Cryptocurrency Market Update

The CoinDesk 20 (CD20), a benchmark measuring major digital assets, opened the Asia trading week with a 7% decline. Bitcoin, the leading cryptocurrency, also dropped by 5% amid growing expectations of a Federal Reserve rate cut in September. Most assets in the CD20 are reporting larger losses compared to bitcoin. Notable declines include Ether (ETH) down by 5.8%, Solana (SOL) by 7.8%, and XRP by 7%. Market data from CoinGlass reveals approximately $175 million in long liquidations over the past 24 hours.

Bitcoin has experienced a 13% decrease over the last week, a trend reminiscent of the aftermath of the FTX collapse. The market sentiment has been influenced by stronger than expected U.S. jobs data, although a rising unemployment rate has fueled speculation of an impending Fed rate cut in September, as outlined in a recent analysis by ING.

According to ING’s James Knightley, the private sector job growth has been lackluster, with only 136,000 new jobs added in June, falling short of the anticipated 160,000. Sectors such as government, education, and healthcare services contributed significantly to new job creation, while retail, temporary help, professional business services, and manufacturing witnessed job losses.

Citi Research has taken a more aggressive stance, forecasting eight Federal Reserve rate cuts starting in September 2024 through July 2025, potentially reducing the benchmark rate by 200 basis points to 3.25%-3.5%. On the prediction platform Polymarket, bettors are indicating a 34% chance of 1 rate cut and a 37% chance of 2 cuts by the end of the year.

Despite dovish Fed expectations, Asian stocks failed to rally as the European Union’s decision to impose significant tariffs on Chinese electric vehicle imports dampened market sentiment. Additionally, in French elections, leftists secured more seats than the far right but fell short of a majority, leading to concerns over potential political and policy gridlock, which could trigger risk aversion in European markets.