Market Deep Dive: Crypto Market facing downward pressure amid US Government and Mt. Gox Moves, Macro Data and Geopolitical Tensions in the Middle East

After Trump’s speech at the Bitcoin Conference, BTC tested the USD 70,000 range on Monday but was rejected after the US government dampened bullishness by moving USD 2 billion worth of BTC to Coinbase Prime. On Wednesday, Arkham reported that over 34,800 BTC had been moved to BitGo addresses, which caused BTC to drop to just above USD 65,000 during the US session. Following the FOMC conclusion and rising Middle East tensions, BTC fell to USD 63,500 overnight, then further to USD 62,300 yesterday after weak US macro data releases. However, it rebounded to USD 65,600 during yesterday’s US after-hours following earnings reports from Apple and Coinbase; it is currently trading above USD 64,000.

ETHBTC tested the 0.05 level on Tuesday and Wednesday, achieving positive net ETF flows on Tuesday of USD 33.7 million. However, with the general decline of the crypto market and ETHE selling continuing (at a slower pace for the last four days), ETHBTC went back to 0.049 with USD 3.080 holding as the first level of support. Also, Solana went to USD 157.5 after it lost its support level of USD 172; it is currently trading above USD 160.

The 30-day BTC ATM implied volatility fell from 60% to 46% (-14% WoW) and the 30-day ETH ATM implied volatility fell from 65% to 52% (-13% WoW). The 25-delta skew declined but stayed positive across all time frames for BTC while for ETH it has turned negative across time frames from 0-30 days, which can still be attributed to Grayscale outflows and the general market downturn this week.

On the macro side, on Tuesday, the German monthly CPI rose to 0.3% in July, and CPI YoY increased to 2.3%. The US CB consumer confidence index improved with 100.3 in July, while US JOLTS job openings fell slightly to 8.184 million in June, exceeding estimates of around 8.020 million.

On Wednesday, the Bank of Japan announced an interest rate hike to 0.25% and a reduction in bond purchases. Meanwhile, the Federal Reserve maintained its key interest rate, hinting at a possible rate cut in September if inflation data remains favourable. Traders are now pricing in a 70% chance of a 25 bps rate cut and a 30% chance of a 50 bps cut, with no likelihood of no rate cut in September.

Yesterday’s economic data raised concerns about a hard landing and a weaker economy, with traders now pricing in three rate cuts by the end of the year. The US ISM Manufacturing PMI came in at 46.8 (expected 48.8), hitting an eight-month low for July, and Initial Jobless Claims reached their highest numbers since June of last year. Markets rebounded in the US afterhours with better-than-expected earnings from Apple, despite lower-than-expected revenues in the Greater China region, and positive results from Coinbase.

This afternoon, all eyes will be on US NFPs and unemployment rates, providing further insights into the current state of the economy.

Next week will be relatively calm in terms of economic events, with US Non-Manufacturing and Services PMI data scheduled for Monday, and German and Swiss CPI data set for release on Friday.

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