thoughts on the Jackson hole meeting over the weekend and what can we expect crypto market for this week
Macro markets went into this weekend with strong expectations on a dovish Powell, and the chairman surprisingly managed to ‘out-dove’ expectations where he basically committed the Fed to the easing path and doing ‘what is needed’ if the data were to slow materially. Powell issued explicit statements such as “the balance of the risks to our two mandates has changed”, “the direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data”, and inflation is now on a “sustainable path to our 2% objective”, with the only question being how many 50bp cuts we are going to get, rather than if we are going to be cutting or not.
Crypto prices saw a similar rally with BTC trading at $64k at the time of writing, with BTC correlation at 1 year highs compared to S&P, and prices continuing to move more in tandem with risk sentiment despite ETF inflows and on-chain activity being muted.
On the news side, markets also cheered on a recent report claiming that the crypto sector has contributed 120M out of about 270M of US campaign donations YTD, compared to a mere $4.6M in 2022, in hope that this will lead to a more politically friendly landscape post elections. Robert F. Kennedy Jr.’s recent endorsement of former President Trump was also a positive for BTC, with Kennedy being a public supporter of crypto, offsetting some disappointment over the recent Democratic convention where crypto was left off the platform speech.
Looking ahead, this week could be a slow one with US Labour Day ahead, with Nvidia earnings mid-week the likely being the biggest market mover, as this week’s PCE has taken on a lower importance given the renewed focus on labor markets over inflation. Prices should continue to track macro sentiment closely, and are likely on the upswing unless we start seeing catastrophically weaker data that would point towards an unlikely imminent recession on the horizon.