.

Data Source: TradingView

• FTX received approval from a local court to liquidate $3.6bn crypto assets in weekly blocks between $50 million to $100 million. Managed by Galaxy Digital, the intent behind the staggered sales is to stave off drastic market and price volatility. FTX’s assets include major holdings in Solana, Bitcoin, Ethereum, among other tokens. Particularly, the Solana assets have drawn attention since they account for a significant 16% of the total circulating supply. This large-scale liquidation comes in the aftermath of FTX’s bankruptcy last year, attributed to alleged fraud by its CEO, Sam Bankman-Fried. Interestingly, as of late a host of alt-coins have shown strength and are beginning to trade above their short-term averages, and this news may restrict their upside in the coming weeks. 

Data Source: @pedma7 via Twitter

• CRV’s price plunged to below $0.40 following the transfer of Curve DAO tokens, initially bought over-the-counter (OTC) from founder Michael Egorov, to Binance. These tokens, originally meant to be locked for half a year, were acquired in August to alleviate Egorov’s liquidation risks in a number of DeFi protocols. A transaction involving 609,000 CRV tokens was observed moving to Binance and later returned a few hours afterwards, causing uncertainty regarding the motive behind these actions. Previously, Egorov had made substantial OTC sales of CRV to mitigate his existing DeFi debts. The deals had a 6-month lock-up assigned to prevent immediate selling pressure, which added to the confusion in last week’s transfers. As it stands, the larger of Egorov’s positions across numerous DeFi protocols will be liquidated between $0.25 and $0.3.

Data Source: @0xAkrasia via Twitter

What to Watch 

• Australia’s monetary policy meeting minutes, on Monday.
• Canadian CPI, on Tuesday.
• FOMC press conference and federal funds rate, on Wednesday.
• UK monetary policy summary, on Thursday.
• Bank of Japan press conference and monetary policy statement, France, Germany, UK and US PMI data, on Friday.

Research Lab

• A Deep Dive Into Blockchain Security and Solutions for the Future:

Blockchain security remains a pivotal topic in the financial realm. Unravel the layers of blockchain security in a detailed analysis that covers its architectural nuances, the role of nodes, the distinctions between public, private, and consortium blockchains, and the evolution of consensus mechanisms like PoW and PoS. Additionally, understand the significance of Layer 2 solutions and the intricacies of settlement.

* Index used:

Bitcoin	Ethereum	Gold	Equities	High Yield Corporate Bonds	Commodities	Treasury Yields
BTC	ETH	PAXG	S&P 500, ASX 200, VT	HYG	SPGSCI	U.S. 10Y

FAQs

What significant decision has FTX made regarding its crypto assets?

FTX has received court approval to liquidate its crypto assets, amounting to $3.6 billion, in weekly blocks ranging from $50 million to $100 million. This decision follows FTX’s bankruptcy last year due to alleged fraud by its CEO.

Why has Binance.US reduced its staff and what challenges is it facing with the SEC?

Binance.US has cut a third of its staff following the departure of its CEO, Brian Schroder. Additionally, the SEC has stated that Binance.US is not cooperating with its current investigations, indicating potential regulatory challenges for the exchange.

How is Japan considering a change in fundraising for startups?

Japan is contemplating allowing startups to raise funds by issuing cryptocurrency instead of traditional stocks, signaling a shift towards greater crypto adoption in the country’s financial sector.

What recent developments have occurred with Telegram in the crypto space?

Telegram has integrated a crypto wallet into its platform, allowing users to manage and transact with digital assets directly within the messaging app.

What stance has Ripple’s CEO taken regarding crypto startups in the US?

Ripple’s CEO has expressed that the US is the “only country” that crypto startups should avoid, highlighting regulatory challenges and uncertainties in the American crypto landscape.

How has DeFi activity performed in August, according to the VanEck report?

The VanEck report indicates that DeFi activity experienced a 15% drop in August, suggesting a potential slowdown or consolidation in the decentralized finance sector.

What significant legal action has been taken against the CEO of the Turkish crypto exchange Thodex?

The CEO of the Turkish crypto exchange Thodex has received a prison sentence for orchestrating a $2 billion scam, highlighting the importance of regulatory oversight and due diligence in the crypto industry.

What major monetary decision has the European Central Bank made recently?

The European Central Bank has raised its interest rates to the highest level since the Euro was introduced in 1999, potentially impacting financial markets and the crypto ecosystem in the region.

How is FTX handling its assets related to Solana?

FTX’s assets include significant holdings in Solana, which accounts for a notable 16% of the total circulating supply. The large-scale liquidation of these assets could influence the Solana market and its price dynamics.

What are the key events to watch in the upcoming week related to the crypto market?

Key events to monitor include Australia’s monetary policy meeting minutes, the FOMC press conference and federal funds rate decision, the UK monetary policy summary, and the Bank of Japan press conference and monetary policy statement.

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