The Bitcoin and crypto market is starting into a very quiet week today in terms of upcoming events. Both crypto related events as well as notable macro data are very scarce this week. The most important macro data are the ISM Services PMI (on Wednesday 10:00 am EST) and the initial jobless claims (on Thursday at 8:30 am EST). However, neither event is likely to have a significant impact on the dollar index (DXY) and thus Bitcoin and crypto.
Due to this, we are making an exception this Monday and looking at the entire month of September rather than the upcoming seven days in our weekly preview. September holds several extremely important events in store, and could also provide a few surprises.
#1 Bitcoin Spot ETF Decision?
The spot Bitcoin ETF approval is still the most important catalyst to observe for the market. Grayscale’s recent victory in court against the SEC has been a significant milestone. “The SEC will likely have no choice but to approve spot Bitcoin ETFs following Grayscale’s victory in its case against the SEC”, according to JPMorgan. However, the timing remains questionable.
While the crypto market is on tenterhooks for the second deadline in mid-October, the consensus among analysts is leaning towards another delay by the SEC. The first “final” deadline for Ark is set for January 10th. Moreover, the market’s somewhat tepid response to Grayscale’s win, followed by a swift retracement, is a testament to the weariness and anticipation that has built up over time.
However, the Grayscale victory has introduced an element of unpredictability. The SEC’s window to appeal the court’s decision closes on October 14th, a date that coincidentally aligns with the second deadline for other institutional giants like BlackRock, Fidelity, and Invesco. But while a definitive decision on a Bitcoin spot ETF in September seems like a long shot, the negotiations between Grayscale and the SEC regarding the execution of the verdict could potentially yield a surprising event.
#2 US CPI Release On September 13th
The September Consumer Price Index (CPI) report is arguably the most awaited economic indicator this month. Scheduled for release on September 13th, this report will shed light on the inflationary trends of the US economy. After a consistent period of decline, July’s CPI showed a surprising uptick. The financial markets are now in a state of heightened alertness, trying to determine if this is the beginning of a new inflationary trend or just an anomaly.
The Federal Reserve’s recent comments on the past two CPI reports have been somewhat optimistic. However, Fed Chair Jerome Powell’s latest remarks serve as a reminder of the volatility and unpredictability of economic indicators. If September’s CPI showcases alarming inflationary trends again, the Fed could very well set the stage for discussions around another potential rate hike in 2023.
In July, CPI rose 0.2% month-over-month on a seasonally adjusted basis, the same increase as in June. Over the last 12 months, the CPI year-over-year (YoY) increased 3.2%. Core CPI increased 0.2% from June and was up 4.7% YoY (0.1% below consensus expectation). Remarkably, July was the fourth consecutive month that annual core CPI has eased.
#3 FOMC Meeting On September 20th
The Federal Open Market Committee (FOMC) meeting on September 20th is another pivotal event in the financial calendar for September. This meeting is particularly significant as it follows the recent surge in CPI and the PCE data, which remains stubbornly high at 3.3%. With the Fed’s self-imposed 2% inflation target still out of reach, the market is overwhelmingly leaning towards a pause in rate hikes, with a whopping 93% probability.
Every word uttered by Jerome Powell will be meticulously analyzed for insights into the Fed’s future strategy. The recent economic data presents a complex picture. On one hand, the sharp decline in US consumer confidence, coupled with a decrease in job openings and a persistent contraction in US manufacturing, paints a bleak picture.
On the other hand, the Fed’s preferred inflation measure, core PCE, has risen in line with expectations. The temporary spike in core services ex-housing, a metric that Powell closely monitors, further complicates the narrative. Nevertheless, a pause seems very likely unless the CPI shoots up again.
#4 More Crypto Events
The decentralized exchange dYdX is prepping for a significant update with the launch of V4 on their Cosmos app-chain. One of the standout features of this update is an in-memory orderbook that will be overseen by dYdX chain validators. In a move that signifies a shift towards greater decentralization, trading revenue will no longer be directed towards centralized entities like dYdX Trading Inc.
With a current market cap of $362 million and a fully diluted valuation of $2.09 billion, the upcoming revenue-sharing model for DYDX token holders is a significant development. However, potential investors should be cautious of the impending 40% unlock of DYDX slated for December.
Coinbase’s Base platform has been making waves in the crypto community. Since its inception, Base has rapidly accumulated a Total Value Locked (TVL) of $400 million. A significant portion of this liquidity ($190 million) is associated with Aerodrome, which has been in the limelight due to its incentivized farms and token airdrop.
While the current TVL might stabilize at this level, the impending launch of several major protocols on Base could act as a magnet for additional liquidity in September. Notable projects that have already made their mark on Base include industry heavyweights like Curve, Uniswap, 1Inch, and Aave.
At press time, the Bitcoin price was at $25,999.