Daily News | Many Market Makers Transferred A Large Amount of BTC to the Exchange, BTC May Rise to $70K After Interest Rate Cuts, Focus on Tonight's CPI Data

Crypto Daily Digest: The SEC stated that it will strictly regulate the crypto industry, and many market makers have transferred a large amount of BTC to the exchange

Gary Gensler, Chairman of the United States Securities and Exchange Commission (SEC), will attend a hearing of the Senate Banking Committee on Tuesday morning. He still insists that cryptocurrencies must comply with the same laws as other securities such as stocks, and many cryptocurrencies fall under the jurisdiction of the SEC.

In his prepared testimony released on Monday, he said, “given the widespread non-compliance of the industry with security laws, it is not surprising that we have seen many problems in the market. This is reminiscent of the situation before the implementation of federal security laws in the 1920s. Therefore, we have taken a series of enforcement actions, some of which have reached settlements and some have filed lawsuits.”

Arthur Hayes stated in his blog that if the Federal Reserve continues to raise interest rates, real interest rates will become even more negative and may remain in this situation for the foreseeable future. The reason why Bitcoin failed to reach $70,000 is that people are more concerned about nominal Federal Reserve interest rates than comparing them with high nominal GDP growth in the United States.

Hayes believes that the Federal Reserve’s primary task is to protect banks and other financial institutions from bankruptcy, and the decay of bonds may lead to a collapse of the entire financial sector. Therefore, the only option for the Federal Reserve is to lower interest rates to restore the health of the banking and push Bitcoin rapidly towards $70,000.

The reason why Bitcoin has such a positive convex relationship with Federal Reserve policy is that the high ratio of debt to GDP leads to the collapse of traditional economic relations. This is similar to raising the temperature of water to 100 degrees Celsius, which will remain liquid until it suddenly boils and turns into a gas. In extreme cases, things can become non-linear and potentially binary.

Although Hayes believes that the Federal Reserve may be forced to lower interest rates to near zero and restart quantitative easing policy, he believes that even if not, Bitcoin can rise significantly.

On-chain data shows that as the market sell-off intensified on Monday, trading companies such as Jump Trading, Wintermute, and Abraxas Capital transferred a large amount of BTC, ETH and ARB to the cryptocurrency exchange. Blockchain analysis company Arkham Intelligence tweeted that asset management company Abraxas Capital transferred 14,130 ETHs worth approximately $22.5 million to Bitfinex through two transactions. Jump Trading sent nearly 236 Bitcoins worth $5.9 million to Binance at once. In addition, according to Lookonchain monitoring, Wintermute, another large market maker, has deposited over $3.3 million in ARBs into Binance in the past 8 hours.

Regarding the recent sell-off of FTX, according to Matrixport in a report, FTX plans to sell at least $3.4 billion in cryptocurrency, which will put pressure on Altcoins for the rest of this year. FTX expressed its desire to sell $200 million worth of crypto assets every week, which means FTX will continue to sell assets until the end of 2023.

Furthermore, FTX is not the only major seller in the market. The report states that VC is also facing tremendous pressure to return funds to investors. Research director Markus Thielen said, “These venture capital funds may still be important sellers of Altcoins.”

Today’s Main Token Trends

BTC

Following the breakdown of the consolidation range mentioned in yesterday’s live broadcast, there was a swift recovery, with prices reaching the upper boundary at $26.5K. The short-term trend still leans towards a bearish sentiment. In the short term, attention should be paid to the resistance level at $26.5K to determine if a breakthrough occurs, which could potentially test the $26.9K level.

OAX

OAX achieved its all-time high at $0.5405, signaling a mid-term completion of a rounded bottom pattern. After briefly surging to the $0.2043 resistance level yesterday, a quick retracement followed. In the short term, it is crucial to maintain the key support level at $0.1510. A conservative strategy suggests re-entering positions upon breaking the $0.2043 resistance.

TRB

The short-term four-hour chart is showing a converging pattern with upward momentum. There have been two attempts to breach the resistance level at $29.32. Continued attention should be given to the converging upward trendline, which might lead to a retracement. If a breakthrough of the $29.32 resistance occurs, the potential targets are $31.95, $33.60, $34.95, and $36.29.

Macro: The Federal Reserve has completed interest rate hikes, funds are pouring into US stocks, stay tuned for tonight’s CPI data

The world’s attention is turned to tonight at 12:30 am (UTC), and CPI data will be released tonight.

From the perspective of market expectations, this inflation will be the most difficult to interpret since the Federal Reserve initiated this interest rate hike cycle: economists expect the US CPI to accelerate to 3.6% in August, with a month on month increase of 0.5% -0.6%, which is the largest increase since inflation peaked in June 2022.

However, its core CPI, which excludes food and energy costs, will fall back to 4.3%, which will be the lowest level since November 2021 (before interest rate hikes).

The focus of Wall Street’s attention tonight will be on the comparison of core CPI with expectations (core CPI is more important than overall CPI): if the year-on-year increase of core CPI is less than 4.3%, it will be seen as positive by the market, and the US dollar index will further decline, possibly testing around the 102.80 level; If the year-on-year increase in core CPI exceeds 4.3%, it will be seen as bearish by the market, which may push up the US dollar and delay the Federal Reserve’s interest rate cut expectations.

If everything meets expectations, it will tend to be seen as positive by the market: CPI has increased by 3.6% year-on-year and 0.6% month on month; The core CPI increased by 4.3% year-on-year and 0.2% month on month. Because the core CPI rose by 0.2% month on month, calculated at an annual rate, it is in line with the Federal Reserve’s inflation target of 2%.

According to CME’s “Federal Reserve Observation” data, the probability of the Federal Reserve maintaining interest rates unchanged from 5.25% to 5.50% in September is 93.0%, and the probability of raising interest rates by 25 basis points to the 5.50% to 5.75% range is 7.0%. The Federal Reserve will announce its interest rate decision (cap) for the period from September 21st to September 20th at 2:00 am, with an expected 5.5%, compared to the previous 5.5%.

On the other hand, according to the latest global fund manager survey by Bank of America, investors’ stock allocation has undergone a “drastic change” - investors have flocked to the US market and withdrawn from emerging markets.

The fund managers surveyed manage a total of $616 billion in assets. Their views on the Asian economy have become pessimistic, with a significant reversal from February this year. This has had an impact on the allocation of emerging market stocks, with net overallocation decreasing from 34% to 9%, which is the lowest level since November 2022.

In contrast, the allocation of US stocks increased by 29 percentage points, reaching a net over allocation of 7% - the first over allocation since August last year.

This year, the US stock market outperformed its global peers, with the S&P 500 index up 17%. Meanwhile, the emerging market index MSCI rose only 2%.

More broadly, investors continue to be optimistic about the global economy avoiding a recession, with 74% of participants believing there may be a “soft landing” or “no landing”, while only 21% expect a “hard landing”. Nevertheless, they still hold a pessimistic attitude: 53% of people expect the economy to weaken in the next 12 months, an increase from 45% in August.