Will China's stimulus measures boost Bitcoin and crypto prices?

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Weekly crypto wrap: 26th September 2024

TLDR

• Reality Check: Bull Market Correction - Real Vision's Chief Crypto Analyst.
• Bitcoin leads US$321M crypto inflows following Fed rate cut.
• Will China's stimulus measures boost Bitcoin and crypto prices?
• Bitcoin dev to unite Bitcoin and Ethereum via cross-chain tunnels.
• Australia’s CPI hits 3-year low, easing to 2.7% in August.
• US Fed cuts rates by 50 bps to 4.75%-5%, signalling further easing ahead.

BTC Markets announcements

Real Vision Deep Dives with Chief Crypto Analyst, Jamie Coutts.

Reality Check: Bull Market Correction.

The past six months have been tough for crypto markets, but a strong foundation is being laid beneath the surface of volatile prices and supply overhangs. Smart contract platforms (SCP) — the backbone of the digital asset ecosystem — are quietly experiencing increased adoption and capital inflows.

Despite concerns over potential political headwinds — a Harris victory or a more fiscally responsible Republican government could impact sentiment — the basis for assessing a secular technology, Blockchain, or adoption, appears to have its own momentum at this point.

Read the preview report: ‘Reality Check: Bull Market Correction.’

Ondo (ONDO) is now live on BTC Markets.

You can buy and sell the ONDO/AUD pair on our platform. Explore this latest addition to our list of supported cryptocurrencies today.

What is Ondo (Ondo)?

Ondo Finance is a platform that uses blockchain technology to make financial markets more efficient, transparent, and accessible by automating processes and reducing costs.

For more information about Ondo (ONDO), please visit our blog. Follow us on X/Twitter, LinkedIn, or Facebook for all the latest updates.

BTC Markets x Ticker News ‘Crypto Corner’ featuring Jamie Coutts.

In this episode of Crypto Corner, BTC Markets CEO Caroline Bowler sits down with Jamie Coutts, Chief Crypto Analyst at ‪Real Vision Finance to discuss the current state of the cryptocurrency market, including macro trends and the outlook for blockchain adoption through 2030.

Additionally, they discuss the exclusive partnership with Real Vision, offering clients a preview of Jamie’s fortnightly market insights and reports.

Watch on YouTube or Ticker News.

The countdown is on to the ASX Markets Day with BTC Markets.

Join us for the ASX Refinitiv Markets Day for Charity on Tuesday, 15th October 2024. We’re honoured to support this key event alongside industry leaders like ASX, NABtrade, Macquarie Bank, and Citi.

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Charlie Sherry, our Head of Finance, speaks with Nick Christie, Co-founder of Syla, about simplifying tax reporting for cryptocurrency investors.

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Learn: Start your crypto journey with BTC Markets' beginner's guide.

Explore the world of cryptocurrencies with BTC Markets' beginner's guide. Our Learn Section is crafted specifically for newcomers eager to understand the crypto space.

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• Introduction to cryptocurrencies: Explore the fascinating world of cryptocurrencies and their potential role in the future of finance.
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• How to buy and sell crypto: Learn how to buy, sell, and store crypto on an exchange, and secure your assets with best practices.
• How to stay safe in crypto: Stay safe in the crypto space by understanding the common scams and how to avoid them.
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BTC Markets in the news

The Block: US spot bitcoin ETFs rebound to daily net inflows of $158 million; BTC hovers at $63,500.

“BTC is showing a strong short-term upward trend, with the price now testing the 200-day simple moving average (SMA) on the daily chart. Over the past week, it has posted three consecutive green closes, reflecting an 8% rise,” said BTC Markets’ crypto analyst Rachael Lucas. “This momentum has been supported by key macroeconomic factors, such as the Federal Reserve’s recent 50 basis point rate cut and the Bank of Japan’s decision to keep interest rates at 0.25%.”

Lucas noted that it’s important to highlight that the bitcoin price gain has paralleled what is seen in the S&P 500 and Nasdaq, which reflects a wider “risk-on” sentiment across global markets.

“However, for a true bull cycle—characterized by sustained higher highs and higher lows—retail volume would need to increase significantly,” said Lucas. “At this point, retail participation remains subdued, making it uncertain whether this upward momentum can be maintained over the long term.”

Read the full article here.

State of crypto

TLDR

• Bitcoin leads US$321M crypto inflows following Fed rate cut.
• Is Bitcoin a Global Liquidity Barometer?
• Steady Bitcoin ETF inflows may lift prices amid slowing spot market demand.
• Will China's stimulus measures boost Bitcoin and crypto prices?
• Bitcoin dev to unite Bitcoin and Ethereum via cross-chain tunnels.
• Synthetix to add Chainlink integration with v3 exchange launch on Arbitrum.

The weekly trading stats as of Monday, September 23rd at 10:00 am AEST, based on data from Tradingview in USD.

Bitcoin leads US$321M crypto inflows following the US Fed Reserve’s rate cut.

Cryptocurrency investment products saw inflows of US$321 million from 15th September to 21st September, following the US Federal Reserve's 50 basis point (bp) rate cut, according to CoinShares. This marks the second consecutive week of inflows, though slightly down from US$436 million the previous week.

Bitcoin was the primary beneficiary, with US$284 million in inflows, while Ethereum saw US$29 million in outflows, marking its fifth straight week of declines. The rate cut sparked positive reactions in crypto markets, increasing total assets under management by 9%.

Solana investment products also saw modest inflows. Meanwhile, gold has surged to a record US$2,629 per ounce, supported by the rate cut and other factors. Analysts expect the Federal Reserve’s trajectory of rate cuts could further boost gold prices.

Bitcoin: A Global Liquidity Barometer by Lyn Alden

Bitcoin’s strong correlation with global liquidity makes it a valuable macroeconomic indicator for investors, consistently reflecting money creation and dollar strength. Unlike traditional assets, its correlation remains relatively pure.

However, this relationship weakens over shorter time frames and can break down due to internal market dynamics like idiosyncratic shocks. Recognising these decoupling periods is crucial, as they often signal price corrections or accumulation phases.

Combining global liquidity analysis with on-chain metrics, such as the MVRV Z-score, helps investors better understand Bitcoin’s price cycles. Despite its complexities, Bitcoin remains a key tool for guiding macroeconomic decision-making.

Steady Bitcoin ETF inflows may lift prices amid slowing spot market demand.

Bitcoin exchange-traded funds (ETFs) have seen sustained inflows, which may help support Bitcoin's price despite a decline in spot market buying, according to Bitfinex analysts. A recent report highlights a multiday streak of inflows into spot Bitcoin ETFs, totalling US$136 million as of September 24. This trend could buoy Bitcoin's price, countering the slowing demand from direct spot market buyers.

Data from CoinGlass shows that September has historically been a challenging month for Bitcoin, with an average loss of 4.49% over the past 11 years. However, Bitcoin's price has increased by 6.26% since September 18, despite these typical bearish trends.

If ETF inflows continue positively, analysts suggest that Bitcoin could experience further price gains, especially if broader financial markets like the S&P 500 also rally. Without a resurgence in spot market buying, however, the most likely scenario is price consolidation or a partial correction.

Long-term industry forecasts remain optimistic, with some analysts predicting Bitcoin could reach six figures within the next year, regardless of external factors such as the outcome of the 2024 U.S. presidential election.

Will China's stimulus measures boost Bitcoin and crypto prices?

The People's Bank of China has launched significant stimulus measures, including cutting the reserve requirements for banks and reducing mortgage rates, sparking speculation about their impact on Bitcoin prices.

This stimulus, described as a "policy bazooka," follows a recent rate cut by the US Federal Reserve, which had previously boosted Bitcoin's value. Crypto enthusiasts are hopeful that increased liquidity from China's actions will favour Bitcoin, as historical data shows a correlation between global liquidity and Bitcoin prices.

Bitcoin's price rose slightly after the announcement, reaching a peak of US$64,500. Analysts warn that despite the stimulus, consumer confidence and demand in China remain weak, limiting its effectiveness. While Hong Kong has approved spot Bitcoin ETFs, trading in mainland China is still banned, which may dampen the potential for significant gains in Bitcoin from this stimulus cycle.

Bitcoin dev to unite Bitcoin and Ethereum via cross-chain tunnels.

Jeff Garzik, a Bitcoin core developer, introduced the Hemi Network, a blockchain protocol aiming to link Bitcoin and Ethereum through a new method called "tunneling." Unlike traditional cross-chain bridges, which have faced security vulnerabilities, tunneling allows both blockchains to coexist without the associated risks. Hemi treats Bitcoin and Ethereum as parts of a larger supernetwork, enhancing secure cross-chain interactions by inheriting Bitcoin’s full security.

Max Sanchez, Hemi Labs' CTO, explained that the Hemi Virtual Machine (HVM) uses Bitcoin’s introspection for a trust-minimised, capital-efficient tunneling system based on BitVM2, enabling more secure and efficient transaction processing. The protocol allows users to transfer assets between Bitcoin and Ethereum, supporting Bitcoin-based asset tokenisation on Ethereum.

On Sept. 18, the Hemi Network raised US$15 million. Meanwhile, Ethereum co-founder Vitalik Buterin predicted cross-chain interoperability issues will soon be resolved, with Layer-2 solutions improving Ethereum’s interoperability.

Trade ETH/AUD on BTC Markets.

Synthetix to add Chainlink integration with v3 exchange launch on Arbitrum.

Synthetix, a derivatives protocol, will integrate Chainlink's Data Streams into its upcoming v3 release on the Arbitrum network, following unanimous approval from its governing council. Chainlink’s Data Streams, which utilise "pull-based" oracles, offer enhanced data delivery with higher frequency and lower latency compared to traditional "push-based" solutions. This upgrade is crucial for Synthetix, which needs real-time market data for effective trading on its decentralised exchange. The integration aims to improve the performance, security, and reliability of Synthetix's markets.

The Synthetix v3 protocol aims to connect centralised and decentralised exchanges, could potentially extend this Data Streams integration to other networks. Chainlink has been actively expanding its services in 2024, including recent integrations with Celo and Gnosis.

Trade LINK/AUD on BTC Markets.

Crypto Fear & Greed Index

Source: alternative.me

The week ahead: economic events

Thursday, September 26th

• Germany GfK Consumer Climate
• United States Durable Goods Orders, GDP Growth Rate and Fed Funds Interest Rate

Friday, September 27th

• France Inflation Rate
• United States Core PCE Price Index MoM, Personal Income and Personal Spending

Monday, September 30th

• China NBS Manufacturing PMI and Caixin Manufacturing PMI
• Italy Inflation Rate
• Germany Inflation Rate

Tuesday, October 1st

• United States Fed Funds Interest Rate
• Japan Consumer Confidence
• Euro Area Inflation Rate

Wednesday, October 2nd

• United States ISM Manufacturing PMI and Job Openings
• Japan Business Confidence

Thursday, October 3rd

• Australia Balance of Trade

Source: trading economics

Market reflections

Overview

Australia's inflation eased to a three-year low of 2.7% in August, as the RBA held rates steady, citing ongoing inflation risks amid a sluggish economic recovery. Manufacturing and services activity weakened, but employment saw a strong rise. Globally, the US Fed cut rates by 50 bps to 4.75%-5%, while Germany's economic indicators declined. Japan’s inflation reached 3%, leading the BoJ to maintain its rate stance. In the UK, retail sales increased by 1% as the BoE held rates at 5%.

Australia

• Australia’s CPI hits 3-year low, easing to 2.7% in August.
• RBA holds cash rate, flags inflation risks amid slower economic rebound.
• Manufacturing PMI hits 3-year low as services sector growth slows.
• Employment surges in August amid mixed trends.

Australia’s monthly CPI hits 3-year low, easing to 2.7% in August.

Australia’s monthly CPI rose 2.7% in August, its lowest since August 2021 and within the central bank’s 2-3% target range for the first time in three years.

The decline was driven by significant drops in electricity prices (-17.9%) and automotive fuel (-7.6%), alongside easing costs in food and alcohol. Excluding volatile items, the CPI rose 3.0%, down from 3.7% in July.

It was the lowest figure since August 2021, coming within the central bank's target range of 2 to 3% for the first time in three years, amid the continued impact of the Energy Bill Relief Fund rebate

RBA holds cash rate at 4.35%, flags inflation risks amid slower economic rebound.

The Reserve Bank of Australia (RBA) kept its cash rate steady at 4.35% for the seventh consecutive meeting in September, aligning with market expectations.

Despite a stable headline inflation outlook, the central bank cautioned that the trimmed mean inflation remains elevated and may not return to the 2-3% target until 2026. The RBA emphasised the need for vigilance against upside inflation risks while maintaining a data-dependent approach.

It noted that household consumption is expected to recover in the second half of 2024, but the pace might be slower, potentially leading to subdued output growth and further labour market deterioration.

The interest rate on Exchange Settlement balances was also left unchanged at 4.25%.

Australia's manufacturing PMI hits 3-year low as services sector growth slows.

The Judo Bank Flash Australia Manufacturing PMI dropped to 46.7 in September from 48.5 in August, marking the fastest contraction in manufacturing activity since May 2020.

Weakened demand led to a decline in new orders and production, prompting firms to reduce purchases and cut inventories. Employment fell for the fourth consecutive month.

In contrast, the Services PMI edged down to 50.6 from 52.5, still indicating modest growth but at a slower pace due to declining new business.

The Composite PMI fell to 49.8, signalling an overall decline in business activity as the manufacturing downturn outweighed the softer growth in services.

Input cost and output price inflation eased across sectors, with selling prices rising at the slowest pace since December 2020.

Australia's employment surges in August amid mixed trends.

Employment in Australia rose by 47,500 in August, bringing total employment to 14,458,600 and significantly surpassing market expectations of a 25,000 gain. This growth follows a downwardly revised increase of 48,900 in the previous month.

The rise in part-time employment was particularly notable, surging by 50,600 after a decline of 15,800 in July. Conversely, full-time employment fell by 3,100, marking a reversal from the five-month peak of 64,800 recorded in July. Over the year to August, total employment has increased by 374,200, equivalent to a growth rate of 2.7%.

Australia’s seasonally adjusted unemployment rate remained steady at 4.2% in August, in line with forecasts. The number of unemployed persons decreased by 10,500 to 627,000, with declines in those seeking both full-time and part-time work.

The participation rate remained at a record high of 67.1%, consistent with expectations. However, the underemployment rate rose to 6.5% from 6.3% in July. Monthly hours worked across all jobs increased by 8 million, or 0.4%, to a total of 1,962 million.

This mixed labour market data reflects ongoing challenges, particularly in full-time employment, while highlighting robust growth in part-time work.

Global

• US Fed cuts rates by 50 bps to 4.75%-5%, signalling further easing ahead.
• Germany's manufacturing PMI & Ifo Business Climate both fell in September.
• Japan's inflation hits 3% in August, prompting the Bank of Japan to maintain steady rates.
• UK retail sales rise 1% in August; Bank of England maintains 5% rate amid inflation concerns.

United States

US Fed cuts rates by 50 bps to 4.75%-5%, signalling further easing ahead.

The US Federal Reserve lowered the fed funds rate by 50 basis points to 4.75%-5% in September, marking the first rate cut since March 2020.

While the move was expected, there was speculation about a smaller 25 bps reduction. New forecasts indicate an additional 100 bps of rate cuts by year-end, with further reductions in 2025 and 2026.

Inflation projections for 2024 and 2025 were revised lower, while GDP growth estimates were slightly reduced for 2024. The unemployment rate forecast was raised for this year and next.

Germany

Manufacturing PMI slumps to 40.3 in September amid deepening sector downturn.

Germany's manufacturing PMI dropped for the fourth consecutive month to 40.3 in September, the lowest level in a year and below forecasts of 42.3. The sector faced its steepest decline in production and new orders in 12 months, while employment contracted at the fastest pace since the pandemic, driven by significant job cuts among major automotive suppliers.

Manufacturing purchasing costs fell at the sharpest rate in six months, reflecting weaker input demand and lower commodity prices, especially steel.

Future activity expectations have also deteriorated rapidly, largely due to negative news surrounding Volkswagen, according to HCOB’s Chief Economist, Dr. Cyrus de la Rubia.

Ifo Business Climate falls to 85.4 in September, lowest since January

Germany's Ifo Business Climate indicator declined to 85.4 in September, down from 86.6 in August, marking the lowest level since January and missing market forecasts of 86.

The index for current conditions fell to 84.4 from 86.5, while business expectations also weakened, dropping to 86.3 from 86.8.

The data suggests growing concerns over the economic outlook as sentiment in both current and future business conditions continues to deteriorate.

Japan

Inflation rises to 3% in August, driven by surging energy and food costs.

Japan's annual inflation rate increased to 3.0% in August, the highest since October 2023, up from 2.8% over the previous three months.

The rise was largely due to a surge in electricity prices, which jumped 26.2% following the end of energy subsidies in May. Gas prices also saw a sharp increase of 11.1%, the highest in 18 months. Food costs accelerated to 3.6%, while inflation rose across various sectors, including housing and household goods. Meanwhile, the core inflation rate hit a six-month high of 2.8%, in line with expectations. On a monthly basis, consumer prices rose by 0.5%, the largest gain in three months.

Bank of Japan holds rates steady at 0.25%, signals cautious stance amid economic uncertainty.

The Bank of Japan (BoJ) kept its key short-term interest rate unchanged at around 0.25% during its September meeting, the highest level since 2008, in line with market expectations.

The central bank took a cautious approach after two rate hikes earlier this year in March and July, citing the need for more time to assess financial markets amid differing views among board members.

The BoJ reiterated that Japan's economy remains on a moderate recovery path, supported by rising private consumption, although exports and industrial production remained subdued.

Inflation ranged between 2.5% and 3.0%, driven by higher service prices, with underlying CPI expected to rise gradually.

United Kingdom

UK retail sales up 1% in August, buoyed by warm weather and seasonal discounts.

UK retail sales rose by 1% month-over-month in August, surpassing expectations of a 0.4% increase and building on a revised 0.7% gain in July.

Warmer weather and end-of-season sales boosted supermarket and clothing store performance, with food store sales jumping 1.8% and non-food sales up 0.6%. Online spending remained flat.

Over the three months to August, retail sales grew by 1.2%. Year-on-year, sales surged 2.5%, the highest since February 2022, following a revised 1.5% rise in July, exceeding forecasts of 1.4%.

Bank of England holds rate at 5%, signals steady outlook amid inflation concerns.

The Bank of England maintained the Bank Rate at 5% during its September meeting, following a 25-bps cut in August—the first in over four years. While the decision aligned with market expectations, one member advocated for a further cut to 4.75%.

Annual inflation stood at 2.2% in August and is projected to rise to 2.5% by year-end as energy price declines wane. Services inflation remained high at 5.6%, while private sector wage growth slowed to 4.9% in the three months to July.

The Committee also agreed to reduce its stock of UK government bonds by £100 billion over the next year.

Scam awareness

Safeguarding against cyber scams.

In today's digital world, spotting a cyber scam is more important than ever. Scams are a common way for cybercriminals to hack into accounts, putting individuals, businesses, and institutions at risk. Staying alert to scam messages is key to protecting yourself online.

Scammers use all sorts of communication methods, email, text messages, phone calls, and social media, to trick people. Their main aim is to get you to hand over money or personal information. They often pretend to be someone you trust, using that familiarity to create a false sense of security.

Read the full blog here.

The ASIC provides a checklist of common scams and ways to avoid them. To learn more, visit ASIC’s website.

Discover more on our ‘Compliance conversation’ blog page, where we share the latest updates on safeguarding against scams and protecting your assets. Stay informed and stay protected!

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