Week Ahead: Cryptocurrencies advanced despite strong USD, US inflation in focus
Volatile week for crypto assets. BTC recovered the $21K handle and made a move towards $22K that proved unsustainable with the currency now slightly lower ahead of a busy week in the markets with $20K once again the support level in focus. BTC has climbed more than 20% from the lows touched on June 18. US dollar strength once again limited the upside for crypto assets.
The trading week was shorter due to the Independence Day holiday, with a significant drop in volume after the Fed published the minutes from the June monetary policy meeting. The US June jobs report validated the narrative of the central bank sticking to a 0.75% interest rate hike in July. US inflation data this week is the highlight in the economic calendar, with a particular focus on energy prices.
ETH merge is on track according to developers after the second to last Merge trial test last week. The final trial is expected for the next few weeks, with devs confident that hiccups will not delay the Merge.
Hedging by miners is still ongoing as reserves decline, putting pressure on crypto prices as BTC miners need to cover higher operational costs as they struggle with lower revenues. Mt Gox rehabilitation is also a headwind for prices as reimbursement of 150K in BTC to move forward could trigger further sell-off of the currency.
Sequoia Capital’s China VC arm raised $9B for four new Chinese startup funds, the biggest capital pool of a single VC firm focused on China. Sequoia is seen as taking advantage of the slowdown by competitors amid global stock and digital asset turbulence.
Voyager Digital filed for bankruptcy with the CEO saying Chapter 11 was the best way to protect client assets and continue operating. Alameda Research Bankman-Fried’s trading firm also extended a $200M cash and stablecoin credit line.
Binance moved forward with its expansion into Europe. Bank of Spain registered the crypto exchange as a virtual currency platform after reviewing anti-money laundering and terrorism financing. Still, it is noted being included in the registry does not imply approval of activities. In other regulatory news, Fed Vice Chair Brainard said the digital asset space has the potential to disrupt the financial system but highlighted the significance of regulating the industry.
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