Gold Market
Gold prices firmed on Friday, trading at $1,924.79, but were set for a weekly decline as the dollar and Treasury yields held firm with strong U.S. economic data raising concerns about the Federal Reserve keeping interest rates higher for longer. The dollar was headed for its longest weekly winning streak in nine years, bolstered by a resilient run of U.S. economic data. According to the CME FedWatch tool, traders see a 93% chance of the Fed leaving rates unchanged at its Sept. 19-20 meeting. Higher U.S. interest rates raise the opportunity cost of holding physical and paper gold, which does not earn any interest.
China’s appetite for gold remains insatiable as the nation’s central bank added more of the precious metal to its foreign reserves for the tenth consecutive month. According to updated foreign reserve data, the People’s Bank of China bought 29 tonnes of gold in August, lifting year-to-date purchases to 155 tonnes. Last month’s data was also the central bank’s biggest purchase since December.
Crypto Markets
Bitcoin price, is slowly moving higher above $26,000. BTC is showing signs of recovery but is still struggling to clear the $27,000 resistance zone. After an impressive performance in July, bears peeled back all gains in August. By the close of the month, Bitcoin was down roughly 20% from July 2023 highs. The world’s largest cryptocurrency lost 11.31% in August, slightly lower than the average of the past two pre halving years. Recent adjustments by JPMorgan in its estimation of Bitcoin’s production cost have garnered attention. Previously standing at $21,000, JPMorgan’s revised Bitcoin Production cost has now been pegged at $18,000. In the meantime, financial research firm Bernstein predicts a significant rally in the cryptocurrency market, primarily led by Bitcoin, due to a recent court decision favouring Greyscale.
Ethereum is currently trading at $1,638, down 0.53% month-to-date, up 36.61% year-to-date and down 65% from its all-time high of $4,800. This downturn has installed apprehension among investors, resulting in a surge in selling activity surrounding this digital asset. Nonetheless, as retail takes fright, Ethereum whales are now taking advantage of the prevailing bearish sentiment, as they have commenced purchasing substantial quantities of ETH at current discounted prices. Late Tuesday, Ethereum whales made a substantial move by purchasing 260,000 Ether in just 24 hours.
Ethereum is set to enter a new era of adoption after Binance announced a new ETH integration on the zkSync Era network. According to the crypto exchange, deposits and withdrawals for Ethereum tokens are now available on zkSync Era Network.
Crypto Project News
Asset managers Ark Invest and 21Shares have applied with the US Securities and Exchange Commission (SEC) for a fund called Ark 21Shares Ethereum ETF, which is the first attempt to launch a spot Ethereum ETF, according to a filing on Wednesday. Ark 21Shares Ethereum ETF would provide direct exposure to Ethereum and would not invest in derivatives. The fund would custody the assets with Coinbase Custody Trust Company and be traded on the Cboe BZX Exchange.
Coinbase plans to launch a crypto lending service for institutional clients in the US. A filing submitted by Coinbase to the Securities and Exchange Commission on September 1 showed that the exchange had raised $57 million for the program. According to a person familiar with the matter, Coinbase is going to offer over-collateralized loans. Clients can lend money to Coinbase, and Coinbase can then make secured loans to institutional clients.
MetaMask announced the launch of the “Sell” feature on MetaMask Portfolio, which allows users to convert cryptocurrencies into fiat and send the funds to bank accounts or PayPal balances. The Sell feature is currently available in the US, UK, and parts of Europe, with plans to expand to more regions. At launch, Sell only supports $ETH on the Ethereum mainnet, and will add support for native gas tokens on Layer2 networks. MetaMask Portfolio now has multiple features, including Dashboard, Buy, Sell, Swap, Bridge, Stake, and Send.
The usage of USDT experiences daily spikes in Asia, the Middle East, and North Africa daytime. This suggests that the stablecoin dollar remains popular in emerging markets, which have been significantly a ected by inflation. People in these regions have limited access to traditional financial services. Underserved populations in emerging markets will likely continue to drive the adoption of cryptocurrencies for payments and as a store of value.
Crypto exchange Kraken is gradually rolling out support for euro and British pound deposits via PayPal for users in the UK and Europe. Currently, eligible users can only use the PayPal funding method on the Kraken mobile app. According to the UK version of the app, PayPal deposits are “available in seconds,” incurring a 2.4% fee. As a rule, Kraken users who fund their accounts via PayPal need to be verified at its intermediate or Pro level, ensuring the name on the PayPal account aligns with the name on their Kraken account and resides in the UK or Europe (excluding Hungary and Croatia).
Regulation
Ethereum co-founder Vitalik Buterin co-authored a research paper focused on a privacy protocol called Privacy Pools with core developer Ameen Soleimani, researcher Jacob Illum from analytics firm Chainalysis, and academics Matthias Nadler and Fabian Schar. With what could be a potential alternative to the troubled Tornado Cash, they posit that financial privacy can co-exist with regulation. Related: Tornado Cash Co-Founders Charged by US DOJ with Laundering More Than $1B. The authors describe the new platform as “a novel smart contract-based privacy-enhancing protocol” designed to enhance transactional privacy on blockchains. Privacy Pools aims to leverage zero-knowledge proofs to determine whether user funds originated from lawful sources without revealing the complete transaction history. The system aims to filter out funds linked to criminal activities while striving to find a balance between privacy and regulatory requirements.
US New Accounting Rule Benefits Companies Holding Crypto Assets. The Financial Accounting Standards Board (FASB) has unanimously approved rules for accounting for the fair value of companies’ cryptocurrency holdings, according to media reports. The rules will go into effect in 2025. Fair value is the estimated price of an asset that considers current market value and other decisive elements. Previous practice required companies to keep impairment losses from crypto, caused when an asset suddenly loses value, on their balance sheets even after the digital asset regained its value. The new accounting method will increase volatility in the earnings of companies with large crypto holdings but allow them to record financial recoveries from increasing crypto prices.
Disclaimer
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