Week Ahead: Cryptocurrencies drop as Fed set to host an economic symposium
Digital currencies shed most of the momentum built after red hot inflation in Europe and the Fed on hawk mode ahead of Jackson Hole. BTC fell more than 12% last week and traded near $21.4K following Friday’s massive drop. Over the weekend, the largest cryptocurrency rebounded and is trading higher due to safe-haven flows. ETH remained close to $1.7K but lost some traction after falling more than 10% on Friday and lagged BTC over the weekend. Market analysts noted NFT trading has slowed down despite ETH prices being higher in anticipation of the Merge.
Risk aversion advanced on global markets on Friday, with the USD a big gainer as investors flocked to safe havens. US equities broke a four-week winning streak declining under pressure from profit taking and the Fed fighting against a dovish pivot with hawkish commentary. The Fed’s monetary policy minutes were released last week, reiterating the move from forward guidance to a more data-dependent path for monetary policy decisions. This week’s busy economic calendar, with the market to be focused on the Jackson Hole economic symposium for any insights on global central bank plans.
Bitcoin mining companies posted disappointing results in Q2 due to impairment charges tracking the drop in cryptocurrency prices. Despite a rebound from recent digital asset price lows, miners are still selling at a higher rate than they are mining. Last week the House Committee on Energy and Commerce asked miners to provide information on energy consumption and average costs.
Tether reported a 20% drop in assets in Q2 in the aftermath of the TerraUSD fall, and the stablecoin operator pleaded to offer more insight into its holdings after criticism. Celsius reported in a bankruptcy filing that it is $1.2B in deficit, but coin reports show the balance gap could be closer to $2.9B
In regulation news, Crypto.com announced it has registered with the UK financial services regulator following South Korean registration two weeks ago. In the Americas, the FDIC demanded FTX correct false or misleading statements about certain products being eligible for insurance protection. Canadian regulators limited exposure to financial institutions and must be notified if digital assets surpass 1% of Tier 1 capital.