What happened last week

The week opened on Monday with prices unchanged as BTC and ETH have been bound in the same range as they have for 3 weeks now. Tuesday however proved more volatile than any other day in those 3 weeks. Most notably BTC tested the 30’000 level after a +5.3% leg but was immediately rejected only to test the level again on Wednesday which became another failed attempt. The price has since Wednesday’s failed attempt been on a slide downwards and seems to close the week in the top of the aforementioned range. The most notable news from the beginning of the week which could have impacted the sentiment positively would be PayPal launching a stablecoin, but that became public Monday while the price only increased on Tuesday. Rumours also started surfacing about Huobi being insolvent which triggered withdrawals and supposedly Justin Sun deposited 200 million USDT to the exchange in response.

As volatility and volumes are falling hand in hand, investors are looking for catalysts which is a word that has been used widely the past few weeks. As for the current week, the main catalyst that investors were anticipating was the CPI numbers from the U.S. on Thursday which came out at 3.2%, slightly below expectations at 3.3% citing lower inflation than expected which could further decrease the probability of a hike at next months meeting. This week’s inflation figures aside, expectations were already in favour of keeping the interest rate static for September since months. As has happened many times before, the BTC price reacted vaguely to the print with an immediate +0.5% leg upwards followed by an immediate -0.5% leg downwards whereafter the BTC price continued its path south of the 30’000-mark following the rejection. 

Even more notably, while the U.S. has been trying to fight inflation for long, the Chinese are facing the opposite challeange, deflation. Also Wednesday, China released it’s CPI figures. According to Bloomberg: “China’s latest consumer and producer price indexes were both negative for the first time since 2020 in July, confirming the country is in deflation.”. So, while too much inflation and too much deflation are both posing various challenges, the deflation in China could help ease the inflation in the west as the world’s largest trading nation sees declining export prices.