Week Ahead: Cryptocurrencies stage Friday rally, US inflation and Ethereum Merge ahead
BTC is back above $21K as risk appetite made a return on Friday. Analysts noted whale holdings have declined, with some taking it as a low probability of bullish momentum. Digital assets have been driven by Fed comments and expectations ahead of the central bank meeting on September 21. ETH rose 5%, trading near $1.7K after hitting a three-week high. Ethereum is expected to enter proof of stake, slashing transaction costs and lower energy requirements this week after completing the final shadow fork on September 9. A successful Merge would put pressure on BTC as ETH closes the gap between the two cryptocurrencies.
US equities rallied to break a streak of three straight weekly drops. Softer China inflation added traction to the US peak inflation narrative, with consumer price data to be the top release on Tuesday. US dollar is on the back foot, falling to a one-week low on Friday ahead of US inflation data, and the market is pricing in a 75 basis point interest rate hike later this month.
Amber group cut 10% of its staff as it navigates the market downturn. The company raised $200M from Temasek Holdings putting its valuation at $3B. CleanSpark announced it had agreed to acquire a Mawson Infrastructure crypto mining facility. CleanSpark acquired 10K rigs for $28M last week. Low BTC prices and high energy costs make the crypto mining space ripe for consolidation. Mysten Labs raised $300M in a series B round led by FTX, putting the value of the infrastructure platform at $2B. FTX Ventures to acquire 30% of SkyBridge Capital, with the firm to use $40M to purchase crypto assets.
MicroStrategy filed to sell $500M in stock to purchase more bitcoin. Franklin Templeton to launch crypto separately managed accounts executed through Eaglebrook Advisors targeting financial advisors, wealth managers and their clients.
In regulation news, the SEC to set up an Office of Crypto Assets to offer more specialized support. SEC Chair Gensler argued that his organization should keep oversight of crypto tokens as there are proposals to give more responsibilities of digital asset regulation to the Commodity Futures Trading Commission. In Russia, the central bank could allow crypto payments into the country, but digital payments inside Russian borders are expected to remain banned.