Market commentary
The crypto markets recovered considerably towards the end of last week. After a two-week consolidation phase, the Bitcoin price managed to break back above the USD 63,000 mark and thus the 200-day moving average. The markets received a tailwind from important macro developments.
Will quantitative easing return?
Quantitative easing (QE) is a monetary policy instrument used by central banks to stimulate the economy. Central banks buy large quantities of financial assets, such as government bonds, to increase the money supply, lower interest rates and encourage lending and investment. This once unconventional monetary policy is now used globally, as can be read in the CVJ.CH Academy.
Following a significant rise in inflation in the wake of the Covid QE programs, the US Federal Reserve (Fed) finally had to hit the brakes. Interest rate hikes and a decline in global liquidity put pressure on the prices of many asset classes. However, policymakers are now satisfied with inflation trends. The Federal Reserve recently confirmed imminent interest rate cuts. This should once again weaken the purchasing power of the US dollar, which in the past has had a positive effect on Bitcoin as an alternative to inflationary fiat money.
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ETF investors are buying again
In the crypto-specific context, US Bitcoin ETFs again recorded significant inflows. In August alone, ETF investors bought more than USD 400 million. The less liquid altcoins also benefited from the recovery. Total crypto market capitalization has risen by almost USD 300 billion since the sell-off three weeks ago. This is partly due to the strong performance of altcoins such as Solana (SOL).
The recovery of the crypto markets appears to be underpinned by sustainable developments. In the face of significant selling pressure of up to USD 10 billion from Mt Gox, Genesis, the German Federal Criminal Police Office and other players, prices have held steady. The recent upswing could trigger a rally in altcoins in particular. Bitcoin dominance is currently at multi-year highs. The inversely correlated “Altcoin Season Index” of the Blockchain Center recently reached a historic support level.
Disclaimer
All information in this publication is provided for general information purposes only. The information provided in this publication does not constitute investment advice and is not intended as such. This publication does not constitute and is not intended as an offer, recommendation or solicitation to invest in any financial instrument, including cryptocurrencies and the like. The contents contained in the publication represent the personal opinions of the respective authors and are not suitable or intended as a basis for decision-making.
Risk notice
Investing in cryptocurrencies, is fundamentally associated with risk. The total loss of the invested capital cannot be excluded. Cryptocurrencies are very volatile and can therefore be exposed to extreme price fluctuations in a short period of time.
