Weekly Market Update: Turns out, it was always about the Fed

Captain obvious moment, but the market feels way more upbeat when Bitcoin is in the 60’s. You can feel it in the communications, analysis and giddy price predictions. The calls of ‘it’s happening’ are already starting. Fingers crossed 🤞. 

This week crypto news saw a change in tone. There were some notable comparisons to previous bull runs and some biggish announcements from the institutional crowd that support, well…some biggish price predictions. Stablecoins continue to be in vogue and Kamala Harris sort of said she’s supporting crypto. 

In macro market news, Oil prices picked up on the escalation in the middle east, however shipping costs appear to be coming off their July highs. 

In the US, all the other news was in the shadow of the Fed rates decision. I think it’s fair to say while there was hope for the 50 bps cut, markets were a little caught out when it was delivered. Many ask, if everything’s so good, why the big one?\

Parking another captain obvious question, risk markets responded strongly with ATHs in the Nasdaqs and crypto, particularly ETH, doing pretty well this week.

In Europe, consumer confidence is up, while in the UK CPI came in as expected and the Bank of England did its part and held rates. 

In APAC, most central banks held rates, however both Indonesia and China’s central banks are easing policy in response to their markets. China’s youth unemployment situation is worsening. Feels like China cannot be counted on to export deflation anymore…

In Australia PMI fell, while headline employment looked better, but under the hood, they have a staggering amount of people in part time roles. The RBA is in a knife fight now, and in response held rates but had a decidedly hawkish tone. 

New Zealand, oh boy! GDP data highlighted what we’re all feeling, it’s a recession. What we didn’t know is that this time is worse than the GFC 😲. Side note, the trade deficit got slightly worse. 

Market sentiment has improved significantly on last month, jumping over 20 points to sit in  neutral  territory. 

Highlights this week: 

• A resounding bounce in the market means almost all of the top 30 assets posted gains this week.
• Our Buy-Sell ratios barely moved this week, supporting a stronger bias to the buy side. 
• BTC, SOL and USDT dominated orders this week. ETH came in 4th. A sign of the times?
• At the time of writing, BTC was up 7%, ETH, SOL and BNB were all up 12%, while XRP was flat for the week.  
• Alternative Layer 1 network SUI was our best performing asset this week, up 45% . 
• XMR was our worst performer, down 1% this week. 

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

Highlights from the crypto space

The current Bitcoin cycle is tracking closely with the 2017 and 2021 cycles, so keep the faith. Similarly, Kaiko analysis shows a big uplift in BTC buy pressure since the Fed rate cut. It turns out it was always about the Fed. 

Raoul Pal says it’s all going to plan, Global liquidity (M2) is leading out the run. And a final bullish piece, Robert Kiyosaki, via a friend’s report, said Bitcoin could hit $500k next year. 2.6m followers got that one. 

Institutional interest in crypto continues on, RIA’s are advising a 6% allocation and selling NASDAQ to fund it. 

BlackRock put out a piece on Bitcoin’s role as a unique diversifier, it has the usual caveats about risk, but their point is sound. Van Eck said BTC to $350k…eventually.  Singapore bank DBS, is launching structured crypto products. 

Bitgo is entering the stablecoin space with USDS, a reward bearing stablecoin. Apparently Revolut is looking at a stablecoin too.

Circle is live in Brazil and Mexico with local banking (did we mention we have a stablecoin?👀) 

A contrarian opinion on Ethereum’s future was put out too. TLDR it’s still got game. 

The SEC has approved BlackRock’s proposal to list and trade options for its spot Bitcoin exchange-traded fund. Staying with BlackRock, they are changing how they are getting Coinbase put Bitcoin onchain. 

Empire did a piece on the collapse of Silvergate bank. Turns out it was the regulators who caused all that consumer pain. Call us surprised. 

Presidential candidate Harris said she’d encourage crypto businesses while protecting the consumer, whatever that means 🤷. 

Token 2049 was held in Singapore last week. It’s a big crypto conference. Here are the key takeaways according to a partner at an investment firm. 

🌎 Macro news TLDR: …Semiconductors are the new battleground

Tensions in the middle east escalated significantly this week. Unsurprisingly Oil prices are up. 

Containerised shipping rates continue to ease. 

U.S. economic news

August retail sales were basically flat, while industrial production rose 0.8%. Jobless claims fell this week too. Flash PMI for September at the composite level was 54.4. 

One of the most anticipated rate decisions in recent times delivered a 50 bps rate cut. The messaging was that the Fed has increased confidence that they have tamed inflation.

The dot plot suggests another 50 bps of cuts will happen by the end of 2024, this suggests things might not be quite as rosy as the Fed is making out.

Given there is another stand-off emerging on a federal funding bill that needs approval before the election … there are risks. 

In the presidential race, Harris is opening up a lead on Trump in the opinion polls.

Across the border, Canadian CPI hit 2% annualised. 

Over in Europe….

UK CPI for August was in line with forecasts at 2.2% annualised. That’s the good news, Services inflation rose from July’s 5.2% to 5.6%.

This is seen as an indicator of domestic price pressure. In response the BoE voted 8-1 to hold rates at 5% and continue with Quantitative Tightening. 

EU consumer confidence is up, almost catching its long term average.

And in Asia Pacific…

Singapore’s August exports missed forecast, while India’s exports beat estimates. Indonesia’s central bank delivered a surprise rate cut, while China, and Japan held rates steady.

Japanese exports rose 5.6% in August, while CPI ticket rose 3%. China’s youth unemployment rose to 18.8% and their central bank cut their key reverse repo rate unexpectedly, while pumping in more liquidity. Apparently it’s a bit underwhelming though. 

Australia’s employment data out this week is a hot mess. Employment rose, but full time jobs fell and all the growth (47,000) was in part time roles.

They have a staggering 31% of their workforce in part time roles (NZ is 20%). Flash PMI for September fell into contraction, with manufacturing coming in at 46.7. 

The RBA held rates as expected while politely noting that inflation is persistent. 

In New Zealand, our current account deficit for Q2 increased to $7.2bn. In GDP terms it increased to 6.7%. The deficit was forecast to decline.

This week’s big data point was GDP which came in at -0.2% for the June quarter, down 0.5% from the March quarter (ouch). On a per capita basis it’s really bad – remember we had record immigration last year.

GDP per capita for June fell 0.5% and is down 2.7% year on year. We are tracking worse than the GFC to put that in context. 

That’s a wrap for this week. 

Stay tuned for the next update.

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