Synopsis
- FATF cracking down on crypto. What do we know so far?
- China, a hiccup for NVIDIA’s Leap Ahead – How does this affect the Tech Giant?
- Jerome Powell’s Jackson Hole Speech
- New proposed crypto tax regulations in the US – Did they get this right?
- Biggest winner and loser of the week
Key Observations
The market cap remained steady, mirrored by the lack of movement. This is further displayed by the volume of activity indicated over the week. The total market is up 36% from the beginning of the year, adding $270B. We anticipate markets to consolidate. However, external factors can influence this both ways.
Analysis
FATF cracking down on crypto. What do we know so far?
Concerns are looming large in the crypto world, and this one in particular needs to be looked into. The Financial Action Task Force (FATF) has been concerned about crypto for a while, and this is making several countries uneasy. A major concern is the ‘travel rule,’ which pushes crypto companies to gather data for transfers above $1,000. Though countries like the UK resisted this FATF recommendation before, their stance is shifting.
Recently, PayPal suspended UK users from buying BTC due to this rule, and similar announcements are expected worldwide. The FATF is aggressively pursuing this, targeting the crypto sector.
China, a hiccup for NVIDIA’s Stride Ahead – How does this affect the Tech Giant?
The response to Nvidia’s strong Q2 earnings suggests insights for stocks and crypto. While Nvidia exceeded Q2 expectations and its CEO’s next-quarter outlook was optimistic, stocks and crypto corrected the following day.
A possible reason behind this downturn could be China. As we know, China holds significant global economic influence. Nvidia’s Q2 earnings revealed a drop in demand for Electric vehicle-related chips due to decreased Chinese demand. China is grappling with an economic slowdown due to overvalued real estate issues. Initially expected to stimulate the economy, China hopes for a stock market boost.
China’s hesitation stems from two reasons: to avoid further collapse of the weak Yuan and to reduce speculation in the property sector, as voiced by the CCP.
Jerome Powell’s Jackson Hole speech
Market participants await his insights on the next economic direction. Powell reaffirmed the Fed’s commitment to the 2% inflation target and did not rule out further rate hikes.
Figure 5: Jerome Powell reassured Fed’s commitment during his Jackson Hole speech
Biden govt. launches new crypto tax reporting rules
Finally, The U.S. Treasury Department has proposed a new rule requiring cryptocurrency brokers, exchanges, and payment processors to report user transactions to the IRS to prevent potential tax evasion in the crypto sector.
The Treasury Department seeks to subject digital asset brokers to reporting rules similar to those governing traditional financial instruments like stocks and bonds. Reactions from the cryptocurrency industry are divided. Some believe the rules could aid regular users in complying with tax laws, while others contend that the decentralized nature of cryptocurrencies might not align well with the proposed approach.
Top gainer of the week: Toncoin (TON) up by 12% ⬆️
Opinions:
Fundamental Analysis:
Despite the relatively flat market, TON showed strength to rise by over 12% in the last week. At the time of writing, TON has become the 14th largest crypto in terms of market cap of over $5B.
Technical Analysis:
The increase in volume and RSI’s over the past week suggests that bullish sentiment among traders is strengthening. Though we know of the inherent volatility associated with TON, the moving averages also indicate a neutral to bullish stance.
Oscillator indicators: 2 bearish, 8 neutral, 1 bullish
Moving average indicators: 3 bearish, 1 neutral, 11 bullish
Biggest loser of the week: Hedera (HBAR) down by 14% ⬇️
Opinions:
Fundamental analysis: HBAR saw a huge sell-off in the wake of 1.15 billion tokens releasing into the circulating supply. This has prompted investors to be wary of the selling pressure accompanied by these scheduled token unlocks.
Technical analysis: Investors do not see this as a great time to enter HBAR. The volume and RSI indicate a balance between buy and sell pressure, and we expect it to test previous levels of support with the increase in circulating supply.
Oscillator indicators: 3 bearish, 8 neutral, 0 bullish
Moving Average indicators: 13 bearish, 1 neutral, 1 bullish
Conclusion
The past week was lackluster. The market remained flat, devoid of any active movement. The amplification of FATF concerns, China slowing down NVIDIA’s momentum, and Powell’s reassurance of the inflation targets round up this week’s highlights. The new tax proposal will garner much-needed discussion as people are divided. The activity in the market suggests that the market shall move sideways over the coming week.
