Recurring market commentary on what’s happening in the crypto markets, summarized by the Crypto Broker team at Crypto Finance AG.
Market commentary
Good afternoon!
After a weekend of low volume, Bitcoin (BTC) dropped by more than 6% between Tuesday night and Wednesday morning. Ethereum (ETH) was up more than 7% after the Bellatrix update was completed successfully on Tuesday. But then it followed suit and dropped 12%. The resilient bulls have taken over since then. Both BTC and ETH have recovered their losses and made new two-week-highs.
General developments
Equities fell at the start of the week, after Labor Day. ISM PMI numbers came in higher than forecasted and higher than the previous month, indicating that the economy is still expanding. As a result, the US Dollar Index (DXY) keeps pushing to new highs. Yesterday, the ECB raised interest rates by 75bps to 1.25%, and deposit facility rates from 0% to 0.75%. Powell also spoke on Thursday. He restated the Fed's strong commitment to controlling inflation, without any Paul Volcker style social costs, a.k.a. a recession.
The Bitcoin Hashrate, the sum of the computing power assigned to mining new blocks, is back at all-time highs, after seeing a slight drop in July. This is positive for the security and health of the chain. The more computing power added to the network, the more difficult it gets to mine a block. Then again, this increase in mining difficulty weighs on the profitability of miners. Data from f2pool.com, shows that many of the larger miners are not profitable anymore. With the increase in energy prices, many will be wondering how the hashrate can stay so high. It is likely that most major miners have a fixed-priced energy contract in place. It will be interesting to see if the energy companies are able to honour these agreements, and what the subsequent impact will be on the hashrate.
An exciting week ahead
Next week will be huge.
CPI data will be released on Tuesday, which will point to the outcome from the FOMC meeting on Wednesday, September 21st. Ethereum's transition to proof-of-stake is also set to happen next Wednesday or Thursday.
Happy Trading!
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