The head of the Federal Reserve signaled that the US Federal Reserve will not turn back monetary policy stimuli in the foreseeable future.
Bitcoin remained unchanged, holding around $ 33,000 after falling two days in a row. The largest cryptocurrency by market capitalization is now roughly sideways for the eighth week in a row.
Analysts said Bitcoin trading along with assets in traditional markets were boosted by assurances from Federal Reserve Chairman Jerome Powell that he still sees no “significant further progress” in an economic recovery – which signals that the US Federal Reserve is unlikely to turn back monetary stimulus anytime soon.
Powell’s comments come after Tuesday’s Labor Department report that June inflation accelerated at the fastest rate in 13 years. Bitcoin is viewed by some investors as a hedge against inflation due to the cryptocurrency’s firm supply schedule.
“What helped cryptocurrencies get positive was the large-scale rally on Wall Street,” wrote Edward Moya, senior market strategist at Oanda, in an email. “The Fed appears stubbornly cautious and ready to tolerate a few more months of mounting price pressures before considering a change in sentiment in the transitory / prolonged inflation debate.”
Current prices
Cryptocurrencies:
- Bitcoin (BTC) $ 32,787.2, +1.62%
- Ether (ETH) 1,986.1 USD, + 3.19%
Traditional markets:
- S&P 500: 4374.3, + 0.12%
- Gold: $ 1,827.1, +1.04%
- 10-year government bond yield closed at 1.344% compared to 1.41% on Tuesday
Ether moved higher with Bitcoin, but among altcoins, the big story of the day was a jump in price for the FOX token after the supporting ShapeShift exchange announced plans to go more decentralized and toss the token out of the air.
Looking for clues
With Bitcoin stuck in the $ 30,000 and $ 40,000 range for eight weeks, cryptocurrency analysts are searching blockchain data for clues as to how the market will perform.
David Grider, Head of Digital Assets at FundStrat, wrote in a weekly report on Wednesday that he was looking closely at the “Spend Output Profit Ratio” or SOPR. The metric is calculated by dividing the average price that Bitcoin was sold at by the average price that it was bought at.
Grider writes, “If the SOPR is greater than 1, it means that the owners of the asset are making a profit at the time of the transaction. Below 1 means that sellers have capitulated and sold at a loss. “
The metric has stayed below 1 since May, possibly a sign of a “healthy profit-taking restart,” reminiscent of a similar episode that played out in March 2020 at the start of the coronavirus pandemic. A few months later, Bitcoin prices recovered and quadrupled over the course of the year.
“In a bull market, as we expect today, an SOPR below 1 may indicate a local low as sellers are reluctant to sell at a loss,” Grider wrote.
The Glassnode diagram annotated by FundStrat shows local highs and lows in the “Spending Win Ratio” of the Bitcoin blockchain.
Source: Glassnode, FundStrat
Powell talks about stablecoins
Jerome Powell spent much of his semi-annual testimony before the House of Representatives Financial Services Committee to look at the outlook for the US economy, the inflation outlook, and the likely path of monetary policy.
He also asked questions about cryptocurrencies, as reported by CoinDesk’s Nate DiCamillo.
United States MP Patrick McHenry of North Carolina, the. Republican ranking on committee asked when the Fed would release its highly anticipated report on Central Banks Digital Currencies (CBDC) and crypto.
Powell said the report previously expected this month will come out in September.
“US regulation, along with environmental, social, and governance (ESG) concerns, is the top risk to crypto, according to a September Fed release [the central bank’s] Concerns about digital currencies should be seen as good news for Bitcoin, “Oanda’s Moya said.
Powell also commented on stablecoins, arguing that they would need to be more regulated if they are to be a major part of the U.S. payment networks.
“Stablecoins certainly have some advantages over faster payment systems and have some of the properties of CBDCs, but there are some risks with stablecoins right now,” said Powell. “I think the problem is that stablecoins are a lot like money market funds or bank deposits or a narrow bank.”
When asked by MP Stephen Lynch (D-Mass.) Powell replied that the status of the dollar as a world reserve currency would not be compromised even if other countries develop CBDCs.
The chairman said central bank digital currencies could undermine the case for decentralized digital assets.
“You wouldn’t need stablecoins, you wouldn’t need cryptocurrencies if you had US digital currency,” Powell said. “I think that’s one of the stronger arguments for it.”
ShapeShift shutdown
Crypto trading pioneer ShapeShift is closing its doors and handing over its legacy to a decentralized autonomous organization (DAO) controlled by holders of their FOX token.
As it begins a month-long process of closing the store, it will initially drop $ 98 million in crypto to decentralized financial investors (DeFi) across multiple blockchains.
After the news, the price of ShapeShift’s FOX stock token skyrocketed. FOX changed hands at press time at $ 0.51; before the news was released this morning, the token was trading at $ 0.28. About an hour after the announcement at 11:00 a.m. ET, it hit $ 0.68.
Altcoin summary
- AXS rally: Axie Infinity’s AXS governance token rally shows no signs of slowing down as users continue to flock to the play-to-earn battle economy amid lackluster promotions in the broader crypto markets. The AXS token hit a new record high of $ 23.60 early Wednesday, beating the previous high of $ 22.50 hit on Tuesday, according to data source Messari. Axie Infinity Shards or AXS is the governance token of the Axie Infinity platform, an Ethereum-based digital marketplace for the Axie Infinity game. “Axie Infinity, developed by SkyMavis, enables players to generate revenue from non-fungible tokens or NFTs and cryptocurrencies by breeding, fighting and trading digital pets called Axies,” a Philippines-based Axie retailer told CoinDesk.
- Chia continues expansion: Chia Network, BitTorrent founder Bram Cohen’s intelligent transaction platform, has added five executives across multiple business areas, including sales, product development and professional services, and has nearly doubled its workforce since the last round of ventures in early May.
- The Phantom Wallet from Solana opens a new round to become multi-chain: Phantom, a digital wallet located on the Solana blockchain network, has raised $ 9 million in Series A funding found under the direction of Andreessen Horowitz (a16z). Other investors involved included Variant Fund, Jump Capital, DeFi Alliance, the Solana Foundation, and Coinbase investor Garry Tan. The funds will be used to expand the Phantom team, develop new features and expand to other blockchains, the company said.
Other markets
Notable Winners as of 9:00 PM UTC (4:00 PM ET):
stellar (XLM) + 5.31%
Bitcoin Cash (BCH) 1.79%
Aave (AAVE) + 1.37%
Notable Losers:
Tezos (XTZ) -5.26%
Algorithm (SOMETHING) -3.83%
dotted (DOT) -3.78%
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