MARKETS week ahead: Sept 25 - Oct 1Last week in the news
Soft landing, hard landing or no-landing is the pending question among market participants after the FOMC meeting held on Wednesday. Markets are never happy with uncertainty, which brought some increased volatility on US markets. After Fed Chair Powell's speech, Treasury yields reached their highest levels since 2007, equity markets sharply fell, while Bitcoin followed the drop on the stronger US dollar.
The FOMC meeting was held on Wednesday where the Fed left rates unchanged, still, leaving some space for another rate hike till the end of this year. Fed Chair Powell delivered an after-meeting speech where he pointed toward the higher-for-longer interest rate levels. One of the important notes from this meeting is expectations from the Fed to cut rates during the next year. Gross domestic product was sharply revised to the level of 2.1% for this year, but is expected to fall during the next year. Markets immediately priced the new Fed`s standing of higher-for-longer rates, where Treasury yields were significantly elevated and the US stock markets fell sharply during the Chair Powell's speech.
Another topic that spotted investors interest during the previous week was Japanese yen weakening against the US dollar. As per analysis from JPMorgan experts, a further yen weakening might influence the Government of Japan to increase interest rates, which could further spark the repatriation of Japan's capital kept in the foreign markets. As per analysts, such an event might further increase volatilities across the US markets. The Bank of Japan is still holding short term interest rates at a negative territory, at level of -0.1%, while 10Y Government bond continues to yield around zero.
JPMorgan analysts commented on Ethereum in their latest research report published on Thursday. As per their opinion, Ethereum`s Shanghai upgrade, which was implemented in April, did not provide expected results. The activity on this network modestly dropped during the last few months, while they presented the result of a 12% decrease in daily transactions since the Shanghai upgrade was implemented. At the same time, several other analysts are noting that there is a general drop in activity on the crypto market, hence, it does not mean that the drop in activity on Ethereum network is necessarily a consequence of the Shanghai upgrade.
Binance Holdings and its CEO, Changpeng Zhao have filed a request to the US court to officially dismiss a lawsuit made by the US Security and Exchange Commission. The basis for such a claim is that the SEC overstepped its authority through this lawsuit, considering that there is still no clear guidelines on how crypto companies should comply with the law in the US while the SEC should not impose any further guidelines retroactively, as they are trying to do in the case of Binance Exchange.
Crypto market cap
The pivotal event of the previous week was certainly the FOMC meeting. Fed officials changed rhetoric a bit, as well as projections for the next two years. Although they left the interest rate unchanged at this meeting, still, based on their projections, there is still room for rates to be increased until the end of this year. The Fed`s pivotal point should be expected somewhere during the next year, when they will start slowly with interest rate decrease. Expectations on the growth of the US economy for this year are revised up to the level of 2.1%, with a decrease in the year ahead. Also, the unemployment rate is expected to reach its highest level around 4.1% during the next year. The economists are quite divided on such projections, noting that the latest Fed`s revised projections would certainly need another revision in the coming period. Anyway, markets did not perceive well what they have heard from Fed Chair Powell, and the downturn on the markets began even during this speech. Bitcoin also followed mainstream`s markets path to the downside, amid stronger US dollar, but overall, the crypto market remained relatively flat. Total crypto market capitalization remained at almost the same level, losing some $2B in value, which represents around 0.2% of its total market cap. Daily trading volumes were again decreased, to the daily levels around $ 33B, from $ 43B traded the week before. Total crypto market capitalization increase since the beginning of this year remained flat at level of 37%, where it has added total $278B to the market cap.
Another mixed week on the crypto market. Total market capitalization remained flat week on week, however, there has been some reallocation of funds between coins. Bitcoin had a relatively volatile week, but managed to end it relatively flat, adding 0.11% to its market cap. At the same time, ETH lost $5.5B in value, decreasing its cap by 2.8% w/w. Altcoins with significant increase in value during the week were LINK, with an increase of 13.29% in value followed by Algorand, with an increase of 5.4%. XRP, Theta, ZCash and Solana ended the previous week more than 2% higher from the week before. On the losing side were Miota, with a drop in value of 4.65%, Bitcoin Cash was down by 2.9%, Stellar lost 3.3%, while ADA dropped by 2%. As for coins in circulation, the situation was a bit calmer from the week before, where Polkadot increased its circulating coins by 4.8% w/w, Stellar`s coins were up by 0.6%, while Solana increased coins in circulation by 0.3% same as Filecoin.
Crypto futures market
The crypto futures market was generally following developments on the spot market during the previous week. Bitcoin short term futures ended the week in a modest green territory, where December 2023 futures were traded 0.67% higher compared to the week before, and ended the week at level $27.095. At the same time, longer term futures were traded some 0.40% lower on a weekly basis. December 2024 ended the week at level $29.640 or 0.45% lower on a weekly basis.
ETH futures did not have a good week, as all maturities dropped between 2% and 3% compared to the week before. Short term ETH futures were traded some 2% lower, with December 2023 ending the week at level of $1.612 or even 3.13% lower from the end of the previous week. December 2024. was closed at price $1.712, some 2.93% lower on a weekly basis. ETH`s future prices continue to be negatively perceived by the markets.
