Weekly Market Update: Bulls Remain Bullish as Volatility Hits All-Time Low

If the market feels unusually subdued, you are 100% correct, with current BTC and ETH volatility being lower than the S&P 500. The lack of action is impacting volumes across the board as the market waits for something to happen. 

What that something is, is open to debate. The Curve situation looks largely contained, however, now there appears to be something funky going on with Houbi and maybe USDT. It could be the market looking for something, anything, to tip the market into activity. 

Institutional interest continues to grow with net inflows into those products. We also saw the filing of 6 ETH Futures ETFs. There are growing calls to say we are in the early days of a bull market too. Globally, there are growing concerns about oil and wheat prices due to supply constraints and events in Ukraine.

The US economy continues to throw out contradictory signals with some concern PCE inflation may be trending up. Europe, particularly the German PMI, is in contraction, but employment is holding up. Outside of China, many Asian economies are showing good signs regarding inflation and GDP trends. Australia revised its GDP forecast down and locally employment appears to be holding up. 

The continuation of the quiet, sideways action means that the sentiment in the crypto market has remained firmly in neutral territory for the last week.

Trend highlights this week: 

• For the second week running, the lack of volatility means we have an even spread of gains and losses in the top 30 assets this week.
• BTC and ETH made a late move to be up 2.3% and 1% respectively.
• Shiba Inu (SHIB) was the best performing major asset, up 13% on last week. 
• Compound (COMP) was our biggest loser of the week, down 13%. 

View all top gainers: Visit the top gainers page to find out more. 

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Highlights from the crypto space

Bitcoin Pro analysis on the market-value-to-realised-value, metric suggests that it is signalling we are entering a bull market

Kaiko reports that the long term volatility of BTC and ETH has hit multi-year lows. K33 research supports this, saying BTC’s volatility is less than the S&P 500 and even gold.

MicroStrategy continues to buy BTC, adding another 467 in July. They also announced a potential capital raise of $750m to buy more BTC. 

Staking inflows to ETH are still at very healthy levels, with the activation queue still sitting at over a month.

Staying with ETH, the race is on for the first ETH Futures ETF with 6 firms applying for a licence. This all kicked off when a rumour that the SEC is open to an ETH Futures ETF. 

More evidence of institutional interest with Coinshares reporting a net $0.5bn this year with the majority into Bitcoin. 

Coinbase’s Q2 numbers were really impressive, it beat market estimates for revenues and profits. Coinbase also fired back at the SEC’s lawsuit against it saying that because the SEC hasn’t proven its case that the tokens are in fact securities, it can’t be an unregistered securities exchange. 

Paypal is launching a US dollar backed stablecoin with Paxo’s help. It will be available to some US citizens. 

Revolute has ceased trading Crypto in the US due to the uncertain regulatory environment.

There are rumours that the US DoJ is considering charges against Binance, but they are worried what that might do to retail investors. 

Debanking in the UK is happening at staggering levels, for a raft of different reasons, including doing legitimate things like buying crypto. 

KPMG did a deep dive into Bitcoin and how it stacks up against an ESG framework. It shows that the claims supporting BTC ESG credentials are positive and seem to hold. 

Fallout from the Curve hack continues.The CEO Michael Egorov had used CRV as collateral for a lot of DeFi loans that were facing liquidation, so essentially he was fire-selling his CRV tokens to avoid a DeFi loan cascade!

Other notable highlights from the crypto space:

• The Litecoin halving happened this week, the market response was slightly muted. 
• The SEC has sued Richard Heart of HEX, Pulsechain and PulseX infamy. 
• A Federal Judge has refused to use the Ripple case as precedence, essentially not agreeing with that case’s conclusion. 
• Here is a good piece on CBDC’s and the need to inform citizen decision making. 
• Consensys has launched an automated smart contract security tool called Fuzzying that looks for vulnerabilities.
• Kenya has suspended Worldcoin until the Government can assess the risks. Apparently there is very high demand in Kenya at the moment. 
• Despite China’s ban on Crypto trading, China is still Binance’ largest sector. 

That’s the summary of the crypto world, so now let’s look at other macroeconomic news and developments from around the globe.

Starting off with global news 

Geopolitical tensions between China and the West are intensifying, with China responding by limiting exports of key materials used in chip manufacture as a response to the US curtailing export and manufacture in China. 

🌎 Macro news TLDR: Global Manufacturing continues to soften.

China is also putting export controls on some drones citing national security concerns. 

Oil prices are now into their 6th straight week of rises with WTI crude up 20% over the same period. 

U.S. economic news

US manufacturing PMI rose to 46.4 in July, however this was less than the expected 46.8. Services PMI declined slightly to 52.7, again less than the forecasted 53. 

Unemployment fell slightly in June to 9.58 million, the lowest since April 2021. Non-Farm payrolls were also lower than expected. There has been a large increase in service sector jobs due to a stronger economy. 

Ratings agency Fitch downgraded the US from AAA to AA+ because it believes the economy is deteriorating?

And in Europe….

Eurozone unemployment hit a record low of 6.4%. Eurozone PMI’s have deteriorated significantly in July coming in at 42.7 vs 44.2 in June. The three largest economies, Germany, France, and Italy are all struggling. 

In the UK, food price inflation is at its lowest levels in a year, it still came in at a whopping 13.4%. The BoE raised its key interest rates to 5.25% in what appears to be quite a contested vote. Inflation is currently at 7.9%. 

Employment appears to be softening in the UK as well as the sluggish economy takes its toll. The UK is also lagging behind on economic growth compared to its G7 colleagues. 

In Ukraine, the apparent Russian blockade on Ukraine’s wheat supply routes is intensifying. Global wheat prices are up 5% due to supply worries.

In response, US banking support for other critical sectors have been pulled, in what they are saying is an attempt to bring Russia back to the negotiating table on grain. 

And in Asia Pacific…

The Caixin China general manufacturing PMI showed a small decline to 49.2 in July, critically it is now in contractionary territory. While their Service PMI rose to 54.1.

India’s Services PMI hit a 13-year high at 62.3. In the Philippines, CPI for July eased down to 4.7%. While South Korea’s inflation is 2.3% in July. Indonesia’s GDP surprised to the upside coming in at 5.17%.

Australia’s wheat and barley forecast for 2024 is down 34%-30% respectively due to El Nino. As the second-largest wheat exporter, this is bad for global prices.

The RBA monetary policy committee minutes show that the RBA has reduced Australia’s growth projections for 2023 to 0.9%.

The unemployment rate in New Zealand rose to 3.6% in June which is still a good result. Interestingly the underemployment rate rose to 9.8% this quarter.

Residential construction costs appear to be flattening off, increasing only 1.1% this quarter. However, they are still up 12.7% on June last year.

That’s a wrap for this week. Thanks for reading!

Stay tuned for the next update.

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