Market Deep Dive: Crypto Market Remains Stable Amidst Volatility; US Economic Concerns Loom


Bitcoin and ether have continued to trade in a tight range for yet another week, with BTC trading almost unchanged at USD 29,150 and ETH slightly lower at USD 1,830.

Curve experienced significant downside volatility this week after Curve Finance, one of the largest decentralised exchanges, was attacked by hackers who exploited a bug in the protocol. This resulted in a sudden liquidity drop on Curve, and the price of CRV crashed by 35% at its lowest point, raising concerns of forced liquidations and further contagion. However, market makers and large crypto players stepped in to stabilise the market, as there was a strong incentive to keep CRV above a certain level.

On Monday, EUR inflation figures were released, showing that Eurozone Core inflation (YoY) for July came in at 5.5%, remaining unchanged from the previous June figure.

Tuesday’s ISM Manufacturing PMI for July in the US was slightly lower than expected at 46.4, confirming the industry contraction expected globally.

The rating agency Fitch downgraded the US rating to AA+ from AAA, citing a deterioration of standards of governance and structural problems. Tax cuts combined with rising government spending and higher interest costs have led to an unsustainable household deficit, which is expected to almost double this year to 6% of GDP. The market reaction was limited, with 10-year US rates edging around 20 bps higher over the week to 4.19%, not far away from a fresh yearly high, and the rates sensitive Nasdaq trading 2.5% lower since last Friday. Nevertheless, Fitch’s concerns are to be taken seriously, and over the mid- and long-term, spending and taxes need to come into balance.

On Thursday, Swiss CPI stood at 1.6% (YoY) for July, a figure that countries around Switzerland would be very pleased with. The Bank of England raised interest rates for the 14th time to 5.25%, the highest reading since early 2008. The central bankers left it open if further hikes are yet to come, and expectations are that the market cannot expect cuts anytime soon in the UK, similar to other countries.

Looking ahead, this afternoon, monthly Nonfarm Payrolls will be released in the US, with an expected 200k new jobs created, similar to last month’s figure.


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