Weekly Market Update: ETH’s Time to Shine

Well it was when we wrote this! We haven’t had the chance to say it’s ETH’s time much this year as it’s been a little underwhelming. However, in the last couple of weeks it’s been the pace setter; ETH fees have returned, it got deflationary again and lo and behold we got net inflows into the ETH ETFs. 🦾

The market has gotten its wind back somewhat. There are price predictions for Solana and BTC out again and some interesting research on where we are on the cycle. We got the DL on what is high flying SUI, Visa moving into asset tokenisation, Paypal is moving into the crypto space increasingly and more on stablecoins. It’s been a week. 

In macro market news, a couple of looming port strikes in North America have the potential to disrupt global supply chains, even more than the middle east and Panama canal at reduced capacity. Supply chains people. Conflict in the middle east is spreading.  

In the US, employment looks to be continuing a slow decline and PCE inflation was exactly where it was expected to be. Q2 GDP numbers were very, very good.  The Federal reserve has started jawboning down rate cut expectations, probably in response to the latest round of all time highs on equity markets.

In Europe, Germany’s CPI is below 2% and traders are saying the ECB is behind the curve and needs to catch up. The Swiss cut their key policy rate to just 1%. Interesting differentials there. 

In APAC, China’s big rate cut moves are yet to be felt and in a surprise move the government gave a one off handout to the poor. Can we whisper social contract?  There are rumours, possibly hopium, that China might shift on its crypto stance as well.  

Australia’s CPI for August came in below 3%, however it was largely driven by government energy rebates. The job market is getting softer too. 

New Zealand, business confidence in future prospects drifted up, however delinquencies on debt continue to rise. 

Market sentiment has drifted back slightly since last week and currently indicates fear in the markets.

Highlights this week: 

• After a solid start, a late fall in prices means the market has trended generally down in the last 7 days.
• Our Buy-Sell ratios continue to flatline in both order volume and value, both remain at the long term average. 
• BTC, ETH and USDT dominated orders this week.  
• At the time of writing, XRP was up 4.5% on the week, while SOL was flat.  BTC was down 3%, ETH 4% and BNB 10%.
• Newly listed memecoin BONK lead the way this week up 30% . 
• XMR again held the position of worst performer, down 15% this week. 

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

Highlights from the crypto space

MilkRoad wrote a piece on the return of ETH fees and the game plan, which suggests that Layer 2’s would outscale all the competition. Seems like it’s working.

Annnnd… well would you look at that! ETF inflows. BlackRock’s spot ETH ETF broke the $1bn barrier for the first time too. 

A former vice finance minister has raised the possibility of China shifting its stance on crypto to align with what is happening globally.

Other notable highlights from the crypto space:

• Van Eck says Solana market cap could reach 50% of Ethereum’s, or around $350 per coin. 
• The Monetary Authority of Singapore is spinning up crypto specific regulations to protect investors. 
• Paypal will allow US businesses to buy, hold and sell crypto via their Paypal account
• This week in stablecoin news, Circle is announcing a suite of products to help issuers with their compliance. While TUSD issuer had to settle with the SEC because they weren’t quite truthful with what was backing the stablecoin. Chainalysis says stablecoins are the killer app. 
• Sui is all the rave at the minute. Here’s a bit of a write up of what it is and how it works. 
• Visa is moving into Asset tokenisation, helping businesses tokenise RWA. 
• Are we there yet? Not even close according to Real Vision.

• Former Binance CEO CZ was released from custody this week after a 4 month stint.
• Staying with stints. Ex Alameda / FTXer Caroline Ellison got 2 years in jail with the judge saying you cannot get a free pass for such fraud. Doesn’t bode well for those up next in the sentencing queue. 

🌎 Macro news TLDR: …Semiconductors are the new battleground.

The OECD thinks the global economy has turned the corner. 

In a ‘watch this space’ post, there is a massive port strike in the US (and Canada), which will have global implications on supply chains. Automation is the key issue.  

On top of this, the Panama Canal is on reduced capacity due to drought. 

The US is close to signing a MoU with India on critical minerals. 

Things in the middle east appear to be deteriorating, with Iran firing missiles into Israel and Israel launching a ground offensive into Lebanon.  

U.S. economic news

In the US, Unemployment drifted up last week, while Q2 GDP was finalised at a whopping 3%. Headline PCE inflation measures came in at 2.2% annualised with a 0.1% increase for the month. 

Core PCE followed similar patterns and is 2.7% annualised. All as expected!  Jerome Powell though is having none of it, talking down expectations of a 50bps cut and effectively jawboning enthusiasm out of the market. 

Over in Europe….

The Swiss national bank cut its key policy rate to 1%. 

German CPI fell to 1.6% in September. Similarly Eurozone headline inflation was 1.8% in September, with core inflation declining to 2.7%.

Traders want the ECB to catch up on inflation and respond accordingly, i.e. with rate cuts. Economic sentiment is basically unchanged this month.

And in Asia Pacific…

China’s central bank offered a one off handout to the poor, this was on top of the record rate cuts. China’s factory CAIXIN PMI fell into contraction territory at 49.3. Services growth also slowed. 

In Australia, their monthly CPI reading was expected to come in at 3.1% for August, instead it came in significantly lower at 2.7%. While the headline number was good, the biggest driver was from a government rebate on electricity pulling down spend. 

Job vacancies in Australia are down significantly, continuing a year long trend. Meanwhile the Federal government is celebrating two years of surpluses. 

In New Zealand, ANZ Morgan reports consumer confidence is trending up, driven by better expectations about the future. 

Centrex’s latest report into debt delinquency shows that it is still on the rise, up 19% on last year, and is particularly bad in construction. 

Given consents are down 20% on last year, that’s not really a surprise. The Quarterly Survey of Business Opinion 

That’s a wrap for this week. 

Stay tuned for the next update.

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