Altcoins strong in a quiet period
The crypto market was calm last week. Bitcoin's price hovered around ā¬67,000, and many altcoins also performed well, despite turbulence outside the crypto market. Oil prices are rising due to increasing unrest in the Middle East, pushing up inflation expectations and putting pressure on interest rates. The US Treasury Secretary is trying to calm the situation, but will he succeed? Read more in this edition of Bitvavo Market News.
Market update
Between 17 and 21 August, Bitcoin gained 25%, climbing from ā¬54,000 to ā¬67,000. The rally was broad-based, with spot, futures and ETFs all contributing to the rise, alongside participation from markets across the globe. This loudly signals that investors are more optimistic than they were in previous months.
Since then, the crypto market has been moving sideways.Ā Bitcoin's price edged up further to a provisional high of ā¬70,750 on September 3, but there is yet to be a breakout or new period of ascent. The price has since fallen back to around ā¬67,000.
Notably, many altcoins are performing at least as well. ETH's chart looks stronger than BTC's, with the price clearly above the March, April, and May highs, all around ā¬2,050. For now, ā¬2,180 is acting as the upper limit. ETH reaches that level almost daily, but has yet to close above it.
Ether is now being squeezed between the short-term averages that have supported this rally and the ā¬2,180 boundary. Investors would ideally like to see an upward breakout, but a downward dip could also provide useful information. If ETH forms a higher low than June's ā¬1,310, it would signal that ETH has started a new bull market.
Featured
Bessent clashes with the bond market
You can certainly win at a casino, and with a bit of luck, you might leave with more money than you came in with. The casino is fine with that. As long as enough people keep playing, the rules of the game ensure the house wins in the long run.
This is a position Scott Bessent is quite comfortable with. The US Treasury Secretary spoke last Tuesday at a university in Texas about his informational advantage over currency traders. If Japan intervenes to support the yen, he has a pretty good idea of what the authorities are planning. After all, he speaks to them directly, stating āI am the house nowā.
In 1992,Ā Bessent worked for George Soros when Soros bet against the British pound. Great Britain was trying to keep its currency within the European Exchange Rate Mechanism but was forced to abandon its defense on September 16. Soros bet that it would fail and made more than a billion dollars in the process. Bessent was among the winners.
Now, over thirty years later, the roles are reversed. Bessent must convince investors that the US government has the situation under control. But however good his information advantage may be, he cannot decide where they put their money.
This became painfully clear last week. Interest rates on long-term US government bonds are rising, making borrowing more expensive for the government, businesses, and homebuyers. Bessent is trying to lower these rates, in part, by buying back existing government bonds.
These buybacks have existed for some time but are now being expanded by Bessent. In August, the cap for long-term bonds increased from $2 billion to at least $4 billion. Up toĀ $6 billion was available for the latest round.
But investors are unimpressed. Investment banks had expected more decisive action, resulting in bonds being sold and the ten-year yield rising to approximately 4.85%. Bessent confidently raised the stakes, only to get exactly what he was trying to prevent: higher yields.
This also feeds into theĀ debasement trade, which has recently returned to the spotlight. This involves investing in scarce assets like gold and Bitcoin, driven by fears that growing government debt will ultimately only remain manageable if the value of money continues to decline.
Bessent's buyback program is not currency debasement in itself, but his struggle shows why that narrative resonates. Washington has significant influence over the supply of dollars, but it has no such influence over the supply of Bitcoin.
In other news
Phishing emails impersonating BitBox and Trezor targeting hardware wallet users. The scammers gained access to Brevo, a marketing platform used by both companies. From there, they were able to send emails that wereĀ almost indistinguishable from genuine communications. As far as is known, the hardware wallets themselves are secure; the danger lies in what the sender asks you to do. Never enter your recovery phrase on a website, no matter how credible the email appears.
Dismissing Bitcoin as mere gambling overlooks its significance. This is the view of Bloomberg journalistĀ Eric Balchunas on X. He cites anĀ article from human rights activist Alex Gladstein concerning saving and making payments in countries where currency debasement and frozen bank accounts are part of daily life. Balchunas adds an uncomfortable question: financial freedom may seem like a given in America, but who can guarantee it will stay that way?
US Bitcoin funds in the red after three strong trading weeks. Last week, approximately $460 million flowedĀ out of the funds. In the three weeks prior, the funds attracted $3.8 billion in inflows. This pattern aligns with a market cooling down after an explosive rally. Notably, ether funds are showing a different trend. They reported inflows again last week, attracting nearly $200 million. BlackRockās ETHA accounted for most of this, with inflows of nearly $150 million.
Clarity Act faces an important test on Tuesday. Will the US crypto bill secure enough support to move forward? Senator Cynthia Lummis presented aĀ revised version on Thursday, including clarifications on DeFi oversight. This procedural vote requires sixty votes, including the support of at least seven Democrats. It is unclear whether the latest version addresses their concerns, as the amendments presented by Lummis do not address the most contentious issue: conflicts of interest.
Satoshi Radio: InĀ the latest episode of Satoshi Radio, the central question is how much grip policymakers really have on the market. Scott Bessent is betting big and wants to push down interest rates on government debt. The hosts also discuss a collapsed memecoin, a major hack at Liquid Network, and a Dutch IPO that's being blocked by the court. As always, the episode closes with an extensive market update.
This article is for informational purposes only and does not constitute a marketing communication or recommendation. None of the content herein should be considered as investment advice or a substitute for it. Bitvavo makes no guarantees regarding the accuracy or completeness of the provided information. Investments involve risks. There is a possibility of losing your entire invested capital.