- Stale price action persists with Bitcoin up about 0.8% and Ethereum flat over the past day.
- Bitcoin’s implied volatility is lower than stocks and gold at the moment, according to research firm K33.
- Market watchers unsure how new US inflation data will affect the industry.
Happy Tuesday!
In today’s Snapshot, we look at research firm K33′s, formerly Arcane, thoughts on the lack of volatility in crypto markets at present, and Ark Invest’s Cathie Wood’s views on Bitcoin ETFs. We also look ahead to the upcoming US inflation data and how it may affect the industry, due on Thursday.
Let’s dig into it.
Stale price action
Bitcoin and the broader crypto market continue to trade sideways without any significant catalysts to push the price higher or lower.
— Paolo Ardoino 🍐 (@paoloardoino) August 7, 2023
“Despite multiple futures-based Ethereum [exchange-traded fund] filings over the past week,” Binance’s Build and Build coin and Ethereum face similar “stale price action,” K33 analysts wrote on Tuesday.
Implied volatility in the options market was pushed lower this week amid “low activity and contracting volatility,” the firm’s report read. Low implied volatility means the market has priced in fewer fluctuations in price, meaning the current price action could continue for some time.
Last week the firm noted that Bitcoin’s five-day volatility was lower than the Nasdaq, the S&P 500, and gold.
The Securities and Exchange Commission is set to make its latest spot Bitcoin ETF decision on August 13, which “may disrupt the slow phase of the market of late,” K33 wrote, noting that “ETF momentum was an important force behind the June rally following BlackRock’s filing.”
Wood, who is the CEO of Florida-based asset manager Ark Invest, was confident about Grayscale winning its case with the SEC when she appeared on Bloomberg TV Monday night to discuss Bitcoin ETFs.
The fund manager was less hopeful her latest application would get an answer anytime soon, pouring cold water over those who hoped the SEC may announce a decision on the firm’s application this month.
The Ark Invest founder did say she expects multiple spot Bitcoin ETFs to be approved at once.
Data dump
Market watchers are keeping their eyes fixed on the upcoming US inflation data for July, which is due to drop at 8:30 am New York time on Thursday.
Inflation in the US is expected to have risen 0.2% month-on-month, according to a Bloomberg survey of economists.
However, what the market’s reaction to changes in the price of goods and services will be is currently hard to predict, according to Noelle Acheson, former head of market insights at crypto firm Genesis and current editor at the Crypto is Macro Now newsletter.
“These days it’s hard to predict how the market will take a beat, a miss or even an in-line since FOMO, [fear of missing out,] seems to be driving investor spirits,” Acheson wrote on Monday.
It appears to be more interesting to “step back and look at the bigger picture regarding rates, inflation and liquidity,” she added.
“I’ve written before about how I believe inflation is coming back,” Acheson noted, “even if unemployment starts to move up.”
The Cleveland Fed’s nowcast tool has headline inflation at more than double consensus, Acheson said. The nowcast is derived from current data and projections are in the present, as opposed to forecasts which are based on older data and aim to predict way out into the future, she explained.
“If the Cleveland Fed’s model is even remotely right, we can expect bond yields and rates pricing to adjust quickly,” Acheson said. A repricing in rate expectations might be enough to finally move the price of Bitcoin, Acheson added.
The Fed’s next rate decision is September 20, a pause is widely expected, according to the CME’s FedWatch tool.
Crypto market movers
- Bitcoin added about 0.8% over the past 24 hours, and Ethereum was flat.
- Dogecoin dipped 1.1% in the same period, now down 4% in the past seven days.
