The NCI closed Sunday (09/04/22) 1.3% above last week’s closing. Positive performance was influenced by ether (ETH), up 5.2%, while bitcoin (BTC) fell 0.8%.
Crypto asset prices entered the new week in search of stability after BTC’s and ETH’s double digit drops in the wake of Fed chairman Jerome Powell’s hawkish speech at the Jackson Hole Economic Symposium.
On Monday, crypto markets recovered part of their weekend losses, led by ETH’s 10% price rise on its way to reclaiming the $1,600 mark.
The bounce back may have been influenced by the receding dollar index (DXY), which has shown a strong inverse correlation with digital asset prices in 2022, but was more likely a product of the newly attractive prices—especially in the case of ETH—as markets opened in North America.
After a brief dip on Monday afternoon, prices began rising again until inflation data out of Germany shook investor confidence. Consumer prices registered an 8.8% increase year-on-year in August, according to data from the nation’s Statistics Bureau. August’s inflation readings marked a 50-year high, despite Germany’s ongoing policies to counter inflation.
In spite of being just under market expectations, Germany’s alarming inflation figures corroborated the outlook that more ECB monetary intervention is needed and larger rate hikes may be in order, following the Fed’s lead.
As result of growing concern with Eurozone inflation, both BTC and ETH prices dropped, ceding their early week recovery momentarily, but quickly recovering Tuesday afternoon.
Investor sentiment quickly turned as BTC approached $20,000 and ETH neared $1,550—a dynamic that would prevail throughout the remainder of the week—despite the ebb and flow of macro developments.
On Thursday, crypto asset prices began to lose steam as BTC and ETH settled into the same price range with a shrinking volatility window until briefly dipping in the afternoon.
On Friday, asset prices remained mostly stable until the opening hours of US stock markets, when the release of nonfarm payrolls figures for August showed the world’s largest economy added 315,000 jobs, slightly exceeding market expectations.
The still robust job creation numbers showed a deep decline in comparison to July’s 528,000 jobs, a sign that the Fed’s monetary policy is starting to take hold of the overheated job market, and markets reacted positively.
Investors interpreted the month-over-month decline as an indicator that the current rate hiking cycle may be shorter and less intense than previously expected.
BTC and ETH prices momentarily surged by $300 and $50, respectively, but news of the cooling job market was not enough to break BTC and ETH away from their sticky $20,000 and $1,550 prices, where they remained during the weekend.
Crypto investors will spend the week monitoring developments surrounding Ethereum's much-anticipated merge, which begins to take place on the 6th with the activation of the Bellatrix upgrade. Markets will also be looking forward to the release of the Fed Beige Book, which will divulge further details regarding the FOMC’s last monetary policy decision on Wednesday.
Hashdex has received permission to list exchange-traded products (ETP) in the European Union, allowing us to launch a series of products in several European jurisdictions in the coming months. Hashdex launched the Nasdaq Crypto Index Europe ETP in the Swiss Six Exchange in May.
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