Global Markets Await Rate Cuts
Bitcoin recently hit $61k for the first time in September, marking a 7.21% increase since last week, where we identified a strong support area at $53k. This surge in volatility is largely driven by expectations of a rate cut tomorrow in the US, likely to be slashed from it's 23 year high. At the same time, the S&P 500 has reached all time highs, adding further momentum to overall market sentiment.
The crypto market recovery has been fuelled by a rise in Bitcoin ETF inflows, totalling $457 million over the past week, with Mondays $263m recording the highest single day in over a month. Additionally, Michael Saylor’s MicroStrategy completed a $1.11 billion USD purchase, acquiring 18,300 BTC, a strong signal of growing institutional interest ahead of the rate decision.
Weekly Market Update
Heightened Volatility Tomorrow
Tomorrow is set to be a crucial day, as the US central bank is expected to lower interest rates, undoing some of the 2022 hikes that were introduced to tackle post COVID inflation. Bitcoin and other cryptocurrencies tend to perform well in low interest rate environments because they’re seen as risk on assets, which attract more investment when borrowing costs are low. Currently, with rates still elevated, more conservative investments like bonds and treasuries are appealing, diverting attention away from riskier assets like crypto. A rate cut could shift that balance, reigniting interest in cryptocurrencies.
There’s now a 57% probability of a 50 bps rate cut and a 43% chance of a 25 bps rate cut. Volatility is expected as traders reposition in response to the Fed’s decision. If the Fed opts for a 50 bps cut, the market for risk assets like Bitcoin could see a strong positive reaction. Rate cuts have been anticipated all year and are widely seen as a bullish catalyst for crypto, positioning Q4 for a potential resurgence.
We are now approaching "Uptober", a month historically associated with strong crypto surges with Bitcoin averaging a 29.5% return during this period. Several factors seem to be aligning this coming Q4 in favour of the market, with looming rate cuts, historical strong performing months, an upcoming election with crypto friendly policies, and Bitcoin’s market cycle pointing to the end of an accumulation phase. These elements combined set the stage for a potential surge in the crypto market as the year wraps up.
New Government Holding Bitcoin
Bhutan, a South Asian nation, has been revealed as a significant holder in the Bitcoin market, holding 13,011 BTC, valued at approximately $780 million. This data comes from Arkham Intelligence and marks the first time Bhutan's Bitcoin holdings have been publicly disclosed.
Unlike other governments, Bhutan’s Bitcoin stash wasn’t accumulated through law enforcement seizures. Instead, the country's holdings stem from its active involvement in Bitcoin mining, which began as early as 2019. This makes Bhutan the 4th largest government holder of Bitcoin, a strategic engagement in Bitcoin mining also highlights the country’s progressive approach to leveraging renewable energy sources for cryptocurrency mining, as it taps into its vast hydropower resources to support these operations.
SUI Continued Domination
Over the past week, SUI has demonstrated impressive growth, surging 34% in just seven days. Yesterday, SUI made a significant announcement, native stable coin USDC will be launching on the network. This integration enhances the user experience for a wide range of applications, from DeFi and gaming to cross border payments, streamlining transactions across the ecosystem. It also strengthens SUI's leadership position within DeFi, where it currently ranks in the top 10 based on total value locked.
SUI’s influence in the Layer 1 space is growing rapidly, with key metrics showing remarkable increases this week with 3.26 million more daily transactions, 818,000 additional daily active users, and a $26 million rise in daily volume compared to this time last week. Despite being a relatively new chain ranked 13th among Layer 1s, SUI is outperforming many of its competitors. With its innovative technology, SUI's future looks incredibly bright.
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