2024-07-31 18:09

Prior to today's meeting, markets had priced in a 100% chance of a rate cut at the bank's September meeting. The Fed held policy steady, as expected, but the policy statement was more hawkish than most anticipated. At his post-meeting press conference, Chairman Jerome Powell indicated the central bank was "moving closer" to the point where it might cut rates. As expected, the U.S. Federal Reserve left its benchmark fed funds rate range unchanged at 5.25%-5.50%. Maybe somewhat surprisingly though, the Fed gave little indication that a September rate cut is guaranteed. "Inflation has eased over the past year but remains somewhat elevated," said the central bank in its policy statement. "The economic outlook is uncertain, and the [FOMC] is attentive to the risks to both sides of its dual mandate," the statement continued. In the minutes following the more hawkish than expected statement, bond yields and the dollar rose a bit, but both remained lower for the day. The price of bitcoin (BTC) edged lower to $66,550, but remained modestly higher over the past 24 hours. U.S. stocks remained sharply higher for the session, the Nasdaq up 2.4% and S&P 500 1.6%. Dealing with galloping inflation at the time, the Fed's historic run of tighter policy began in early 2022 taking the fed funds rate from 0% to 5.25%-5.50% in the space of less than 18 months. The rate has remained at that level for more than a year as the central bank has been cautious to ease while inflation stubbornly remained well above its 2% target. Prior to today's meeting, markets had fully anticipated at least 25 basis points in rate cuts by the mid-September meeting, according to CME FedWatch. Looking out further, markets had priced in a near-60% chance of 75 basis points in rate cuts by the Fed's final meeting of 2024 in mid-December. Speaking at his post-meeting press conference, Fed Chair Jerome Powell said recent readings have given more confidence that inflation is moving back to its 2% target. While no decisions have been made about September, he said, the "broad sense is that we're moving closer" to reducing rates. Update (18:45 UTC, 7/31/24): Added press conference comments from Jerome Powell. https://www.coindesk.com/markets/2024/07/31/fed-holds-policy-steady-expresses-more-caution-than-expected-on-september-rate-cut/

2024-07-31 09:28

The yen’s popularity as a funding currency can cause knock-on effects in other markets, helping tighten global financial conditions, BlackRock said. The Bank of Japan's interest-rate increase sent the Japanese yen to its strongest since March against the U.S. dollar. BTC holds on to a weekly loss as rising yen could lead to global financial tightening. Bitcoin (BTC) remained on the defensive while the Japanese yen (JPY) strengthened in the foreign exchange market after the Bank of Japan (BoJ) raised its interest rate and announced other measures to tighten liquidity. In an aggressive hawkish move, the central bank lifted its unsecured overnight call rate target to around 0.25% from the previous 0%-0.1% range. It also said it would cut liquidity-boosting bond purchases to roughly 3 trillion yen ($20 billion) a month by the first quarter of 2026. As of March, the bank was buying about 6 trillion yen of bonds a month, . Bitcoin held steady near $66,000, nursing a weekly loss of 2% on expectations for renewed rate cuts from the U.S. Federal Reserve. That spurred demand for the "anti-risk" yen, sending the USD/JPY rate down to nearly 150, the strongest for yen since March, according to data source TradingView. Futures tied to the S&P 500 rose 0.4%, signaling a positive open on Wednesday. Traders use the low-yielding Japanese yen to invest or fund investments in high-return assets. As such, a notable rally in the yen tends to strain the so-called carry trades and forces investors to reduce exposure to riskier assets, including cryptocurrencies. "The yen’s popularity as a funding currency can cause knock-on effects in other markets, helping tighten global financial conditions," BlackRock said in its weekly note. "The yen’s resulting surge caused investors to unwind positions using the low-yielding yen to buy higher-yielding currencies – what’s known as the carry trade." The yen has rallied nearly 6.4% against the dollar this month, the highest gain since November 2022. That might partly explain the recent risk aversion in technology stocks and bitcoin's repeated bullish exhaustion near $70,000. The yen could gain further ground, adding to risk aversion if the Fed sends out a strong dovish signal later Wednesday, setting the stage for rapid-fire rate cuts. https://www.coindesk.com/markets/2024/07/31/bitcoin-keeps-weekly-loss-as-anti-risk-yen-strengthens-after-boj-rate-hike/

2024-07-31 06:56

XRP trading activity is heightening in South Korea, where traders tend to get euphoric about rallying tokens. XRP draws highest price since March 25. Traders foresee an end to the legal dispute between the SEC and Ripple Labs. Optimism from traders pushed payments-focused XRP token to the front of the market, beating bitcoin (BTC), ether (ETH) and the broad-based CoinDesk 20 index in Asian trading hours. XRP has risen 7% in 24 hours to over 64 cents, the highest point since March 25, amid a large scheduled token unlock and increased hopes for settlement of the long-running SEC Ripple lawsuit. A Tuesday filing showed that the U.S. Securities and Exchange Commission (SEC) intends to amend its complaint against crypto exchange Binance, including with respect to "Third Party Crypto Asset Securities," which likely means that the Judge won't have to decide whether ten tokens such as Solana's SOL and Polygon's MATIC are unregistered securities just yet. Although the filing did not name any token, traders are taking it to be a sign that the legal dispute between the SEC and Ripple Labs, which the regulator argues issued XRP, could be ending. Ripple and XRP aren't interchangeable. While Ripple is a fintech company focused on building a global payments network, XRP is an independent digital asset used for things like online payments and currency swaps. Ripple is set to unlock 1 billion XRP, or $641 million worth at current prices, in August as part of a pre-determined unlock schedule. While the concept of putting more token supply onto the market would logically drive down the price, a growing field of research suggests it might accelerate an existing bullish market trend because of increased liquidity. Market data from CoinGecko shows that XRP's demand stems from South Korea. The XRP-Korean Won trading pair came in at $386.5 million versus Binance's XRP-USDT trading pair, which hit $352.5 million in volume. In crypto circles, South Korean traders are known for pushing euphoric rallies on tokens, contributing to buying pressure and possibly influencing prices. Earlier in July, XRP trading activity on local exchanges crossed those of usual leaders bitcoin and tether (USDT) stablecoins, contributing to a 20% rally in the tokens. https://www.coindesk.com/markets/2024/07/31/xrp-surges-7-amid-ripple-sec-settlement-hopes-600m-token-unlock/

2024-07-31 06:51

The crypto Trump trade appears to be softening. Bitcoin ETFs broke an inflow trend, while ether ETFs recorded net inflows for the second time in their existence. Traders are looking to the possibility of soft U.S. tech earnings as a signal for upcoming volatility in the BTC market. U.S.-listed spot bitcoin (BTC) exchange-traded funds (ETFs) recorded outflows while ether (ETH) ETFs recorded inflows after a four-day losing streak on Tuesday as prices pared gains from last week’s run-up to Republican presidential candidate Donald Trump’s speech. Spot bitcoin ETFs recorded $18 million in net outflows, breaking a four-day streak that saw inflows as high as $124 million. SoSoValue data shows that Grayscale’s GBTC led outflows at $74 million. Products from Fidelity, Ark Invest, Bitwise, and VanEck saw outflows ranging from $2 million to $7 million. Blackrock’s IBIT was the only ETF that recorded inflows, almost $75 million. Eher-tracked ETFs recorded net inflows at $33 million after a four-day losing streak, only the second day of net inflows since they went live on July 23. Ether ETFs have witnessed a cumulative net outflow of over $400 million. Grayscale’s ETHE has recorded the most losses at $1.84 billion, while BlackRock’s ETHA leads inflows at $618 million. BTC surged to over $69,000 last week as Trump took the stage at the Bitcoin 2024 conference in Nashville, revealing plans to fire the U.S. SEC head Gary Gensler and create a strategic bitcoin reserve if elected. However, the cryptocurrency lost as much as 5% on Monday as the U.S. Marshals Service shifted $2 billion worth of BTC to two new wallets, instilling fears of a looming liquidation. Meanwhile, traders are largely cautioning of further price volatility as major U.S. technology firms are scheduled to release earnings this week – an event that tends to influence bitcoin prices. “Election headlines will remain a major focus, but several key macroeconomic events are also on the horizon,” Singapore-based QCP Capital said in a Telegram broadcast Tuesday. “Key events starting with the FOMC meeting on Wednesday, megacap tech earnings (Apple, Amazon, Meta) throughout the week, and unemployment data on Friday.” “We maintain a range-trading outlook for BTC,” the firm said. CORRECTION (July 31, 08:43 UTC): Corrects ether ETF inflows in headline, first paragraph. An earlier version of this story said the ETFs experienced their first net inflows. CORRECTION (July 31, 10:50 UTC): Corrects ticker for Grayscale's bitcoin ETF in third paragraph. https://www.coindesk.com/markets/2024/07/31/bitcoin-ether-etfs-record-outflows-as-trump-speech-euphoria-fades/

2024-07-31 06:19

Bitcoin has exhibited a strong positive correlation with NVDA since late 2022. NVDA's 30-day implied volatility has surpassed bitcoin and ether's gauge. Bitcoin has exhibited a strong positive correlation with NVDA since late 2022. Nasdaq-listed Nvidia (NVDA), hailed by Goldman Sachs as the world's most important stock this year, is expected to see more significant price swings than crypto market leaders bitcoin and ether. NVDA's 30-day options implied volatility, a gauge of anticipated price swings over four weeks, has recently surged from an annualized 48% to 71%, according to data source Fintel. Meanwhile, crypto exchange Deribit's bitcoin DVOL index, a measure of 30-day implied volatility, has declined from 68% to 49%, according to charting platform TradingView. The ETH DVOL index has dropped from 70% to 55%. Options are derivative contracts that protect the buyer from bullish and bearish price swings. The implied volatility, influenced by demand for options, represents the degree of uncertainty or expected price turbulence. NVDA, a bellwether for all things artificial intelligence (AI) and the producer of graphics processing units formerly used for cryptocurrency mining, has emerged as a barometer of sentiment for both equity and crypto markets since the debut of ChatGPT in late 2022. Both bitcoin and NVDA bottomed out in late 2022 and have since exhibited a strong positive correlation. As of writing, the correlation between 90-day prices on bitcoin and NVDA was 0.73. NVDA's stock is down roughly 26% since reaching a high of $140 last month, offering bearish cues to the crypto market. Bitcoin has been locked in the range of $60,000 to $70,000, CoinDesk data show. The spike in NVDA's implied volatility is likely related to the hedging activity of market makers, a phenomenon often seen in the crypto market, according to the crypto financial platform BloFin. "It must be admitted that negative gamma does not only dominate the crypto market. In the U.S. stock market, SPY and QQQ have experienced significant declines caused by negative gamma hedging, and the high volatility risk has made NVDA's front-month implied volatility level significantly surpass that of cryptocurrencies such as BTC and ETH," Griffin Ardern, head of options trading and research at crypto financial platform BloFin, told CoinDesk. Negative or short gamma means market makers trade in the direction of the price moves to maintain their overall exposure direction-neutral, inadvertently adding to market volatility. https://www.coindesk.com/markets/2024/07/31/nvidia-becoming-more-volatile-than-bitcoin-and-ether/

2024-07-30 19:58

The office of Senator Cynthia Lummis, who proposed the strategic reserve at the Bitcoin Nashville conference on Saturday, shared a draft of the legislation with CoinDesk. The purchase of bitcoin for a new strategic reserve would be financed partly by revaluing Federal Reserve's gold, according to draft legislation from U.S. Senator Cynthia Lummis's office. The plan proposes establishing a "Bitcoin Purchase Program" of up to 200,000 BTC a year over a five-year period. U.S. Senator Cynthia Lummis's plan for a new Strategic Bitcoin Reserve would finance purchases of the cryptocurrency partly by revaluing gold certificates held by the Federal Reserve System, according to a draft of the legislation obtained by CoinDesk. Lummis, a Wyoming Republican who is known for her Bitcoin-friendly policy stance, announced her intention to propose the reserve on Saturday at the Bitcoin Nashville conference. She came onstage just minutes after former U.S. President Donald Trump, the Republican nominee in this year's presidential race, delivered a speech on blockchain policy before the cheering room, filled to its 8,500-person capacity. Read More: The U.S. Government May Begin Hoarding Bitcoin, But How and Why? Trump, during this speech, endorsed using the U.S. government's existing bitcoin holdings – primarily obtained through forfeitures and seizures related to criminal cases – to form the "core" of a new "strategic national bitcoin stockpile." According to the draft bill, under the working short title of "Bitcoin Act of 2024," the Treasury secretary would "establish a decentralized network of secure Bitcoin storage facilities distributed across the U.S.," selecting the locations for the vaults "based on a comprehensive risk assessment, prioritizing geographic diversity, security and accessibility." The Treasury secretary would establish a "Bitcoin Purchase Program" of up to 200,000 BTC a year over a five-year period, for a total of 1 million, according to the draft. The bitcoin would be held for at least 20 years and could only be disposed of for the purpose of paying off federal debt. After that, no more than 10% of the assets could be sold during any two-year period. The bitcoin purchases would be financed through a few methods, describe in the draft bill as "offsetting the cost of the Strategic Bitcoin Reserve." The plan calls for the setting aside of $6 billion from any net earnings remitted by Federal Reserve to the Treasury from fiscal years 2025 through 2029, and it would reduce the discretionary surplus funds of Federal Reserve banks to $2.4 billion from $6.825 billion, the level that's currently stipulated in the Federal Reserve Act. Revaluing the Fed's gold There's also the revaluation of Federal Reserve banks' gold certificates to reflect their fair market value. Under the plan, within six months of enactment of the legislation, Federal Reserve banks would tender all of their oustanding gold certificates to the Treasury secretary. Within 90 days after that, the Treasury secretary would issue "new gold certificates to the Federal Reserve banks that reflect the fair market value price of the gold." The Federal Reserve banks would then "remit the difference in cash value between the old and new certificates" to the Treasury secretary. Read More: Anthony Pompliano: Bitcoin Will Be on U.S. Balance Sheet in 'Next 10, 15 Years' As of July 24, Federal Reserve banks held "gold stock" valued at $11 billion, according to the central bank's most recent balance sheet update. That valuation might be based on the official U.S. book value of $42.22 per troy ounce, which the Federal Reserve Bank of New York uses to value its gold. But the market value of the gold is more than 50 times higher, with front-month futures contracts on the yellow metal trading around $2,400, based on MarketWatch pricing. https://www.coindesk.com/policy/2024/07/30/us-strategic-bitcoin-reserve-to-be-funded-partly-by-revaluing-feds-gold-draft-bill-shows/