Crypto Markets Hope For A Softer Fed

Crypto markets remained firm near the flatline despite the stock market rally triggered by expectations of a pause in hawkish monetary policy, losing steam on Wednesday.

Data released by the U.S. Bureau of Labor Statistics on Tuesday had shown the number of job openings in the US falling to 10.1 million in August, from 11.2 million in July. Markets were expecting a 10.775 million reading. Earlier, data released by the Institute for Supply Management had shown the ISM Manufacturing PMI in U.S. unexpectedly declining to 50.9 in September, from the level of 52.8 in August and market forecasts of 52.2. The latest reading pointed to the slowest growth in factory activity since the pandemic-induced contractions in 2020.

The increase in bad data has raised the expectations of a softer stance by not just the Fed but also by central banks worldwide as indicators of a recession emerge from more sectors and regions of the global economy.

In the Summary of Economic Projections issued by the Fed at the time of the FOMC in September, the median year-end projection for the federal funds rate was raised to 4.4 percent, from 3.4 percent earlier. This is projected to further increase to 4.6 percent by 2023, and thereafter reduce to 3.9 percent by 2024 and 2.9 percent by 2025. Markets are now hoping the rates have peaked and a dovish pivot by the Fed is round the corner.

Meanwhile the Dollar Index (DXY), a key macro trigger for markets hovered between 110.09 and 111.09. It is currently at 111.06.

Overall crypto market capitalization is currently at $954 billion, occupied 40.2 percent by Bitcoin and 17.2 percent by Ethereum.

Bitcoin gained 0.37 percent overnight to trade at $20,032.37. BTC ranged between $20,380.34 and $19,917.91 in the past 24 hours.

Ethereum is however trading at $1,336.48 with overnight losses of more than 1 percent. Ether traded between $1,364.97 and $1,335.89 in the past 24 hours.

4th ranked BNB(BNB) is hovering a little above the flatline. 6th ranked XRP (XRP) gained 2.13 percent overnight. 8th ranked Cardano (ADA) and 9th ranked Solana (SOL) are trading with losses of less than 1 percent.

10th ranked Dogecoin’s (DOGE) overnight rally of 6.01 percent reflected the euphoria surrounding the revival of the Elon Musk-Twitter deal. DOGE is the highest gainer among the top 50 cryptos.

61st ranked Helium (HNT) is the biggest gainer among the top 100 cryptos, having added more than 6.7 percent in the past 24 hours.

72nd ranked Lido DAO (LDO) is the greatest laggard among the top 100 cryptos, with an overnight decline of 4.5 percent.

Among the top 100 cryptos, 89th ranked Trust Wallet Token (TWT) is the biggest gainer on a year-to-date basis. TWT, a BEP-20 token has gained more than 25 percent in 2022. 19th ranked UNUS SED LEO (LEO) follows with a 9.5 percent gain in 2022.

Meanwhile the Financial Stability Oversight Council (FSOC) has released a Report on Digital Asset Financial Stability Risks and Regulation in response to President Biden’s Executive Order on “Ensuring Responsible Development of Digital Assets.” The report reviews the specific financial stability risks and regulatory gaps posed by various types of digital assets and provides recommendations to address such risks.

The report notes that crypto-asset activities could pose risks to the stability of the U.S. financial system if their interconnections with the traditional financial system or their overall scale were to grow without adherence to or being paired with appropriate regulation. The Council is of the opinion that compliance with and enforcement of the existing regulatory structure is a key step in addressing financial stability risks.

The report identifies three gaps in the regulation of crypto-asset activities in the United States. The spot markets for crypto assets that are not securities, being subject to limited direct federal regulation is perceived as a major gap. Crypto-asset businesses not having a consistent or comprehensive regulatory framework, resulting in regulatory arbitrage is also identified as a lacuna in the existing system. Crypto-asset trading platforms offering retail customers direct access to markets, by vertically integrating the services provided by intermediaries such as broker-dealers or futures commission merchants is also cited as a matter of concern.

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