Crypto Market Update

September is off to a bumpy start for markets. The ISM manufacturing PMI came in at a contractionary 47.2, below the expected 47.9, pushing treasuries higher while equities and crypto dipped. Defensive sectors are leading equities as the price action clearly signals a shift to risk-off sentiment. This week is pivotal, with key data releases including JOLTs job openings on Wednesday and the Non-Farm Payrolls (NFP) and unemployment rate on Friday. The market’s interpretation of interest rate cuts hinges on the broader economic context—if job data continues to soften without tipping into recessionary territory, it could support a Goldilocks or soft landing scenario. However, should the data suggest a sharper slowdown, investors may begin to price in a higher probability of a hard landing. Meanwhile, BTC has dropped to below $58k after a brief rally on Sunday, ETH  is down to $2,450 and SOL  testing the $130 level. The DXY is inching higher, maintaining its recent rebound even as rates fall, and the VIX has surged 16%, reaching its highest level since mid-August.

Flows Slow / Turn Negative

Early last week and the week prior, the flows picture appeared encouraging, with net inflows into BTC ETFs, robust inflows into stablecoins, and a sustained premium on Coinbase. However, over the past several trading days, BTC ETFs have experienced outflows, with the 5-day moving average turning negative after Friday’s close. While stablecoins haven’t shown significant outflows, the pace of capital inflows has noticeably slowed, as illustrated in the chart below. Additionally, BTC on Coinbase has generally been trading at a discount to BTC on Binance, indicating that U.S. investors are net sellers in the crypto market.

Several Prediction Markets / Polls Show Trump Gaining Ground

Over the weekend, Presidential Candidate Trump regained a lead over Vice President Kamala Harris on Polymarket. This is the second time Trump has pulled ahead in their presidential election prediction market. Coincidentally, Trump’s rise also aligns with his lead in Nate Silver’s probability model, a well-known election forecasting tool. However, it’s worth noting that PredictIt, another major election betting market, has not mirrored this shift toward Trump in recent days. As a reminder, this is significant for crypto prices, given the GOP’s supportive stance on crypto and the Democrats’ ongoing regulation-by-enforcement approach.

Technical Strategy

Monero has been able to successfully buck the bearish tide across the crypto space Tuesday and could be set to break out of its consolidation pattern since June.   Today’s gains have reached the highest levels on a daily closing basis since mid-June, making it important to revisit given this above-average relative strength.  Any daily close back over 176 should help jump-start its momentum even more, allowing for a rally back to 258 then 290-308 area.  Overall, XMR looks like an attractive risk/reward given its short-term strength as part of its sideways range since 2022.

Daily Important Metrics Crypto Size Bullish signal is tied to the crypto market growing Market cap 2.02T $-28.4B(-1.38%) BTC Dominance 56.39 % (0.27%) Stablecoins Increase in circulating stablecoins is a Bullish signal In Circulation +$118B (-0.07%) In Exchanges +$21B (0.31%) BTC Metrics A decrease in Bitcoin on exchanges is bullish, indicates investors are moving coins to cold storage # BTC Exchanges +$3.0M (0.08%) Funding Rates Positive funding rates indicate traders are Bullish Aggregate +0.4748(0.7199) Binance +0.9961(0.8816) Bitfinex +0.9710(-0.5907) Bitmex +0.6793(1.0459) ByBit +0.3936(0.9645) Deribit +0.1516(0.1609) Huobi +0.1091(0.1091) Kraken +0.5315(0.6673) Mean +0.4748(0.7199) OKex +0.1560(-0.0287) Sentiment BMI : 45 (100.00%) Futures A positive spread between Futures Prices and Spot Prices is Bullish CME Price $57,945(-1.29%) Spot Basis +$283(0.49%) Volume 467,411(-9.23%) Open Interest 287,166(-0.61%) Options all exchanges Higher open interest change in a bull market is bullish for the sector Volume 13,024(20.99%) Open Interest 260,597 (0.64%) Vol. Put/Call Ratio 0.3557 (-35.87%) OOI Put/Call Ratio 0.4535 (-0.31%) All metrics as of 2024-09-03 15:58:05 All Funding rates are in bps Crypto Prices Symbol Market Cap Last Price Daily Change Year to Date Relative to BTC YTD BTC $1.14T $57,941 -0.88% 37.19% ETH $295B $2,452 -2.77% 7.76% -21.45% SOL $61B $131 -1.45% 28.84% -6.09% HNT $1.2B $7.31 -3.47% -80.63% -85.88% DOGE $182,804 $0.0002 -4.20% -99.79% -99.85% All prices as of 2024-09-03 14:59:18 Exchange Traded Products (ETPs) Symbol Prem. to Nav Last Price Daily Change Year to Date Relative to BTC YTD BITW -28.01% $30 -3.47% 28.88% -6.05% ETHE -0.77% $21 -2.29% 6.78% -22.16% News Quick Bits CoinDesk Metaplanet Teams Up With SBI VC Trade for Bitcoin Custody Metaplanet said it was adopting bitcoin as a reserve asset to hedge against the volatility of the yen in May and had accumulated a total of 360 BTC by mid-August. CoinDesk Matter Labs Restructures, Lays Off 16% of Team The company made the move to adapt to "the different type of technology and support" that developers building on ZKsync now require. Market Data CoinDesk Donald Trumps Harris On Polymarket Once Again Harris led Trump in early August and betting odds reached 50-50 on the marketplace last month but shifted to Trump’s favor over the weekend. The Block Polymarket traders think there is over 70% chance of a 25 basis point cut in the Fed’s next rate decision Polymarket traders are betting on a cut in the federal funds rate at the Federal Reserve’s FOMC meeting, scheduled for September 17-18. Regulation The Block Qatar improves regulatory clarity for cryptocurrency with newly released framework by major SEZ The 'QFC Digital Assets Framework' intends to offer more regulatory clarity on tokenization, transfer, exchange and custody. Fundraising and M&A The Block Web3 security firm Hypernative raises $16 million in Series A funding Hypernative, a web3 security firm that helps identify and prevent hacks, has raised $16 million in a Series A funding round. Mining The Block Bitfarms mines 233 BTC in August as Riot pens open letter in takeover saga Bitcoin miner Bitfarms reported mining 233 BTC in August and increased its holdings to 1,103 BTC amid Riot's attempted takeover. Web 3.0 CoinDesk Ripple Will Soon Add Ethereum Compatible Smart Contracts to XRP Ledger The contracts will exist on a sidechain built on XRPL, developers said in a Tuesday post. CoinDesk Brevan Howard-Backed Tokenization Firm Libre Arrives on NEAR Blockchain NEAR Protocol’s cross-chain signing feature will allow users on multiple blockchains to transact with Libre’s selection of tokenized credit and hedge funds.