Daily News | Market Fluctuates and Falls, Traders Bet on Fed's 25 Basis Point Rate Cut in September

2024-08-16, 04:26

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## Crypto Daily Digest: Market volatility is decreasing and may enter a period of silence
According to Farside Investor data, the US <a href="/ar/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> spot ETF had a net inflow of $11 million yesterday. Among them, Fidelity FBTC had a net inflow of $16.2 million, Bitwise's BITB had a net inflow of $6.2 million, Grayscale GBTC had a net outflow of $25 million, and Grayscale BTC had a net inflow of $13.7 million.

Yesterday, the US <a href="/ar/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> spot ETFs had a net outflow of $39.2 million. Among them, BlackRock ETHA had a net inflow of $800,000, Fidelity FETH had a net inflow of $2.5 million, and Grayscale ETHE had a net outflow of $42.5 million.

**MakerDAO approved the proposal to reduce the size of WBTC collateral**

Previously, MakerDAO initiated a proposal on August 12 to reduce the size of WBTC collateral, which has been used and implemented. The proposal will reduce the WBTC loan amount by at least $1.25 billion.

BA Labs, a crypto risk analysis and assessment agency, stated that due to the upcoming change in WBTC custody, the integration of WBTC collateral on Maker and SparkLend faces higher potential risks. If Bitgo or other relevant parties cannot convincingly demonstrate the security of maintaining the existing WBTC collateral integration, BA Labs will consider further adjusting parameters to protect the protocol until the WBTC collateral on Maker and SparkLend is completely removed.

**36.78 million BLUR unlocked today**

Today is the unlocking time for the first issue of BLUR in January. 36.78 million BLURs ($5.64 million) were unlocked and transferred from the BLUR unlocking contract to the 0x0A0 multi signature address 5 hours ago. The 0x0A0 multi signature address also underwent a small deposit test with the CEX deposit address, and these BLURs will be transferred to CEX as before.

**With the successive implementation of PPI and CPI, market volatility expectations have significantly decreased**

Macro researcher Adam posted on social media that with the successive landing of PPI and CPI, the market's volatility expectations have significantly decreased, which in turn has led to a significant decline in major maturity IVs. Short term IV has decreased by over 20% this week, while there is also a decline of approximately 5% in the medium to long term.

The decline in implied volatility IV in the options market is relatively rare, and institutional sellers can make up for a lot of profits in this round of decline to offset the hedging losses caused by the huge fluctuations in the past month. Now the term structure has returned to a stable structure of far high and near low, and the market may be quiet for a period of time.

## Market Trends: The market is fluctuating and falling, and BTC is approaching the bottom buying range
### Mainstream Coins
BTC shows a fluctuating downward trend. Yesterday, the inflow of BTC spot ETF funds was only $11 million, which failed to provide significant support to the market. This indicates that investors are adopting a wait-and-see attitude towards the current market environment and expect BTC's volatile downward trend to continue.

ETH has also performed poorly. Data shows that the outflow of ETH spot ETF funds reached $39 million, further exacerbating the downward pressure on the market. The downward trend of ETH is consistent with BTC, and the market lacks effective support.

Altcoins: The Altcoin market has generally experienced a significant decline, and the overall market lacks hotspots and positive driving factors. Investors' sentiment is low, and their interest in investing in Altcoins has significantly weakened.

### Data Indicators
AHR999 Index: Today, the AHR999 Index is 0.63, gradually approaching the historical bottom buying range. This index indicates that the market may be approaching an ideal buying point.

Fear & Greed Index: The current Fear & Greed Index is 27, indicating that market sentiment is still in a state of fear. The sluggish market sentiment is expected to persist for some time, and investors are generally waiting for the emergence of new market hotspots and narratives to reignite trading enthusiasm.

### Market Hotspots:
WBTC Trust Crisis: Recently, the custody of WBTC (Wrapped Bitcoin) by a company backed by Justin Sun has sparked widespread controversy in the community. As the largest staking lending platform of WBTC, MakerDAO has passed the proposal to reduce the size of WBTC collateral, with a cumulative reduction of $1.25 billion. Currently, the total circulation of WBTC exceeds 150,000, with a total value of over $8.8 billion.

This series of events has triggered a crisis of trust in WBTC, which is difficult to resolve in the short term. This trust crisis may create potential selling pressure on the market, further exacerbating market volatility.

## Macroeconomics: The three major US stock indices collectively closed higher, and a rate cut in September is almost a foregone conclusion
The three major US stock indices all rose over 1%, with the S&P 500 index rising 1.61% to 5,543.22 points; The Dow Jones Industrial Average rose 1.39% to 40,563.06 points; The Nasdaq index rose 2.34% to 17,594.50 points. The benchmark 10-year Treasury yield is 3.92%, while the 2-year Treasury yield, which is most sensitive to the Federal Reserve policy rate, is 4.08%.

Among the popular US stocks, Apple rose 1.35%, Microsoft rose 1.00%, Nvidia rose 4.05%, Google C rose 0.70%, Google A rose 0.58%, Amazon rose 4.40%, Meta rose 2.01%, TSMC rose 2.35%, Tesla rose 6.34%, and AMD rose 4.70%.

According to CME's "Federal Reserve Watch", the probability of the Federal Reserve cutting interest rates by 25 basis points in September is 74%, and the probability of cutting interest rates by 50 basis points is 26%. With the September interest rate cut almost a foregone conclusion, the focus of discussion at the Federal Reserve's September meeting is expected to be on the scale of the rate cut. What troubles the Federal Reserve is whether to cautiously cut interest rates by 25 basis points or significantly cut interest rates by 50 basis points. Recently, a disappointing employment data has raised concerns in the market that the US labor market is deteriorating and the US economy will also fall into recession.

Analysis suggests that the labor market must deteriorate significantly before the Federal Reserve can cut interest rates by 50 basis points. Brian Ross, Senior Investment Strategist at UBS Global Wealth Management, stated that inflation data is sufficient for the Federal Reserve to begin cutting interest rates in September, but did not give them a reason for a significant rate cut. The answer to this question may depend on the next non farm payroll data.

### Conclusion
Overall, the current <a href="/ar/price" target="_blank" class="blog_inner_link">crypto market</a> is facing significant downward pressure. The volatile downward trend of BTC and ETH is difficult to reverse in the short term, and the Altcoin market also lacks effective hotspots and support. The AHR999 index and the Fear & Greed index both indicate a sluggish market sentiment, with investors generally adopting a wait-and-see attitude.

The trust crisis of WBTC further increases market uncertainty and may have a negative impact on overall market sentiment. In the short term, the crypto market may continue to maintain a volatile downward trend, and investors need to remain cautious and closely monitor market dynamics and potential risk factors.

In this market environment, it is recommended that investors remain patient and wait for the emergence of new market hotspots and positive signals in order to operate at the appropriate time.

<div class="blog-details-info">
<div>Author:**Icing**, Gate.io Researcher
<div>Translator:Joy Z.
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

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