Market Highlights
- A quiet week ended with strong gains after the US Federal Reserve indicated it’s looking to cut rates in September.
- Toncoin Plummets Following Telegram Founder’s Arrest
- Grayscale launched a trust that provides investors with exposure to Avalanche (AVAX).
- A flurry of activity in AI projects drove significant price gains in altcoins, AGIX, FET and OCEAN.
Markets Overview
Macro Market Updates:
It was a week of Purchasing Managers Index (PMI) updates for several countries. The data releases were mixed, with Germany, France and the US underperforming in their respective flash manufacturing PMI updates, while the United Kingdom’s releases came in higher than forecast. Friday delivered a boost to traditional finance and crypto markets when US Federal Reserve Governor Jerome Powell gave a strong indication that the central bank would cut interest rates at its September meeting. In his remarks at the Jackson Hole Symposium, he said the “time has come for policy to adjust”.
- Canada’s trimmed consumer price index (CPI) came in at 2.7% for the 12 months to 30 July 2024, marking the lowest annual inflation since March 2021.
- The US flash manufacturing PMI and flash services PMI came in at 48 (a 14-month low) and 55.2, respectively.
- The UK had the strongest PMI releases, with 52.5 for the flash manufacturing PMI and 53.3 for the flash services PMI, which were both higher than forecast.
- US unemployment claims came in as forecasted at 232,000.
Crypto Market Sector Performance
Most crypto sectors experienced strong growth this week. Recent developments in artificial intelligence (AI) projects have resulted in growth in the AI sector, driving its strongest uptick in recent weeks. Similarly, the data services and Oracle sectors experienced significant growth, presumably due to the gains in altcoins such as NULS (NULS) and Arcblock (ABT), which each help developers work more efficiently by offering scalable development solutions. The shift towards growth in emerging sectors indicates that the market may be feeling more confident in allocating funds to developing technologies following the recent weeks of pullbacks and consolidation.
Bitcoin (BTC)
The week started much like the one prior, with price continuing to move sideways. However, things changed on Friday, following US Federal Reserve Governor Jerome Powell’s indication that the central bank would likely deliver a rate cut at its 19 September meeting.
Opening the week at US$58,533, price broke the key level at US$60,870 to close the week. The key level at US$65,500 is still providing resistance as the upward momentum from Friday appears to have slowed. These are the highest prices seen for bitcoin since the start of August.
Bitcoin asset investment products saw inflows of US$543 million, demonstrating that the largest cryptocurrency is still sensitive to interest rate expectations.
Mt. Gox continues to move bitcoin to new wallets as part of its repayments to creditors. According to Arkham Intelligence, on 21 August, 13,265 bitcoin worth around US$784.2 million were moved to a new wallet. It’s estimated that only 1,264 BTC (approximately US$74.5 million) were distributed, while the remainder was moved to cold storage. This indicates that the market’s earlier concerns about the movement of bitcoin by Mt. Gox may have settled, given the large proportion that is being stored rather than sold.
Also this week, pro-bitcoin US presidential candidate Robert F. Kennedy Jr suspended his campaign to endorse former president Donald Trump. While RFK isn’t ending his campaign altogether, he is removing his name from ballet papers in swing states. He was the first presidential candidate to support bitcoin, saying at the Bitcoin conference in Miami last year that the cryptocurrency is a “bulwark” against governmental and corporate overreach.
Bitcoin is currently trading at US$62,984, an increase of 6.6% on the week.
Ethereum (ETH)
Ethereum opened the week at US$2,611. Gains of around 10% were seen throughout the week before a small retrace back to around US$2,780.
It was a week of outflows for Ethereum with US$36 million leaving funds. These outflows are predominantly due to the funds that continue to be withdrawn from the Grayscale Ethereum Trust. Last week alone saw US$118 million in outflows from the Trust. Since Ethereum ETFs launched in July, US$31. billion has flowed into funds. The Grayscale Ethereum Trust has had outflows of US$2.5 billion.
The Ethereum Foundation transferred 35,000 ETH worth around US$96 million to a wallet on the Kraken exchange on 23 August. The Foundation’s executive director, Aya Miyaguchi, clarified in a post on X that the transfer was for “treasury management activities” such as sending grants to recipients. This transaction follows a transfer of 92,000 ETH to an unidentified wallet in July.
Ethereum is currently trading at US$2,686, an increase of 2.4% on the week.
Altcoins
DAO-win to win
- VIDT DAO (VID) gained 146.7%, taking its market cap to US$33.9 million. Price for the platform, which securely timestamps and authenticates digital documents, presumably accelerated to the upside due to its listing on crypto exchange, MEXC. VIDT is trading around US$0.04, and its all-time high is US$0.07, which was reached in April.
Scaling up
- NULS (NULS) grew by 71.5%, which takes its market cap to US$46 million. The gains are presumably due to price finding key support around US$0.225 and the announcement that cross-chain integration of bitcoin and Ethereum-native assets was successfully completed, allowing users to pay gas fees with BTC and ETH. The open-source, community-driven project offers microservices to developers looking to scale up their projects.
- Arcblock (ABT) grew by 57.8%, taking its market cap to US$193.5 million. After finding support around US$1.20, price gained momentum to the upside, reaching US$2.20 before a small retrace. The gains are presumably due to bullish technical price action and the growing use of software architecture systems that help developers work more efficiently.
AI gains
- SingularityNET (AGIX) gained 65.3%. This takes its market cap to US$311.3 million. Price for the decentralised AI marketplace, which is currently focused on building Artificial General Intelligence (AGI) solutions, presumably grew due to positive developments shared at its ambassador town hall meeting and continued investor interest in the development of AI.
- Artificial Superintelligence Alliance (FET) gained 61.6%, taking its market cap to US$3.3 billion. The gains are likely due to the Innovation Lab launched in San Francisco this week. The Lab is designed to help early-stage startups develop their AI applications through its accelerator program. An annual budget allocation of US$10 million will be used to help businesses advance their AI projects.
- Ocean Protocol (OCEAN) grew by 60.6%. This takes its market cap to US$196.1 million. Price gained upward momentum following the release of Ocean Nodes, a decentralised solution designed to help developers build AI tools and products. The new release allows users to monetise their computational resources, develop scalable decentralised AI models, and improve security and privacy.
Past performance is not indicative of future results.
In Other News
Digital asset investment products saw inflows of US$533 million last week. The largest inflows in five weeks are presumably a response to US Federal Reserve Governor Jerome Powell’s remarks regarding a September rate cut. Trading volumes for the week reached US$9 billion, and the US saw the majority of the inflows, with US$498 going into funds.
- The price of Toncoin (TON) fell by almost 20% following the arrest of Telegram’s founder, Pavel Durov, who is a prominent figure in Toncoin. Durov was arrested at France’s Le Bourget airport due to an alleged “lack of control” on Telegram, leading to it reportedly being used to facilitate criminal activities. As the currency used to compensate developers, buy ads and purchase a premium subscription on Telegram, Toncoin plays an important role in the messaging app. Its price grew by over 240% in the first half of 2024, with an all-time high of $8.24 in June.
- Grayscale Investments has launched another digital asset investment product. The Avalanche Trust will give investors exposure to Avalanche (AVAX). Operating like its other crypto trusts, such as its Ethereum and bitcoin exchange-traded funds (ETFs), the Trust will be open to accredited investors. The price of AVAX gained 28% following the announcement.
- Crypto infrastructure startup Conduit announced that it’s launching an integrations marketplace for teams to buy solutions for their chains. Conduit helps developers build “customisable and reliable” Layer-2 scaling solutions (rollups). As of Thursday’s launch, the company had 48 partners listed, all offering tools to save teams time when deploying a rollup. It’s estimated the tools available can save development teams three to six months. Conduit closed a Series A funding round in June, where it raised US$37 million.
Regulatory
- The US Trustee overseeing the bankruptcy of the crypto exchange and hedge fund, FTX, filed a complaint outlining key issues, such as overly broad legal protection of the entities involved, unjust treatment of small creditors, and the refusal of the estate to carve out the costs of a data breach that one of its service providers suffered. Credit activist Sunil Kavuri also filed a complaint. He argues that the reimbursement plan should account for in-kind distributions to assist creditors in avoiding large tax bills.
- Crypto exchange Kraken’s motion to dismiss the US Securities and Exchange Commission’s (SEC) case against it has been denied. The US SEC brought a case against the exchange in 2023 as it alleges that some of the transactions on the network are investment contracts, which are, therefore, securities and should be subject to securities laws. It’s also alleged that Kraken didn’t separate customer and firm assets and mishandled customer information.
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