In the week under review, Bitcoin (BTC) price declined by 3.64%, while Ethereum (ETH) shed 7.65% to both trade respectively at $112,159 and $4,141 as at 6.00am Nigerian time today. Over the same period, total market capitalization decreased from $4.15trn to $3.96trn this morning. Suffice to say; although most crypto enthusiasts believe that the market is currently still in a bull cycle, there are growing opinions that the cycle may be near its end. Several factors have contributed to this dissenting trend in the last week, especially the US Federal Reserve’s announcement last Wednesday, September 17th.
First and foremost, the crypto market had largely priced in a dovish Fed stance, influenced by President Trump’s persistent vocal desire to see U.S interest rates aggressively cut. Despite the regulator’s consistency over the years, there was an overwhelming belief across markets in the build-up to the meeting that the Fed had become a politically influenced/motivated regulator. To the astonishment of many, although the Fed decided to cut rates by 25bps, it did so based on empirical data and in line with its mandate to manage the balance of interests between guarding against inflation and striving to address unemployment in America. The Fed also declined to commit to any further rate reductions for the rest of the year and the individual views of Fed members were indicative of no general consensus about further interest rate drops. Another noteworthy pointer for crypto markets following the Fed decision was the fact that out of 12 members, only Stephen Miran (newly appointed by President Trump) voted for more than a 25bps rate drop (50bps specifically). All others unanimously voted for a 25bps cut and in some quarters, this was indicative of the fact that The Fed remains a Powell Fed and not quite a Trump Fed just yet.
Following comments by the U.S. Fed Chair Jerome Powell yesterday, reiterating facts already made known after last week’s decision, markets reacted once again, triggering fresh declines. Both BTC and ETH traded new weekly lows yesterday, a clear demonstration of the Fed’s impact on the market.
Over the past week, Bitcoin (BTC) returned to the sub $115,000 threshold and while Ethereum (ETH) has sustained trading above $4,000 territory. Nevertheless, both coins have dipped considerably from their August all-time highs (BTC – $124,457.12 and ETH – $4,953.73).
The markets have experienced series of liquidation waves in the last week, mainly centered around BTC. The propensity to aggressively hold BTC has been greatly hampered specifically for retail speculators. There are strong indications that BTC might dip further into the sub $110,000 lows traded at the beginning of September. Although many expect the cryptocurrency hype and pump apparatus to generally continue to function, the potential downward trajectory for the industry’s flagship (BTC), which could easily lead to a bandwagon effect of sorts where everything else is affected by a mix of profit taking, downward pressure and extreme caution. The fact that long-term holders remain well in the money continues to reinforce this view as markets react to indications of weaker economic fundamentals and potential conflicts across the Middle east and Europe. Nevertheless, Ethereum (ETH) remains positioned as the newest industry bride with promising prospects to appreciate exponentially in the long term. We cannot help but wonder when the Altcoin season will actually start in this bull cycle, if at all it will!!!!!
By: Sandra A. Aghaizu
Bitcoin falters on uncertain seas,
its flagship weight pulls markets low;
each wave of selling bends the knees
of speculators come and go.
Yet anchored deep, the old hands stay,
their fortunes built in cycles past;
while restless traders drift away,
their fleeting courage cannot last.
Ethereum waits, a bride adorned,
her promise whispered, bright, profound;
but will her season be reborn,
or vanish before it leaves the ground?
