On Wednesday morning in Asia, Bitcoin was trading flatly below the resistance level of $26,000. Ether rose marginally but remained below the $1,650 threshold, while the top 10 non-stablecoin cryptocurrencies traded in a range. After Visa’s announcement that it would expand stablecoin payments to the Solana network, Solana led the pack of victors. After a decline on Tuesday, U.S. stock futures traded in a range of prices on Wednesday. Russian and Saudi Arabian restrictions on oil exports have stoked inflationary concerns and investor dread of future U.S. interest rate increases.
Solana accelerates Visa’s partnership
Bitcoin edged up 0.01% in the last 24 hours to US$25,764.10 as of 07:10 a.m. in Hong Kong, for a weekly loss of 6.72%, according to CoinMarketCap data. Since Saturday, the dominant cryptocurrency has been trading between $25,500 and $26,000. It was trading in the same range in June before the Bitcoin exchange-traded fund (ETF) application by U.S. investment behemoth BlackRock sent the price above US$30,000.
“The market appears to underestimate the potential impact of U.S. Bitcoin spot exchange-traded funds. Approval of a spot ETF should attract massive inflows, thereby exerting significant buying pressure on Bitcoin. If, on the other hand, the BTC spot ETFs are denied, nothing will change,” the crypto research firm K33 Research wrote in a report published on Tuesday.
“Prices are now the same as they were prior to the Blackrock announcement, which gave BTC spot ETF chances new life.” The Nasdaq 100, an indicator of the market’s general risk appetite, is up 2% over the same time period. The BTC spot ETFs will be enormous, and with enhanced approval odds, it appears that the market is mispricing it,” continued the report.
Tuesday, digital asset manager Grayscale Investments urged the U.S. Securities and Exchange Commission (SEC) to approve its application to convert the Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin exchange-traded fund (ETF). This occurred after a court ruled in favour of the digital asset management company on August 29, compelling the SEC to reconsider an application it rejected the previous year.
“GBTC is ready to operate as a bitcoin ETF upon regulatory approval, and Grayscale looks forward to further constructive engagement with the SEC,” Grayscale said in a Tuesday Twitter thread.
Justin d’Anethan, manager of Asia-Pacific business development at Belgium-based crypto market maker Keyrock, said the resubmission of Grayscale’s request to the SEC for their ETF approval is a reason for optimism.
The price of Ethereum increased by 0.51% to $1,631.79. Over the past week, it has decreased by 5.53%. Since the weekend, the second largest cryptocurrency has been trading around $1,640. However, K33 analysts anticipate a price increase for the token in the immediate future.
“September and October favour overweight exposure to ETH, as ETH carries stronger ETF momentum in the near term,” K33 wrote in a report published on Tuesday. Futures-based ETH ETFs are expected to receive final approval decisions in mid-October, with a high likelihood of approval.
In the United States, nearly a dozen firms, including Volatility Shares, Bitwise, Roundhill, and ProShares, have filed to launch Ethereum ETFs.
Solana’s SOL led the gainers with a 4.43 percent increase to $20.22 per share, despite a weekly loss of 7.19 percent.
Visa Inc. announced on Tuesday that it will extend its stablecoin settlement services to the Solana blockchain. Since March 2021, the global payments colossus has supported USDC settlements on the Ethereum blockchain.
Visa’s addition of the blockchain to its payment network follows an extensive period of planning and infrastructure evaluation, according to a tweet from Solana on Tuesday.
“The partnership between Solana and Visa is a positive development for the blockchain ecosystem,” said John Stefanidis, CEO of Balthazar DAO, a blockchain infrastructure foundation.
“It expands the spectrum of use cases beyond Ethereum-based applications. In addition, Solana offers quicker and more cost-effective transactions, making it an excellent choice for settling internal transactions, as stated by Stefanidis.
On September 1, the cryptocurrency exchange Coinbase launched a new crypto lending platform for institutional investors in the United States. According to a filing made with the U.S. Securities and Exchange Commission on Friday, the platform has raised over $57 million in investment.
The introduction of the platform follows the failures of prominent cryptocurrency lenders, including Celsius Network, BlockFi, and Genesis Global. These failures created a void in the crypto lending market that the new Coinbase platform could fill.
The total capitalization of the crypto market increased by 0.15 percent to $1.04 trillion. The volume of trade increased by 5.5% to $25.05 billion.
Oil prices increase; Goldman Sachs reduces its US recession forecast
Futures on U.S. equities were neutral as of 9:40 a.m. in Asia. The Dow increased while the S&P 500 and Nasdaq recorded losses. On Tuesday, all three major U.S. indices closed lower. The Dow led the declines with a decrease of 0.56%.
The majority of the major stock indexes in Asia posted losses. China’s Shanghai Composite Index, Hong Kong’s Hang Seng, and South Korea’s Kospi declined, while Japan’s Nikkei gained 0.58 percent.
On Tuesday, the benchmark Brent Crude Oil price reached US$90.38 per barrel, the highest level since November 2022. Saudi Arabia and Russia extended their unilateral oil supply cutbacks by three months until the end of the year, which contributed to the declines in the Asia equity market.
Tuesday, the investment firm Goldman Sachs reduced its forecast for a U.S. economic recession in the next 12 months from 20% to 15%. The figure is significantly lower than the 60% consensus of Bloomberg analysts. Continued positive inflation and robust labour market data were cited as the reasons for the report’s optimistic outlook.
Christopher Waller, governor of the U.S. Federal Reserve, stated in an interview with CNBC on Tuesday that “a hell of a good week of data” for August, including a better-than-expected jobs report, indicates a deceleration in inflation. However, he stated that it is too soon to tell if the Fed will continue its monetary tightening policies.
Waller stated, “I want to be extremely cautious before declaring that we’ve completed our work on inflation until we see a couple of months continue along this trajectory.”
He added, “I don’t believe a further increase would necessarily trigger a recession if we felt we had to implement one.” Even if we raise rates one more time, it’s not clear that we’re in imminent peril of causing significant harm to the job market.
Loretta Mester, president of the Federal Reserve Bank of Cleveland, was more hawkish. She said in an interview with German news outlet Borsen-Zeitung Tuesday that the Fed “might have to go a bit higher” in its policy rates to manage a still high level of demand in the economy.
The Federal Reserve will meet on September 20 to make its next decision regarding interest rates, which are presently between 5.25 and 5.50 percent, the highest level in 22 years.
The CME FedWatch Tool predicts a 93% chance that the Fed will maintain the current rate in September, a decrease from the 94% chance predicted on September 1. It also forecasts a 41.3% chance for another 25-basis-point rate hike in November, up from 33.5% on Sept. 1.
In a Tuesday research note viewed by Bloomberg, Jan Hatzius, chief economist at Goldman Sachs, stated, “Fed officials are unlikely to move swiftly towards easier policy unless growth slows more than we forecast in the coming quarters.” We therefore anticipate only very incremental reductions of 25 basis points per quarter beginning in 2024Q2.
Thursday’s official speeches will provide additional insight into the Fed’s rate-setting strategy. S&P will release its August U.S. services purchasing manager index (PMI) later on Wednesday.