What happened last week

This week started off on a positive note with firstly the JOLT report on Monday which indicated that the US labour market was on a track back to pre-covid levels. The effects of this report were amplified to some extent by the Supreme Court decision to rule in favor of Grayscale in the ongoing lawsuit with Coinbase shares increasing 15% intraday but reverted most of the gains Thursday afternoon and into the evening along with the majority of the crypto board which on the contrary seems to end the week exactly where it started. The drop started around 15:30 CEST slipping down around 4% to slightly above the 26’000 support before the news of SEC delaying all BTC spot ETF applications came at around 22:00 CEST which caused another miniscule leg down of around 0.5%. pushing BTC slightly below said support and BTC has now been tied even tighter to the support level. This level is exactly where Bitcoin entered the week before the Supreme Court ruling. With August historically being the worst month for Bitcoin, this August was no different and even marked the worst monthly performance since the collapse of FTX. 

Equities are ending the week on a more positive note than crypto markets although slightly with the mixed today as US inflation data came in in accordance with market expectations adding further confidence to a no-hike September. According to CME FedWatch Tool the likelihood of a no-hike is at 88.5% while the probability of a hike in November remains at 49%. While inflation seems to be somewhat under control at the moment from a macro perspective, US consumer confidence dropped slightly in August on inflation worries as reported by Reuters while credit card delinquency also hit a historical high. 

In China government stimulus continues, this week this week by reducing the stamp duty on stock trades - the first such reduction since 2008. This is essentially a tax cut, which, coupled with the approval of 37 new retail funds, is fueling optimism about the Chinese economy. China also lifted the Covid test requirement for inbound travellers.

Today there is more labor market data due in America to support the JOLT report and given its positive indications, expectations also seem to be that there will be no major surprises.

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Our take

The current situation feels somewhat stable with some positive signs emerging in the 2 biggest economies while crypto investors are eagerly awaiting the ETF saga unfold. Today’s delay on all ETF applications was very much expected in our view, although the markets shows a slightly different picture losing some gains. The final deadine would be in March which coincides with a halving in April and given the positive signs we have seen lately the market could likely be in for a surge soon. Next Monday its Labor Day in the US and Canada so the weekend including Monday is unlikely to take us anywhere significant price wise.

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The week ahead

Tuesday, 29. August

• US + CA Labor Day! 
• Swiss GDP
• China PMI

Wednesday, 30. August

• EU PMI
• EU PPI

Thursday, 31. August

• Swiss unemployment rate 
• EU GDP
• EU Employment figures
• US Job data
• FOMC member speaking
• Fed Balance Sheet

Friday, 01. September

• Fed Vice Chair speaking
• China CPI
• China PPI