The overdue and planned interest rate cuts in the US make it clear that the issue of inflation is taking a back seat for the moment and the focus is no longer on solving problems, but on new beginnings and growth. On the one hand, this leads to a positive outlook; on the other hand, a “failure” could put those very problems back on the map much more strongly. Developments should therefore be monitored closely.
Thought of the week
Digital Asset News
On Friday, Federal Reserve Chairman Jerome H. Powell stated that the central bank could be ready to cut interest rates at its upcoming meeting in September. Powell made the announcement during a conference at the Kansas City Fed in Jackson Hole, Wyoming, which is traditionally seen as an important platform for monetary policy decisions. Powell explained that the size of the possible interest rate cut had not yet been determined and would be discussed further. However, the Fed is prepared to adjust its policy in order to support the labour market and stabilize the economic course. “The time has come to adjust policy,” Powell said. He emphasized that future decisions would depend on the latest economic data, the economic outlook and a consideration of the risks.
These statements come at a time when interest rates have been held at around 5.3% for over a year, the highest level in two decades. With inflation cooling and signs of a possible weakening labor market, market expectations of a rate cut at the Fed meeting in September have increased. However, with inflation falling and the labor market weakening, Powell is now hinting that the central bank could shift its focus back to supporting the labor market and lowering interest rates. Powell’s comments led to positive market developments.
Buying interest in Bitcoin in the US has reached a 39-day high following the US Federal Reserve’s fairly concrete hints of an imminent rate cut.
“Demand for Bitcoin has shot up today after the Fed announced the start of its rate cuts,” as Julio Moreno of CryptoQuant notes today, August 24, referring to the so-called Coinbase Premium Index, which tracks the difference between Bitcoin prices on Coinbase Pro and Binance, which in turn can be used to compare sentiment in the US crypto market with the rest of the world. Meanwhile, the current surge in buying interest can be traced directly back to the announcement by US Federal Reserve Chairman Jerome Powell, who held out the prospect of an imminent interest rate cut without, however, naming a specific date.Cointelegraph had previously reported that the conference was eagerly awaited by market observers, who were hoping for an indication of the Federal Reserve’s future interest rate policy, which they have now received from Powell. In light of this, some analysts are now so optimistic that they now see BTC “only on the way up”.
According to a new report from JPMorgan, Bitcoin miners are currently struggling to maintain their profits as the halving of Bitcoin in April and rising electricity costs continue to weigh heavily on miners’ production.
The second quarter of 2024 “was a historic quarter as Bitcoin miners underwent the fourth Bitcoin halving, which halved the number of coins mined daily (and thus daily revenue opportunities), resulting in lower margins and profitability across our coverage,” according to the report, authored by analysts Reginald Smith and Charles Pearce.
Miners with sufficient cash liquidity such as [Riot Platforms] and [Cleanspark] then acquired other miners with operational assets to increase near-term hashrate and expand their power pipeline,” JPMorgan explained. ”Capital-constrained miners such as IREN and [Cipher], meanwhile, focused on diversifying into other businesses that require less immediate capital.”
The five publicly traded bitcoin miners tracked by JPMorgan produced 5,854 bitcoin in the second quarter, down 28% from the previous quarter. After halving, some miners are shifting their computing power from BTC mining to AI applications. Accordingly, Hive Digital Technologies Ltd. recorded a 36% increase in revenue in the second quarter of 2024 after switching to the use of AI applications.
Digital Asset Market
Market report including trading idea
The majority of digital assets experienced a week in which a positive trend was established, especially for Bitcoin. This is due to the announcements by Jerome Powell (FED) to lower key interest rates as quickly as possible. Inflation is under “control” and the market data, above all that relating to the labor market, provides sufficient arguments to initiate this step. This is creating a mood of optimism and general optimism in the market, as fresh investment capital is now expected in the coming months. Institutional investors in the US supported this trend with comparatively high investments in various investment products related to Bitcoin and Ethereum. Last week therefore focused on the monetary policy direction in the US – whether this catalyst can carry the market through the “summer break” remains to be seen, but fundamentally this event has helped and provided stability.
On a weekly basis, Bitcoin is now up almost 8% and was not only able to confirm the support zone of $60,000, but also leave it with a strong upswing with a local high of ~$65,000.
For the coming week: If above-average volume continues to flow into the market as a result of the FED’s decision, further positivity could follow, otherwise the aforementioned support zones should be noted.
Chart technology
In chart terms, Bitcoin is now hovering around the $65,000 mark and appears to be forming minor resistance here. The increased volumes in the last few days of last week established a volatile trend, which lost momentum slightly over the weekend. The next few days will show whether this is sustainable or whether the market will return to “calm”. Should this happen, the trend channel down to $60,000 should be observed and could be of interest for swing trades.
The next price targets in the event of a positive trend: ~$65,000, ~$66,500, ~$70,000
The next price targets in the event of a negative trend: ~$62,500, ~$60,000 ~$58,500
Trading idea
If there are minor setbacks with a generally positive trend, these could be used as medium-term swing trades to enter this already established trend.
Weekly overview
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