5 Things to Know in Crypto Today: BTC Hovers Above $21K Amid Risk-off Macro Tone

Key Points

• Cryptocurrencies are trading with a negative bias on Monday amid a risk-off tone to global macro trade.
• Bitcoin was last trading in the low $21,000s, but still within recent ranges as altcoins suffer.
• It’s a busy week of macro events, with Fed Chair Powell’s Friday speech the highlight.

Crypto Weighed Amid Downbeat Tone to Macro Trade

A risk-off tone to global macro trading conditions amid continued concerns about 1) hawkishness from central bankers from the Fed and ECB and 2) a worsening energy crisis in Europe that risks further pushing up inflation their and tilting the continent into recession is weighing on cryptocurrency markets a tad on Monday. Bitcoin was last trading lower by about 1.0% on the day, though at current levels around $21,250, is still well within its weekend ranges, as prices consolidated after last Friday’s big drop from above $23,000.

Major altcoins are performing poorly, with Ethereum down over 3.5% in the last 24 hours according to CoinMarketCap and now under $1,600. Over the same time period, the likes of BNB, XRP, ADA, SOL and DOGE are all down between 2-4%. Monday is going to be a very quiet session in the US, implying not much volatility in cryptocurrency markets. US PMI survey data for August on Tuesday, the second reading of US Q2 GDP growth on Thursday and then July Core PCE inflation and a speech from Fed Chair Jerome Powell on Friday are the main events.

Crypto Markets Brace for Upcoming Fed Jackson Hole Event

The US Federal Reserve holds its annual symposium in Jackson Hole, Wyoming on Friday, an event that will be the dominant driver of macro sentiment this week. Fed Chair Jerome Powell will be delivering a major address on Friday. Powell and former Fed chairs have used the platform to signal major policy changes in the past. No major shift in the Fed’s policy stance is expected to be announced this Friday.

Rather, analysts expect Powell to echo the hawkish tone of other Fed policymakers who have been speaking in the last few weeks. While policymakers have expressed different preferences regarding the timing/extent of further interest rate hikes, they unanimously agree that 1) more hikes are needed and 2) the Fed must not get complacent in its fight against inflation, which remains far from won. Concerns about Fed tightening may well keep crypto bulls at bay.

Liquidity Tightening in Cryptocurrency Markets Eases

The recent tightening of liquidity conditions in cryptocurrency markets eased last week, said Morgan Stanley in a research report released last Friday. The metric that the bank uses as a proxy of liquidity conditions is the market cap of stablecoins/digital assets whose value is linked to the value of real-world assets (such as gold-backed coins).

According to Morgan Stanley, last week was the first week since April where the market cap of these assets did not decline, a possible sign that “extreme institutional deleveraging” might now have paused. However, there also appears to be little demand for leveraged positions to be rebuilt, the bank said, citing the continued drive by global central banks to tighten monetary policy as a hurdle.

FTX Revenue Surged 1,000% in the 2020/2021 Tax Year, CNBC Reports

Global cryptocurrency exchange FTX saw its revenue surge by 1,000% in the 2020-2021 tax year, reported CNBC this weekend citing audited financial documents, with revenues exploding from around $90 million to $1.2 billion. Reportedly, FTX raked in $270 million in revenues in Q1 2022, but many analysts suspect that the worsening of the crypto winter in Q2 implies that revenues last quarter may have declined.

Cryptocurrency Market Cap Could Hit $200T in the Next 10 Years, Says Raoul Pal

Widely followed macro commentator and former Goldman Sachs executive Raoul Pal outlined in a recent interview that he thinks the market cap of cryptocurrencies could surge by as much as 200x in the next 10 years to around $200 trillion.

“If I just extrapolate the network adoption effects, the number of users, and where the number of users is going and assume it gets to somewhere between four and five billion in the next 10 years or so – which would be central bank digital currencies enabling it, all ticketing, a whole bunch of stuff going that way – the market cap of the space goes from $1 trillion to $200 trillion,” he explained.

He said that even if he was wrong by 90%, that could still mean a cryptocurrency market cap of around $20 trillion, which he said “is still the best bet in the world”.