CRYPTO week ahead: September 19 – 25

2022年9月19日

Last week in the news

Financial markets closed lower after posted US inflation figures on Thursday. It is part of a positioning for new FED's rate hikes, as it is expected to occur at the FOMC regular meeting, as of September 20-21st. Bitcoin continues to test 20K, while Ether had an important week as implementation of the Merge fork has been finalised.

Investor’s confidence has been shaken during the previous week, as the US inflation data showed a bit higher figures than the once the market was expecting. As per official data, inflation in the US increased by 0.1% to the level of 8.3% in August. At the same time the market was expecting the figure to drop by 0.1% for the same period. Core inflation was up by 0.6% on a monthly basis, leading to total yearly core inflation to 6.3%. These figures were perceived negatively by the market, supporting their expectation that the FED will further increase benchmark interest rates at their next meeting on September 20-21st . Markets were traded lower after this news, while US 2Y Treasury bond yields rose to the highest level of 3.8%, while benchmark 10Y rose to 3.45% as of the end of the week.

It was a very important week for Ethereum network, as the long awaited Merge fork had been implemented. As per professionals within the industry, the fork was a huge success for Etherum and sort of a “game changer” for the crypto world, as it is supposed to cut energy consumption by 99%. The fork is supposed to support Ethereum token, Ether, as it now becomes a “productive asset”. However, on the opposite side, not all crypto miners were happy with this improvement. Industry specialists are stressing the issues with connections to the servers in order to mine PoW ETH. Professionals with higher speed of their networks were able to connect, while others did not have this privilege.

During the previous week the White House released a framework on the future regulation of the crypto market in the US. The document does not have any legal implications, but it will be used as a guideline for institutions that regulate financial markets, like SEC or Commodity Futures Trading Commission. The framework covers crypto industry payments but also investors protection and promotion of financial stability. As it has been stated by the state officials, the aim of such a document is to put the US as a leader in governance of the crypto ecosystem.
In its attempt to push further with the implementation of digital euro, the ECB made a pick of several companies, including Amazon and a group of 31 banks and credit institutions, which currently have the capacity for testing personal payments in digital assets.

Crypto market cap

Macro fundamentals continue to shape the sentiment of investors on financial markets. Latest figures on US inflation, which were modestly higher than expected, supported negative market sentiment, perceiving that the FED will most certainly increase further interest rates at their September`s meeting. This also means further tightening of monetary policy and less liquidity on the market, in which sense, the market is positioning accordingly, pushing the value to the downside. During the previous week total crypto market capitalization dropped again below $1 trillion in value, ending the week around level of 940B. This was a decrease of 7% on a weekly basis, where around 66B has been lost. Daily trading volumes continue to be at a higher level, but still, without much change from the week before, moving around 120B on a daily basis. Total funds outflow from the beginning of this year stands at the level of 1.243B, which is a total drop of 57%.

Majority of coins lost some of the value during the previous week, still, around 85% of the drop was led by three most significant coins on the market: BTC, ETH and BNB. Previous week`s drop was led by Ether, which lost almost 31B or 15% in value during the single week. ETH was followed by BTC with a drop of 22B in market cap or more than 5%. BNB`s market cap was down by 22B or almost 5%. In a relative sense, the coin which lost the most during the week was EOS, with a drop of 20% in value, and is followed by Zcash, which lost 10%, same as Maker. Only a few coins managed to gain during the week, one of which is XRP, with a gain of 11B in market cap or almost 6%. In this group falls also LINK who added 3% to its value. As for coins in circulation, the highest increase was Uniswap, which added 2.2% of new coins, followed by Filecoin with an additional 1.9% of coins in circulation.


Crypto futures market

Crypto futures were traded in a mixed mode during the previous week. BTC short term futures were down by some 8% on average, on fears from further FED's rate hike. Long term futures were up by more than 2% on a weekly basis, where December 2022 were closed modestly below 20K.

On the other hand, ETH futures continue to be under influence of Merge fork. As it has been expected, successful implementation of the fork moved both spot and future prices to the downside as many of the open positions were speculative in nature. However, analysts are noting that shortening of ETH futures might continue due to staking yields, because staked ether might be withdrawn after implementation of Shanghai fork, which will occur in the mid-2023.

During the previous week short term ETH futures were traded lower by 16%, while longer term future prices were down by some 8% on average. The price for December this year was traded below 1.5K.