Week Ahead: Bitcoin stuck in a tight trading range, miners sold tokens to cover operation costs
BTC was rangebound, trading close to $32K briefly last week before dropping below $30K. BTC is higher over the weekend and broke through the $30K price level with a focus on Consensus 2022 as an event that could break BTC from consolidation as it faces resistance around $34K with support levels at $25K and $20K. ETH remains below $2K as the currency faced liquidations last week.
Risk appetite fell after stronger US jobs, and manufacturing data pointed to higher inflation and lowered probabilities the Fed would stop hiking rates in September. The dark side of higher cryptocurrency adoption has been an increase in correlation with the stock market, particularly the tech sector, which has been under pressure as the Fed keeps lifting interest rates to contain inflation.
Miners sold tokens to take profit opportunities during a volatile trading week with reports of up to $6.3 billion in value. Smaller miners have been forced to liquidate some of their holdings to provide working capital for their mining operation, while larger miners are paying down equipment to increase their capacity. Publicly traded miners offered investors a way to add BTC exposure without owning tokens, and as crypto appetite declined, so have shares in the crypto mining sector. Riot Blockchain hired investment banker Jason Chung to boost the capital market and financing deals. Fidelity to add more than 200 positions to better serve clients who want to invest in cryptocurrencies.
Job cuts in the crypto industry were in the spotlight after Coinbase announced a hiring freeze and rescinded job offers. Brazilian 2TM laid off 10% of the company due to the macroeconomic climate, and earlier, Mexico’s Bitso announced that 12% of its workforce had been dismissed.
Regulation was a big topic last week. Crypto companies increased lobbying efforts in the US, outpacing FAANGs, pharmaceuticals, and the defence industry. Regulation aimed at customer protection will be an issue in November’s congressional elections after the stable coin debacle. FTX CEO said he could spend as much as $1 billion ahead of the 2024 US presidential election. Fed Governor Waller said Friday that the central banks shouldn’t issue digital currency to compete with private currencies, but better oversight is needed to foster more innovation.
Japan passed legislation on Friday to create a safety net for stablecoin investors, with the law to take effect next year. The move could help restore confidence after the collapse of Luna and the lack of traction of Luna 2.0.