Powell: "The Time Has Come", Telegram CEO Arrested, Choppy Price Action

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This Week’s Top Stories

“‘Time has come’ for US Federal Reserve to cut interest rates, says Powell” – Friday, 23.8

• “The time has come for policy to adjust,” Powell told at the annual Jackson Hole symposium for central bankers in Wyoming on Friday. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”
• During his speech at the Jackson Hole symposium, Jerome Powell indicated that the time for a monetary policy adjustment has arrived, mentioning that his confidence for inflation to be on the path to its 2 percent target has grown.  The probability for a 50-bps rate cut in September has increased after his speech, with the market pricing in a 50-bps cut with a 38 percent probability.

“Telegram CEO Pavel Durov arrested at French airport” – Saturday, 24.8

• Telegram CEO Pavel Durov has been arrested by French police at an airport north of Paris, he was detained after his private jet landed. According to officials, Durov was arrested under warrant for offenses related to Telegram. Reportedly because of a lack of moderation.
• The price of TON, the official token associated with Telegram, has dropped more than 25% following the news of Durov’s arrest on Saturday. While he is now under formal investigation, bail was set at $5.56 million, and he has now been released. He is not allowed to leave France. Fun fact: On Polymarket, market participants are betting on whether he will flee France by September 15 (10 percent chance as of today).

“OpenSea receives Wells notice from SEC, regulator says NFTs are securities” – Wednesday, 28.8

• Crypto marketplace OpenSea has been added to the SEC’s list of targets, as the regulator extends its crackdown on the sector. A Wells notice is typically one of the final steps before the SEC issues formal charges. The letter, according to the OpenSea chief, alleges that the nonfungible tokens, or NFTs, sold on its platform are securities.
• OpenSea CEO Devin Fizer posted on X, mentioning that they are shocked that the SEC would make such a sweeping move against creators and artists, and that they will stand up and fight against this move. He argues that NFTs are fundamentally creative goods and that one should not regulate digital art in the same way one regulates collateralized debt obligations.

“Nvidia shares fall even as revenue more than doubles” – Thursday, 29.8

• Nvidia’s revenue more than doubled in the past quarter to continue its run of blockbuster growth, but its shares fell as the US chipmaker failed to meet the highest expectations for what has become one of Wall Street’s most closely watched companies.
• While Nvidia beat expectations for their earnings report once again, investors seem to have bet on a beat, and the event ended up being a ‘sell the news’ event. Shares of Nvidia are currently down more than 5% since the release of the earnings report.

Chart of the Week

This week we are looking at the total stablecoin market cap, excluding algorithmic stablecoins, as it is now at its highest level in history, surpassing its previous all-time high from early 2022. This chart is indicating that new money has been entering the market since the summer of 2023, as the chart has then bottomed and has been on an uptrend ever since. We have also mentioned this in our May edition of the Industry Rollup, highlighting that stablecoins remain the most important proxy for liquidity and an important directional indicator of digital asset markets.

What’s Happening On-Chain?

While Solana has seen record numbers when it comes to monthly new addresses on its network, in other words, record numbers of unique first signers to transact on the network – in recent months, August, however, is not looking so hot right now. With one day left in the month, the current number of new addresses is on track to be the lowest year-to-date. While in July a total of 33.15 million new addresses were recorded on the Solana network, the total number for August is at 11.1 million as of today.

Digital Asset Fund Flows

Last week, digital asset investment products marked the largest inflows in five weeks, with $533 million of net inflows. The Bitcoin spot ETFs saw $252 million of net inflows on Friday alone, likely due to Jerome Powell’s speech at the Jackson Hole symposium, which sent the markets on an upward tear. While the Bitcoin spot ETFs recorded five days of net inflows last week, the Ethereum spot ETFs saw five red days with net outflows, although the outflows from Grayscale’s ETHE further slowed down last Friday, a trend that continued this week. Wednesday this week in fact marked the first net inflow day for the ETH spot ETFs since August 15. While the BTC spot ETFs experienced a positive week last week, this week was accompanied by some net outflow days after net inflows of $200 million on Monday.

The net outflows from the Ether products are mainly due to the outflows of ETHE, since the other issuers often do not see any inflows at all. The ETHE outflows have been in the low single-digit million range this week.

Market Sentiment

The crypto market sentiment is lingering back in fear territory after a couple of days at neutral levels over the last weekend. Funding rates for the major cryptocurrencies have been neutral since early April, and total liquidations have also been rather low, except for the crash on Monday, August 5, where we saw a huge liquidation cascade. The Bitcoin sentiment survey from Coinglass indicates, however, that market participants are rather leaning towards the bullish side, with 35 percent being bullish and 19 percent saying that they feel very bullish.

The stock market sentiment, as indicated by the CNN fear and greed index, is back in greed territory, after spending some time in the neutral zone and even in extreme fear at the beginning of August. The index is now at a level last seen in mid-July, where we topped the last rally before correcting to the downside. The AAII investment survey is showing a similar trend, the amount of members who feel bullish for the coming six months is now above 50 percent for the second week in a row.

Other Relevant News

• Elon Musk, Tesla win dismissal of lawsuit claiming they rigged Dogecoin – link
• US economic growth for last quarter is revised up to a solid 3% annual rate – link
• Kylian Mbappe's Twitter account was hacked and released the token MBAPPE, which has now been deleted – link
• Grayscale launches investment fund for AVAX token – link

Looking Ahead

Powell’s speech last Friday brought back some life into the crypto and traditional markets as he indicated a change in monetary policy and expressed his confidence regarding the trend of the inflation. However, optimism was short-lived, BTC traded above $65’000 for a couple of hours over the weekend and then corrected to the downside again, now trading at $59’000 at the time of writing. The S&P 500 has been trading in a price range for two weeks now, consolidating below its all-time high from mid-July. Bitcoin has also been trading more or less sideways since the beginning of August but is still farther away from its previous all-time high than the S&P 500 for example.

While market participants are awaiting a change in monetary policy in September, it is unknown how the crypto market will trade towards the decision of the Fed. While the selling pressure from Mt. Gox is likely on hold for the time being, eyes are now also on the U.S. election, coming up in November this year.

Bitcoin dominance has been on a steady uptrend over the last few weeks, sucking away the lives of many altcoin holders. The BTC dominance is now at its highest level since April 2021, while Ethereum is also trading around its lowest level compared to Bitcoin since the spring of 2021. An interesting dynamic, worth keeping an eye on.

While sentiment on the stock markets in the USA is already quite positive again and many investors are expecting prices to rise in the coming months, this should be observed with caution, as the first signs of greed are visible, for example, in CNN's index. The crypto markets are still in fear territory, although investors seem to be somewhat more positive with regard to Bitcoin.

Below you can find some of the key data releases to watch out for next week.

Monday, 2 September 2024

• U.S. Labor Day

Tuesday, 3 September 2024

• Switzerland CPI
• Switzerland GDP

Wednesday, 4 September 2024

• Polygon Mainnet & POL Migration

Thursday, 5 September 2024

• Switzerland Unemployment Rate
• U.S. Initial Jobless Claims

Friday, 6 September 2024

• Euro Zone GDP 
• U.S. Nonfarm Payrolls
• U.S. Unemployment Rate

Sunday, 8 September 2024

• Japan GDP
• China CPI, PPI