What happened last week

Despite an initially calm outlook for August, with range-bound trading, historically low volatility with BTC reaching an all time low in terms of 30D volatility, last night proved differently with BTC opening the day -7.5%. BTC was already on a declining path before Thursday with a minor dip on Wednesday night following the release of FED minutes where the consensus seems to be a more-than-expected hawkish view essentially increasing the potential of a rate hike in September, and regardless it still gives an indication to the upcoming Jackson Hole Symposium. The sudden drop caught many off guard as evidenced by the liquidations that occurred overnight amounting to more than $1 billion, a substantial amount when liquidations above $100 million is already noteworthy relative to the past few months. As for equities Asia printed losses in the morning as Evergrande filed for bankruptcy protection in the US and there is also solid grounds for inflation concerns in Japan. Europe is traded lower in anticipation of the CPI print today where the expectations were probably not aided by the current events, the print however came in on a positive note confirming that inflation is slowing down. US markets traded similarly with all sectors but energy printing losses which is due for a correction if Citigroup is right about their recommendation to short oil after summer.

Evergrande U.S. Chapter 15: The world's most indebted real estate developer, Evergrande, recently reported a staggering loss of $81 billion in July which already then caused concerns for Chinas economy and has now filed for Chapter 15 bankruptcy protection in the US, certainly not aiding the sentiment. Another developer, Country Garden also seems to be in trouble. Interestingly enough equity markets didn’t react much as it was published. Although this might not directly be linked to Bitcoin the event, coupled with Yuan again hitting multi-year lows against the Dollar, could have stirred the market. Although we find it unlikely that this could have caused the drop we saw. Additionally, the USDRUB exchange rate touched 100 a few days back and now stands at 93, potentially causing economic concerns spanning much wider than just Evergrande or crypto for that matter.

Inflation Concerns: Prior to the FOMC August meeting, consensus was that the Fed would maintain static interest rates in their September meeting. This sentiment still holds according to the CME Fed Watch tool. However, Jerome Powell has not ruled a rate hike completely out. More information is expected to follow on this topic on August 25th when Powell is due to speak at the annual Jackson Hole Symposium. As the rate hike cycle is expected to come to a halt, many are likely extra curious for this year’s Symposium to see what is next. Hence markets will most likely remain subdued in anticipation of the outlook especially given the current macro status quo.

Bond Auctions & Bitcoin: Around 5:30 PM yesterday, short-term bill auctions took place in the US. Historically, a rise in yields, which has been the trend lately, has proven detrimental for Bitcoin as it typically signals a reduction in money supply. The benchmark 10-year yield is now back at a 15-year peak.

SpaceX's Write-Down: A wave of panic might have been triggered when SpaceX marked down their Bitcoin holdings by $370 million. Some may have interpreted this as a sale, though there's no evidence to support this claim. According to Coindesk, for tax purposes.

ETH Futures ETF: Finally to some positive news, Bloomberg posted an article at 00:56 CEST citing anonymous sources according to whom the SEC is set to greenlight ETH futures ETFs. This is of course very positive news for the market especially considering that these products may become tradeable as early as October which could become a much needed catalyst while the main topic remains spot BTC ETFs. Interestingly, the news came from anonymous sources right after a sharp drop with $1b worth of longs liquidated without any other certain causes for the drop. The first significant recovery in Bitcoin's price came just a minute before Bloomberg published on this.