Week Ahead: Cryptocurrencies rise after 75 bp Fed hike and dovish Powell unlocked risk appetite
BTC rose more than 6%, and ETH gained 11% after the Fed decided to lift interest rates by 75 basis points as analysts expected, but it was Powell’s dovish comments boosted risk assets, with tech stocks and digital assets higher. The Fed chair moved away from forward guidance with data dependency now the main driver of monetary policy, adding importance to inflation indicators moving forward to limit or increase risk appetite in the market.
A surge in ETH prices has led to the flipping narrative gaining traction as proof-of-stake is expected in September after several successful tests. The merge could be the event that catapults ETH as a credible contender for BTC’s crown.
Challenging macro conditions have made traditional VCs slow down deals, but the crypto space has shown strong growth despite a crypto winter. Data showed that VCs had invested more than $17.5B in cryptocurrencies and blockchain startups in the first half of the year and were on target to break last year’s $26.9B record. $11B in North America in the past six months compared to $15B for the whole of 2021.
FTX announced it is now fully approved to operate in Dubai. The firm will offer regulated derivatives to institutional investors with a gradual scale to retail investors down the line. Charles Schwab announced it will launch crypto-themed EFT on August 4. Cboe wrote down $460M in latest earnings from the acquisition of digital asset exchange ErisX, later renamed Cboe Digital. Zipmex filed for bankruptcy protection in Singapore and is working to address the $53M exposure to Babel Finance and Celsius.
In crypto regulation news, FDIC said Friday that banks have to explain to customers which of their funds will be insured in case of collapse when placed in crypto assets. This comes after the FDIC and the Fed issuing a cease and desist order against Voyager Digital. In more US regulation news, the stablecoin regulation bill is expected to be pushed back until September as provisions continue to be updated as the banking industry provides more feedback. UK’s Law Commission said the country needs legislation for cryptocurrencies and NFTs as they don’t fit into current private property law. The proposal would create a legal framework to protect users and innovation with greater consistency.