The crypto market has been somewhat quiet for the last week, with mostly horizontal price movement. However, Bitcoin is down 3.25 %, ETH 6%, SOL 4%.
Bitcoin's price declined on Wednesday as concerns grew over potential additional distributions from the defunct crypto exchange Mt. Gox, which reportedly mobilized approximately $700 million worth of tokens, possibly in preparation for further token distributions.
Bitcoin recouped most of its early-August losses as U.S. recession fears eased, but it has struggled to consistently break above the $60,000 level due to a lack of strong positive signals in the crypto markets.
Bitcoin has largely remained within the same trading range it has held for most of the year, struggling to break into new highs amid waning interest in the crypto market.
For example, the sharp appreciation of the Japanese yen this week introduces some uncertainty for the crypto market. This development is reminiscent of a similar trend earlier in August that led to significant declines in crypto prices, highlighting the potential risks posed by currency fluctuations.
Broader market sentiment also cooled as Wall Street ended its eight-day winning streak, with traders now seeking stronger positive signals to sustain the mid-August rebound rally.
The improved risk appetite was driven by increasing confidence that the Federal Reserve will reduce interest rates by 25 basis points in September, according to CME FedWatch.
The U.S. reportedly added an impressive 2.9 million jobs — about 242,000 per month — between spring 2023 and spring 2024, a period when the economy was expected to be slowing down.
But did it really?
The answer to that question will become clearer on Wednesday when the government releases its benchmark revisions for U.S. employment growth from April 2023 to March 2024.
These revisions aim to provide a more accurate account of the number of jobs created during that period.
Wall Street anticipates a significant downward adjustment in these figures, with estimates suggesting a reduction of between 600,000 and 1 million jobs.
Assuming Wall Street's predictions are correct, what does this imply? It would indicate that the labor market wasn't as robust as it appeared and that it cooled more rapidly than previously thought.
A revision of that scale could put significant pressure on the Federal Reserve and its chairman, Jerome Powell, ahead of his crucial speech at the Jackson Hole symposium on Friday. If the data is revised downward, it may prompt Powell to adopt a more dovish stance, potentially signaling deeper rate cuts than the markets currently anticipate.
Although Powell is unlikely to directly signal a rate cut, his comments could offer optimism, particularly as recent U.S. inflation data shows signs of cooling. Lower interest rates typically favor riskier, speculative assets like cryptocurrencies.
Analysts believe that Powell could adopt a "dovish tone," signaling a shift in the Fed's focus toward preventing further weakness in the labor market following a disappointing July jobs report.
They also caution that even if Powell's speech turns out to be more dovish than expected, the market reaction may be muted. With rate cuts already factored in, any upside from a dovish Jackson Hole speech is likely limited, as investors will be more focused on Nvidia's earnings next week for a clearer indication of economic growth.
Bitcoin miners have been offloading BTC through exchanges, with their net flow declining throughout the second quarter of 2024. However, over the past two weeks, this selling pressure has leveled off, as miners’ reserves are starting to indicate a shift back toward accumulation.
The chart shows a marked decrease in miners' selling pressure in August, suggesting that BTC might stabilize within its current price range leading into next month.
Likewise, the stablecoin supply ratio (SSR) serves as another indicator of available liquidity in the form of stablecoins that could be used to purchase Bitcoin.
The SSR measures the ratio of the total cryptocurrency market cap to the combined market cap of all stablecoins. A declining SSR suggests that the supply of stablecoins is growing while the overall market cap lags, signaling increased liquidity for asset purchases. The SSR ratio has now dropped to levels last seen in early February 2024, indicating that there is a significant amount of liquidity available in the market. This new liquidity could potentially trigger a rally in the near future.
Finally, from the farside chart, we can see there has been positive inflow of funds into BTC ETFs, with inflow of $62.1 million on Monday 19th and inflow of $88 million on Tuesday 20th of August.
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