Market Deep Dive: Mixed Signals, SEC ETF Decision Delay, and the Road to Q4


At the beginning of the week until Tuesday (and also on the weekend), we saw BTC trading in a tight range between $25,875 and $26,250, while ETH was rather choppy between $1,625 and $1,660. However, on Tuesday after the US Appeals Court ordered a review of the SEC’s previous rejection of Grayscale’s bid for converting GBTC into a Spot ETF, BTC saw a surge, trading temporarily above $28,000, and ETH testing the $1,740 range. Pivoting to altcoins, Bitcoin Cash (BCH) took the lead as one of the high beta cryptocurrencies relative to bitcoin, registering an 18% rise in the wake of BTC’s surge on Tuesday.

Although the crypto industry’s positive response to the court’s decision made sense, its near-term implications are limited, as the SEC might still decline GBTC’s application on new criteria. Consequently, BTC just briefly touched the $28k level and gave up all its gains (mean-reverting to the $26k range) during the course of Wednesday and Thursday amid mixed macro signals and the expected decision postponement of the SEC on the BTC Spot ETF applications this week, including Blackrock’s. The forthcoming ETF filing reviews are now scheduled for October 7 and 16. Within many professional circles, post-GBTC news speculation suggested the rally was propelled by the momentum of beta chasers, short-term traders, and retail capital.
Meanwhile, as Elon Musk steers the rebranded Twitter platform, now called ‘X’, into the crypto trading realm, market enthusiasts are speculating on the platform’s potential bitcoin holdings in the future.

Zooming out to the macro perspective, this week offered mixed signals while Chairman Powell’s address in Jackson Hole mirrored his last year’s inflationary concerns. No solid hints were dropped about the Fed’s tapering timeline. After some new stimulus news from China (halving of existing 0.1% stamp duty on stock trading) on Monday, Tuesday’s labour data from the US Job Openings and Labor Turnover Survey (JOLTS) presented a less-than-expected figure of 8.827M job openings for July. This lean towards a balanced laboiu market could ease the pressure on the Fed for another rate hike in their upcoming September meeting even if traders price in an 88.5% chance of a rate pause.

On Wednesday, the US Consumer Confidence Index dropped to 106.1, undershooting the 116 forecast, hinting at potential consumer apprehension. Conversely, on Thursday, the Core PCE Price Index, a reliable barometer for inflation, aligned with forecasts at 4.2% YoY and 0.2% MoM. Initial Jobless Claims, at 228k, underscored a recovering employment landscape, coming in 7k below expectations.

On Thursday, EU Core CPI data numbers came in at 5.3% YoY, which were in line with consensus while Germany reported 6.1% (vs. consensus 6%) and a monthly increase of unemployment of 18K. Following comments by ECB Vice-President Luis de Guindos, the likelihood of an ECB rate hike in September has diminished from nearly 50% to around 25%, indicating that the decision remains undecided for the upcoming meeting.

Today, Switzerland’s CPI edged higher to 1.6% YoY, slightly above the 1.5% estimate, hinting at gentle inflationary currents in the Swiss economy.

Looking forward, keen eyes will be on today’s release of US Nonfarm Payrolls, Unemployment Rate, and the ISM Manufacturing PMI.

A quick look at the volatility landscape reveals BTC’s 30-day at-the-money implied volatility decreased to 34% (-4% WoW), while ETH’s sits slightly lower at 31% (-2% WoW). Given the SEC’s recent setbacks in major cases against the crypto space, the industry remains cautiously optimistic. This sentiment, combined with potential short-term bearish pressures from events such as the Mt. Gox payout next month and looming announcements from the SEC versus the palpable momentum from traditional sectors like AI and gold, point to an intriguing lead-up to Q4.

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