The US Federal Reserve recently released minutes from its September monetary policy meeting. According to these minutes, participants acknowledged both upside risks to inflation and downside risks to economic activity. This suggests a two-sided challenge in achieving the Fed’s objectives. Policymakers also noted that as policy approaches its peak, decisions, and communications should start shifting toward a longer horizon of keeping rates higher for an extended period.
Buyers are finding it difficult to maintain Bitcoin (BTC) price above USD$27,000. The selling increased after the September producer price index rose 0.5% for the month versus expectations for a 0.3% increase. This shows that the inflation pressures are unlikely to ease in a hurry for the United States economy. The uncertain near-term environment has shifted analysts’ focus to November and the upcoming halving event expected in April 2024. Crypto analyst Miles Deutscher cited a chart from CryptoCon and said that if history repeats itself, then Bitcoin may turn up by November 21 and start its journey higher to the next halving.
Early September data show central bank gold demand remains strong. China also bought 29 tonnes of gold in August. Weekly data from the Reserve Bank of India suggests its gold reserves rose by 7 tonnes in September – all added in the last week of the month. This would be the largest monthly gold purchase by the RBI since July 2022 (13 tonnes) and lifts gold holdings to 807 tonnes.The National Bank of Poland also bought 18 tonnes of gold in August, the country is on pace to reach the 100-tonne target it announced in 2021.
Gold Market
Gold sees its best week since March, with prices up 6% from last week’s lows. After hitting a seven-month low last Friday, the precious metal is seeing its best weekly gains since mid-March. Prices are over USD$90 higher than last week’s closing price, with December gold last trading at USD$1,941.50 an ounce and are up more than 6% from last week’s lows. The precious metal has strengthened after reviving from the knee-jerk move on Thursday, a result of the United States Consumer Price Index (CPI) report for September showing headline inflation above expectations. Investors are fleeing to safe havens as the risks of Middle East tensions grow, If the geopolitical situation gets gloomier, there is a good chance that gold prices could go to the USD$2,000 level this year. We have come from mid-USD$1,800s to mid-USD$1,900s, USD$2,000 is just a fraction of that.
Crypto Markets
Bitcoin price managed to stay above USD$26,500 following last week’s jump above USD$28,000. Investors and analysts had expected this support to hold to allow BTC to chart another recovery path to USD$30,000. Bitcoin price struggled to start a recovery wave above the USD$27,500 resistance. This has harmed the market cap a bit more. The metric has declined by a few billion and is just inches above USD$520 billion now. Its market dominance, though, has jumped slightly and is at 50% as of now.
While Bitcoin’s price has fluctuated dramatically this year, the cohort of long-term holders or “hodlers” remains resolute, Glassnode’s latest report shows. Glassnode’s Hodler Net Position Change metric reveals these investors, specifically those holding coins for at least 155 days, are withdrawing over 50,000 BTC from exchanges each month. This data highlights both the tightening supply and reluctance among seasoned investors to transact in the current market conditions.
Ethereum remained in a bearish zone below the USD$1,600 resistance zone. ETH is still consolidating above the USD$1,550 support and showing bearish signs, like Bitcoin. The recent low was formed near USD$1,542 before the price started a consolidation phase. The price spiked once above the 23.6% Fib retracement level of the key decline from the USD$1,665 swing high to the USD$1,542 low, but upsides were limited.
Solana and Dogecoin are also slightly in the red on a daily scale. Toncoin has dropped the most from the larger-cap alts, having lost just over 2% daily. In contrast, Binance Coin, Ripple, and Cardano sit with minor gains. Nevertheless, the total crypto market cap has remained relatively still at just over USD$1.050 trillion on CoinMarketCap.
Crypto Project News
Trezor, a major provider of hardware cryptocurrency wallets, is celebrating its 10th anniversary by releasing three self-custody products, including a new Trezor wallet, a proprietary private key backup solution and a Bitcoin (BTC) )-only wallet. The Czech Republic-based company on Oct. 12 officially announced the launch of Trezor Safe 3, its brand-new hardware wallet supporting more than 7,000 cryptocurrencies. The firm stressed that the new wallet launch marks an important milestone in Trezor’s provision of entry-level hardware wallets.
JPMorgan’s Onyx Coin Systems has scored another win in the Middle East with the completion of a blockchain-based cross-border payments pilot project with First Abu Dhabi Bank (FAB). The pilot phase was “executed seamlessly with satisfactory response times,” according to a statement. The FAB pilot wound up weeks after a similar test in Bahrain, where Bank ABC had been testing the Onyx system and proceeded to a limited launch of services. FAB said it was continuing to explore the opportunities the system offers.
On October 11, the Open Network Foundation (TON Foundation) announced its participation in a Guinness World Records-approved competition to claim the title of “world’s fastest blockchain.” The public network performance test is slated to take place on October 31, 2023, at 15:00 UTC. During this event, the blockchain network will be rigorously tested for its reliability, scalability, and speed. In a remarkable testament to its growth, the TON blockchain has experienced exponential expansion since 2022. The user base has surged by a staggering 20-fold, catapulting from 170,000 to an impressive 3.5 million addresses. This surge has been complemented by an increase in TON validator nodes, which now stand at 350. This expansion has contributed to a more decentralised network that spans over 25 countries.
Regulation
The European Securities and Market Authority (ESMA) has released a report on developing decentralised finance (DeFi) and the risk posed by growing adoption. In a report released on Oct 11, the 22-page document highlights the risks posed by a sector that holds much promise and reshaped finance in the region. According to the document, DeFi has led to the innovation of financial products, making payments easier and aiding financial inclusion to cater to the unbanked around the world. ESMA stated that the development of DeFi has notched several positives relating to transaction speed, cost, and security to an extent against traditional finance but added that its application in some areas poses a significant risk. DeFi could contribute to greater financial inclusion by allowing users to access products and services without an intermediary who may selectively restrict access. “Still on the positive, the document recommends the openness of blockchain technology as it records transactions on immutable blocks without the existence of intermediaries and “central counterparties.” Smart contracts made decentralised finance possible, creating ‘innovative financial products’” that range from futures contracts, automated market makers, flash loans, etc.
The Hong Kong Legislative Council’s Committee on Financial Affairs will discuss the regulation of virtual asset trading platforms and the feasible regulatory framework for Over-the-counter (OTC) entities. In response, the Financial Services and the Treasury Bureau stated that the government and regulatory authorities periodically review regulatory measures and consider introducing appropriate measures in response to market developments. This includes the regulation of related businesses outside virtual asset trading platforms, with considerations given to suitable regulatory authorities, forms, and requirements outlets operating as physical stores, providing a convenient channel for many retail investors to trade virtual currencies. Customers can exchange Hong Kong dollars directly for equivalent amounts of stablecoins like Tether (USDT), Bitcoin, Ethereum, etc., and transfer them to their exchange platform accounts or personal wallets. It is estimated that Hong Kong has over a hundred OTC outlets, with some OTCs processing cash transactions totalling billions annually.
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