Crypto market cautious after Fed’s Powell says US inflation still ‘too high’

Bitcoin, Ether and other top 10 non-stablecoin cryptocurrencies held steady on Monday morning in Asia. Crypto investor sentiment remains cautious, although JPMorgan Chase & Co. analysts report that downward price momentum in the market has slowed. The Forkast 500 NFT Index gained after Donald Trump’s arrest triggered a surge in sales of the former U.S. president’s signature NFT collection. U.S. equity futures gained despite U.S. Federal Reserve chair Jerome Powell using his highly anticipated Jackson Hole speech on Friday to double down on the potential for interest rates to stay higher for longer.

JP Morgan finds ‘limited downside’ for crypto

Bitcoin posted a minimal gain of 0.08% for the last 24 hours to reach US$26,050.62 as of 06:40 a.m. in Hong Kong. The token was trading 0.59% lower for the week, according to CoinMarketCap data. The world’s leading cryptocurrency hovered around US$26,000 over the weekend, briefly dipping below the key support level several times.

“The Cryptocurrency Fear and Greed Index is in “Fear” territory for the latest week,” said Alex Kuptsikevich, senior market analyst at London-based online brokerage FxPro, in an emailed statement.

“By this measure, the market is far from oversold and not yet attractive to bargain hunters,” he said, adding that Bitcoin has entered another long period of horizontal price movement.

Ether gained 0.35% to US$1,653.79, while losing 1.73% in the last seven days. Alongside most other cryptos, including Bitcoin, it posted heavy losses Aug. 18 as macroeconomic factors — including uncertainty over upcoming Fed moves on interest rates, depreciation of the Chinese yuan and the bankruptcy of Chinese property giant Evergrande — weighed on the market.

“Ethereum is consolidating around US$1,650, a significant pivot level of the last 12 months,” said Kuptsikevich. He warned that a failure to maintain this level could take the price to US$1,200 “within a week or two.”

Contrastingly, a report by analysts at JPMorgan Chase & Co. forecast “limited downside” for the crypto market as losses slow. They found a drop in the number of Bitcoin-linked futures contracts on exchanges that are yet to be settled — a sign that downward price movement is losing its momentum.

Other top 10 non-stablecoin cryptocurrencies were steady to mixed.

Solana led the gains, rising 1.99% to US$20.73, but it still posted a loss of 4.89% for the week. That drop came despite news last week that Solana Pay — a free-to-use payment protocol built on the Solana blockchain — has partnered with Canada-based e-commerce platform Shopify to allow USDC stablecoin payments for online shopping without intermediary fees.

The total crypto market capitalization grew 0.18% to US$1.05 trillion. Trading volume also rose 6.88% to US$16.28 billion.

Trump mugshot boosts former US president’s NFT sales

The indexes are proxy measures of the performance of the global NFT market. They are managed by CryptoSlam, a sister company of Forkast.News under the Forkast.Labs umbrella.

The main Forkast 500 NFT index edged up 0.07% over the past 24 hours to 2,244.41 as of 11:45 a.m. in Hong Kong, but was down 3.71% for the week. Forkast’s Ethereum, Polygon and Cardano indexes moved down, while the Solana index rose.

Total NFT trading volume rose 0.33% in the past 24 hours to US$10.02 million. Volume on Ethereum and Polygon fell while Solana, Mythos and BNB logged increases, according to data from CryptoSlam.

Meanwhile, the public release of Donald Trump’s police mugshot Thursday caused a surge in the price of the former U.S. presidents signature NFTs. The average price of Trump Digital Trading Cards on the NFT marketplace OpenSea jumped 70% to 0.1913 ETH (US$358) on Sunday from 0.1118 ETH on Wednesday.

The mugshot is part of the criminal case brought by the Georgia state government against Trump for electoral interference at the end of the 2020 presidential race. The image is the first mugshot taken of a former president in U.S. history. Trump tweeted the picture on his official X account on Friday. It was his first tweet since being reinstated to X (formerly Twitter) following a ban in January 2021.

The tweet had 250.4 million views and 1.6 million likes as of Monday afternoon in Asia.

“The more Trump is in the news, the more these will sell,” said Yehudah Petscher, NFT strategist for Forkast Labs.

“To some degree, I do think these are historic. You have one of the most polarizing figures in world history, and I think most people don’t realize or they forgot, but there’s a whole collection of prize NFTs,” Petscher added.

Trump’s NFT collection, launched last December, includes passes to perks including a group Zoom call with the former president.

“I bought a couple of the Zoom calls,” Petscher said. “When else are you ever going to have a chance to talk to a president for 30 bucks?”

In terms of collections, Mythos chain-based NFTs from blockchain gaming platform DMarket topped trade volume, gaining 3.58% to US$815,301. Ethereum-based NFT staple Bored Ape Yacht Club placed second despite dropping 45.50% to US$666,010.

The digital collection from ImmutableX’s science fiction-based trading card game “Cross The Ages” placed third with a trading volume of US$472,187.

Powell signals rates could stay higher-for-longer

Federal Reserve Chairman Jerome Powell Image: Getty Images

U.S. stock futures were trading up as of 11:55 a.m. in Hong Kong, adding to gains made during regular session trading Friday. China’s Shanghai Composite Index, Hong Kong’s Hang Seng, South Korea’s Kospi and Japan’s Nikkei all also logged gains.

That followed Federal Reserve Chair Jerome Powell’s opening speech at the Jackson Hole Economic Symposium last Friday. Powell said the U.S. economy has become more resilient, but made clear that inflation still remains “too high.” The central bank could still raise interest rates if needed, he said, but will “proceed carefully” before making any decision.

“It’s a reiteration that the Fed at best is going to go very slowly and cautiously,” Michael Green, chief investment strategist at Simplify Asset Management, said to BBC News.

The Fed raised its interest rate to between 5.25% and 5.50% in July, the highest level in 22 years. The CME FedWatch Tool predicts a 19.5% chance for a 25-basis-point rate hike at the Fed’s next meeting in September.

Meanwhile, China stocks rose following weekend reports that Beijing is preparing new measures to boost capital markets. The proposed measures include a plan to cut stamp duty — a tax levied on documents required to legally record transactions — on stock trading by a maximum of 50%. If implemented, the cut will be the first of its kind since 2008.

“Such a policy will likely give a short-term boost to the market, but won’t have much effect over the long run,” Xie Chen, fund manager at Shanghai Jianwen Investment Management Co., told Reuters.

Macroeconomic data for July, including output and retail sales figures, showed a slowdown in China’s post-coronavirus recovery efforts, with some analysts predicting a recession.

(Updates to add Equities section)