The Bitcoin price is bouncing back this week, gaining nearly 7% and circling now around 60,000 US dollars. It reached a weekly high at 61,316 US dollars yesterday. Ether and SOL are showing flattish performances. In the top 10 cryptocurrencies by market capitalization, BNB and XRP are also outperforming. BNB is up nearly 6.6% at 545 US dollars. XRP is the best performer: up 8.7%. It failed to reach 60 cents according to coinmarketcap, à level that was last seen in August this year.
In the top 50, we have à few cryptocurrencies that are printing double digit returns:
SUI, joining the top 30 this week: it is the native cryptocurrency of the SUI layer-1 blockchain, launched in April 2023.
I’d like to say a word or two on SUI - I usually like to discover and introduce new projects in our sessions.
The SUI blockchain is a Proof of Stake blockchain.
SUI is a well-funded project that facilitates web3 development. For the techs amongst us, SUI has its own programming language called MOVE, inspired by Rust and that is presumably safer than the Solidity language used in the Ethereum ecosystem. It is very much centered on security. There is a bytecode verification embedded: it checks code for the classic threats like smart contract reentrancy attacks.
It is also object-centric. An object in programming is like a real-life object, a structure with its own properties: take a tree for instance: it has a height, a location, it has leaves, et cetera.. These programming objects are stored in the blockchain and they have an owner. These objects can also change, but they hold their own transaction history.
The objects can be nested with each other, and they could represent quite sophisticated and flexible NFTs.
So basically the SUI blockchain is more than ever structured around programming objects, when other blockchains are structured around accounts. In practice, traditional developers will find it easier to code on MOVE because it’s been conceived for traditional object-oriented developers.
Other advantages:
SUI is at least 2.5 times faster than Solana. It is the second fastest blockchain behind Toncoin.
Users don’t need to worry about gas fees: transactions are gasless for the user and gas is handled by the Decentralized applications.
As we can see on this graph, produced by defiLlama, SUI’s Total value locked had an interesting growth this year, similar to other new projects.The SUI token is worth roughly 1.2 US dollars, and we have almost 750 million dollars worth of SUIs locked.
We got this week several positive announcements for SUI:
USDC will be available soon on this blockchain.
The Grayscale SUI trust announced that it is open for qualified investors.
These are possibly the main drivers of this week’s price performance. The token price jumped by nearly 13% on Grayscale’s announcement.
Moving on to US economics:
The release last Wednesday of the CPI figures for the month of August did not disappoint. The Year-on-Year CPI came out in line at 2.5%, confirming a significant drop of 0.4% compared to July.
Looking at the trend, this is the best result since March 2021.
It boosted the probability to have a rate cut of 50bps, 0.5%. The CME fedwatch shows a 61% probability to have a 50bps rate cut. This probability is based on the market of course: it is just implied from the price of the Fed Funds future contract.
The FOMC decision will be released tonight.
The S&P500 printed an all-time-high on Tuesday, above 5,670 US dollars. The market bounced back nicely when the CPI came out.
Retail sales results for the month of August came out yesterday. Results were better than expected for the headline figure but still not reassuring enough: Core Retail Sales that exclude automobiles came out lower than expected.
Industrial production came out stronger in August as well. There are no indicators that show concern over the state of the US economy - there is no ground for panic. Apart from the CPI release, data this week could reasonably suggest a 25 bps rate cut. Normally, the Fed should act in anticipation of a deteriorating job market. But Jerome Powell has a tendency to navigate on sight. Finally, the decision depends on all members of the FOMC committee, not only Jerome Powell.
Bottom line, there is high uncertainty over the Fed’s decision today. It is a coin toss. What we can expect is that a 25bps rate cut will drive the market down, including the cryptocurrency market.
In this scenario, the S&P500 could lose 150 points, or 2.5%: falling back to levels observed before the CPI release. Bitcoin could drop back to 55,000 US dollars.
From a flow perspective, 618 million US dollars were invested in the Bitcoin ETF: this is à rebound that followed 2 weeks of outflows. Ether continues to experience outflows.
Microstrategy announced additional investments in Bitcoin: the company owns 244,800 bitcoins worth nearly 14.7 billion US dollars. It now owns more shares than the Grayscale ETF.
From a trading perspective, leverage is back this month so far. This graph produced by CryptoQuant shows the Estimated Leverage Ratio. It is the ratio of the total open interest in Bitcoin futures divided by exchanges coin reserves. The higher this ratio, the higher the risk.
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