The Nasdaq Crypto Index (NCI) closed Sunday (12/25/22) 0.7% above last week’s closing. The index’s positive performance was influenced by ether (ETH), up 2.1%, while bitcoin (BTC) rose 0.2%.

Coming out of a week where markets were disappointed by Jerome Powell’s hawkish tone, investors came into the new week still concerned with Binance’s outflows. 

Crypto started the week trending down, with prices beginning to slip around the time markets opened in North America. BTC and ETH hit their respective weekly lows of $16,364 and $1,161 early on Monday night (EST). With no apparent driver causing the drawdown, prices began to rebound and eventually surpassed last week’s closing by the early hours of Tuesday.

Meanwhile, as the Western Hemisphere slept, the Bank of Japan (BoJ) readied a surprise for markets with a tweak to its yield curve cap for 10-year bonds, which now allows for moves of 50 bps (previously: 25 bps) above or below its 0% target. 

Its benchmark rate still stands at -0.1%, but many analysts interpreted the tweeking of the policy as a measure that lays the groundwork for a future rate hike. 

Traditional markets reacted negatively to the apparent pivot of the greatest stalwart of stimulative monetary policy, wondering if the move signaled the end of the “easy money”, ultra-low interest rates era. 

Crypto investors were, however, too busy buying up what was left of Monday’s dip to react to the pivot of the last negative rates holdout amongst central banks. If anything, crypto asset prices seemed to benefit from the hit taken by the US Dollar Index (DXY) that resulted from the Japanese yen gaining strength. BTC hit its weekly high of $16,940 a couple hours after markets opened in North America.

Prices moved sideways for the remainder of Tuesday and throughout Wednesday, with BTC trading just above $16,800 and ETH just below $1,220. Briefly before markets opened on Thursday in North America, prices began trending down only to recover later in the night. 

On Friday, the US Bureau of Economic Analysis published its Personal Consumption Expenditure (PCE) Index—often referred to as the Fed’s preferred measure of inflation—to little fanfare. 

The reading showed that prices rose 0.1% in November and 5.5% on a twelve-month basis. Core inflation, which excludes food and energy prices, was up 4.7% over the previous year, its lowest level since October 2021. All figures indicate that progress is being made towards price stability, despite Fed chair Jerome Powell’s hawkish tone in his latest press conference.

Perhaps due to the proximity of Christmas Eve or the fact that markets have become accustomed to positive inflation data or both—,price charts barely registered the release of November's PCE. Nonetheless, the small post-PCE uptick was enough to nudge ETH into its weekly high of $1,225 briefly before US markets opened.

Prices moved sideways for the remainder of Friday and into a quiet holiday weekend.

 

Looking ahead

 

Expect a quiet week with low trading volume. On the macro front, Thursday’s US jobless claims will headline an eventful calendar. With Binance outflows returning to normalcy, crypto markets should be quiet as well. 

 

Core Scientific files for Chapter 11

 

Core Scientific (CORZ), one of the largest bitcoin miners by computing power, filed for chapter 11 bankruptcy. The combination of pervasively low BTC prices and increasing energy costs has exerted a great deal of pressure on mining companies. Compute North, another large mining data-center, filed for bankruptcy earlier in September. Despite the reduced returns of mining operations as a result of BTC’s ~65% drawdown in 2022, Bitcoin’s hashrate, the network’s combined computational power, has continued to trend upwards.

 

Visa unveils plans to introduce autopayments to Ethereum

 

Visa, the card payment organization, has divulged plans to introduce recurring payments to self custodial wallet users through StarkNet, a layer-2 scaling solution built on top of Ethereum. The payments processor intends to provide “a new solution towards a real-world application of auto payments to demonstrate how to write a smart contract for a self-custodial wallet that can pull funds automatically, instead of requiring the user's active participation each time to instruct and push payments on a blockchain.” If successful, the initiative has the potential to increase crypto’s usage as a means of payment. 

 

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