This has been a busy week for cryptocurrencies and traditional markets, and investors will find that bitcoin (BTC) and altcoins have started to go their own way with the implementation of a new policy of monetary expansion.
Before you read the overview, check out the most widely read stories about the price of Bitcoin. The macroeconomic picture and the DeFi phenomenon are gaining momentum.
Ethereum price remains in the days of major resistance before the $ 112 million options expire
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A large crypto company expects Polkadot (DOT) to become a top 3 blockchain
Bitcoin price is briefly at $ 11.6k as the Fed says inflation can exceed 2%.
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A crucial moment for Bitcoin and digital assets
Central bank policy, first formulated after the Great Recession and later seen as exceptional, became normal – and fears crept in from around the world.
Quantitative easing, persistently low interest rates, stimulus payments and other measures have increasingly been used to support the economy, jobs and financial markets that have been plagued by the government’s response to the COVID-19 pandemic.
This prompted the Federal Reserve and the US Treasury Department to rewrite the fiscal rules to keep the country from sinking under the weight of a seemingly almost certain financial collapse.
The scale of these efforts represents a significant shift from previous measures like TARP, which have been heavily focused on the financial industry – and have led us to a pivotal moment for Bitcoin and other digital assets.
Economists go so far
That coolness you feel is not the end of summer. It’s a collective chill after the remarks Fed officials made in Jackson Hole this week.
Federal Reserve Chairman Jerome Powell this week endorsed the Fed’s new approach, saying it was a duty to stimulate the US labor market while allaying concerns about rising inflation.
While Powell recognized that an earlier drop in unemployment raised concerns about rising inflation and prompted the Federal Reserve to raise interest rates, the central bank will clearly no longer take such action.
This could be a frightening prospect for anyone interested in the value of money who has seen the disastrous effects of the full expansion of the money supply in countries like Venezuela, Russia, Brazil, and more.
The reason digital assets are important is twofold: technology and the potential to fight inflation – the ability to benefit from non-banking companies and instill “credit and confidence”.
In terms of market reaction, long-term US Treasury bond yields climbed to their highest levels in the months of Thursday, shifting the yield curve after Powell announced this new policy framework that will encourage higher inflation to fuel economic recovery and create jobs .
Weekly performance snapshot of the cryptocurrency market
Weekly performance snapshot of the cryptocurrency market. Source: Coin360
In the future, it is worth paying attention to the broader raw material complex, as well as the development of expectations. The correlations that may apply now may not be correct, especially those related to inflation.
Unsurprisingly, Bitcoin (BTC) and gold traded lock-in for most of the session, initially rising higher before reversing and falling to new session lows.
You could be on something
Another week brought another wave of capital inflows into DeFi companies. The grand total now stands at $ 7.22 billion, and the three largest assets – including Aave, Maker, and Curve – are each over $ 1 billion.
The total number of bitcoins trapped in the ecosystem has now risen to 46,086, with the Bitcoin Encapsulated Account (wBTC) representing 30,798, followed by the Rinbitcoin at 8,408. Although transaction costs on the Ethereum network have fallen from recent highs, they have surprisingly failed. This leads to a significant increase in the trading volume on decentralized exchanges.