Week Ahead: Cryptocurrencies declined after Fed Powell’s hawkish speech doused risk appetite
Digital assets dropped this week after Fed chair Jerome Powell gave a short but hawkish speech on Friday as part of the Jackson Hole symposium. Powell said there will be a restrictive policy for some time with the Fed to keep at it until the job is done, putting back on the table a 75 bp rate hike in September. Bitcoin traded below $20K as risk assets fell further, with rumours circulating of Mt Gox funds release adding to the decline.
ETH hovered near $1.5K over the weekend. Coinbase said it will evaluate potential forks following the Merge. The transition to proof-of-stake has been a tailwind for the second largest digital currency, but analysts are starting to wonder if it could also trigger a sell-off if it happens during challenging macro conditions. Bugs were found ahead of the Merge, raising concerns about data integrity, but a fix was quickly deployed. Coinbase said it would evaluate any forks on a case-by-case basis following the Merge.
US stocks tumbled after Powell’s 8-minute speech was firmly on the hawk camp. The US dollar strengthened to 20-year highs as the central bank will keep hiking rates until it reigns back inflation. European Central Bank board member Schnabel followed through over the weekend, saying the central banks must act forcefully to combat inflation, even if it drags economies into recession. Next week’s highlight will be the August US employment report due Friday for signals on the state of the economy.
WonderFi applied to list on Nasdaq two months after it was listed on the Toronto exchange as it seeks international expansion. Reports of over $100M stolen in NFT in July year over a year raising the concerns of regulators worldwide.
In crypto regulation news, Australia is to prioritize token mapping with a consultation paper to be released soon. Surveys have shown that Australia has the third largest digital asset penetration in the world, with the Australian Securities and Investment Commission writing that 44% of retail investors held cryptocurrencies last year. In Singapore, authorities have stepped up their fact-finding mission ahead of regulatory changes. The SEC delayed its ruling on VanEck’s spot Bitcoin ETF until October 11 as the deadline to approve or deny the application. VanEck’s last two applications have been denied.
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