State of the Crypto Markets

Macro Overview

This week saw announcements related to Fed Chair Powell’s Speech, U.S. Durable Goods order MoM, BRICS Summit, & US Initial Jobless claims.

• Fed Chair Powell is concerned about high inflation and is considering raising rates. Although there’s progress, inflation remains uncomfortably high. Powell’s speech is reminiscent of his earlier remarks about managing inflation. With a strong economy and slower inflation, the Fed can be cautious in upcoming meetings. From a cryptocurrency standpoint, this is viewed as unfavorable news.
•  US Initial jobless claims that measure the number of individuals who filed for unemployment insurance for the first time during the past week came at 230K, less than the estimation of 240K. This is not an encouraging sign for crypto, since the dollar is inversely correlated to crypto.
• The latest report on US Durable Goods Orders shows a decrease of 5.2% month-over-month, compared to the forecasted decline of 4.1%. The previous month had seen an increase of 4.6%.
• The BRICS economic bloc has opted to abandon the use of the US dollar for trade settlements, as part of their strategy to promote international usage of local currencies. Brazil’s President, Luiz Inacio Lula Da Silva, confirmed this move and announced the expansion of the alliance by six countries by 2024.

Next week’s major callouts include the US JOLTs Job Openings, US Prelim GDP q/q, US Core PCE Price Index m/m, US Non-Farm Employment Change & US Unemployment Rate announcement.

Crypto Markets Overview

• Market Movement: This week, the crypto markets experienced a slight 0.24% decrease, bringing the total market value to $1.03 trillion. Notably, both BTC and ETH saw marginal declines of 0.76% and 0.84% respectively. Bitcoin’s dominance stands at 49.27%, while Ethereum’s holds at 19.22%.2.
• Solana’s E-commerce Move: Solana Pay, a decentralized payment protocol by Solana Labs, has partnered with Shopify, a prominent e-commerce platform. This integration revealed through TechCrunch on August 23, paves the way for businesses to smoothly process payments using USDC, a stablecoin closely linked to the US dollar. This is a significant step towards the mainstream adoption of cryptocurrency in the e-commerce sector.
• ‘X(formerly Twitter) Is A Dog & Doge Friendly Place’, Elon Musk & His Mother’s Tweets Set Dogecoin On Rollercoaster.
• A rumor sparked from a post by @WhaleChart on X, claiming that Binance was selling Bitcoin on the spot market to support its token, BNB. However, no concrete evidence has emerged to support this claim. This incident highlights the volatility and susceptibility of the crypto market to rumors and speculation.
• LDO Tokens unlock: On the date of August 25, 8.5 million LDO tokens, which represent about 0.97% of the total LDO supply, became accessible. Existing investors holding over 300 million tokens are eligible to receive these tokens. This release reflects the ongoing expansion of decentralized governance token distributions.
• AVAX Tokens unlock: On August 26, the native token of the Avalanche blockchain, AVAX, is set to unlock 9.54 million tokens, equivalent to $98.7 million. This allocation, which constitutes 2.77% of the current supply, will be distributed among strategic partners, the Foundation, the team, and airdrop participants. This event showcases the strategy of token distribution to foster network growth and incentivization.
• Ethereum’s Testnet Progress: Ethereum developers plan to introduce a new testnet called Holesky, intending to introduce 1.6 billion Holesky testnet ether. With the evaluation of 1.4 million validators, this initiative aims to further enhance the comprehensive development of the Ethereum blockchain.
• Wallet Activity: Blockchain analysts noted that Ethereum co-founder Vitalik Buterin deposited 600 Ethereum worth around $1 million from his wallet to Coinbase, according to data from Ethereum network explorer, Etherscan. This move followed Ethereum’s recent price drop of 6%, revealing the strategic maneuvering of assets during market fluctuations.
• Coinbase’s Investment: As per Circle’s blog post on August 21, cryptocurrency exchange Coinbase acquired a minority stake in Circle Internet Financial. Interestingly, Coinbase dissolved its partnership with the Centre Consortium, which issued the USD Coin (USDC), the second-largest stablecoin. USDC’s value is pegged to the US dollar, providing stability through dollar-equivalent reserves. This acquisition signifies the evolving landscape of stablecoin collaborations and their role in maintaining price stability.

Bitcoin Technical Analysis

Source: TradingView

Summary: 

• BTC’s movement this week: Fluctuated within a narrow range of approximately 2%.
• Attempt to break sideways trend: BTC made an effort to break out(upside) of the sideways zone but was unsuccessful. It faced rejection from the 50 EMA on the 4-hour timeframe.
• Current status: BTC retraced back into the sideways zone and is currently holding within it.
• Bearish sentiment in higher timeframes: In daily and weekly charts, BTC appears bearish due to a significant breakdown of a major upward trendline.
• Potential price levels: There’s a possibility of a retest to the $28,000 level. However, a more significant downside target lies around $24,000, which also corresponds to the 0.5 Fibonacci retracement level.
• Oscillator status: Daily timeframes show oversold conditions based on oscillators. It’s important to note that relying solely on indicators might not be advisable given the current market situation.

Ethereum Technical Analysis

Source: TradingView

Summary: 

• ETH’s relative weakness compared to BTC was due to news about the founder of ETH moving a substantial amount of ETH worth 1 million dollars from his wallet to Coinbase.
• Despite the news, ETH traded within a range but attempted a breakdown. However, it found support at the 200EMA on the weekly chart, leading to a bounce back within the range.
• In higher timeframes, ETH is displaying a bearish trend as BTC.
• There’s potential for a retest if BTC follows a similar pattern.
• The current price of ETH is holding at a support level of around $1650.
• The previous support level at $1,711 is expected to transition into a resistance level moving forward.
•  Resistance is also anticipated around the $1,794

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