- The ‘September Curse’ took effect this week as asset prices from stocks to cryptos and precious metals struggled to gain momentum amid rising recession fears.
- Bitcoin bulls could not overcome resistance at $59,000 on multiple occasions, leading analysts to warn that further downside may be on the way.
- The CFTC charged Uniswap Labs with illegally offering leveraged cryptocurrency trading to US retail investors, resulting in a settlement with the regulator and a fine of $175k.
Market Overview
It was a slow and choppy burn this week as the ‘September Curse’ set in across markets, with asset prices from cryptos to stocks and precious metals struggling as the momentum turned in the bear's favor.
After a year of imploring the Fed to cut interest rates, Chair Powell finally signaled they are on the way at the next FOMC meeting in September, leading to a ‘sell the news’ reaction as traders looked to lock in gains ahead of a potential market crash.
History shows that rate cuts are followed by significant pullbacks in the stock market after an initial euphoric burst higher, and that reality set in for more experienced investors – who warned far and wide that rate cuts are actually a signal of an approaching recession.
For Bitcoin, analysts are mixed on what will happen to King Crypto. Some have warned about an additional 20% drop that would take BTC to the mid $40k range, where it would form a new base of support before starting its trek higher. Others say that the early August pullback to sub-$50k marked the bottom in the market, and Bitcoin will continue to chop its way to new all-time highs, potentially extending well into 2025.
As it stands now, BTC has been struggling with resistance at $59,000, which halted multiple attempts to push higher over the past week. After dipping to a low of $55,581 on Wednesday, Bitcoin remained pinned below $57,000 on Thursday and closed the daily candle at $56,155.
At the time of writing, Bitcoin trades at $56,356, and the total cryptocurrency market cap stands at $1.99 trillion, a decrease of 7.44% over the past week. The DeFi market cap currently stands at $72.5 billion, with a 24-hour trading volume of $2.58 billion, which is 4.23% of the total crypto market volume.
Crypto News
RIAs Pitch BTC – The June ‘Advisor Pulse Survey’ conducted by the Digital Assets Council of Financial Professionals (DACFP) showed that four in 10 (40%) financial advisors report they have recommended crypto to at least half of their clients in the wake of the launch of spot BTC ETFs in the U.S., up from 32% in March. The number of advisors recommending crypto to all their clients nearly doubled, rising from 8% in March 2024 to 13% in June 2024. While 60% of advisors said they were not recommending crypto to clients, a majority of those advisors (56%) said they plan to do so in the future. 40% said they intend to begin recommending digital assets within the next six months, up from 35% who indicated this intent in March 2024. Nearly all advisors (91%) plan to recommend that clients allocate between 1% to 5% of their assets to digital assets.
Election Showdown – Pro-crypto attorney John Deaton won the Republican nomination for the U.S. Senate in the Massachusetts primary election on Sept. 3, setting the stage for a showdown with Democratic Senator Elizabeth Warren in November. Deaton, a former Marine and outspoken advocate of Ripple (XRP), defeated two other Republican candidates by securing nearly 65% of votes in the Massachusetts primary. The senate race is likely to be closely watched by crypto proponents as Senator Warren is well-known for her strong anti-crypto stance, going as far as making a “war on crypto” a key part of her re-election campaign in 2023, along with sponsoring several pieces of legislation seeking to clamp down on crypto in the U.S. The Commonwealth Unity Fund, a crypto political action committee (PAC), distributed more than $1 million in Massachusetts to support Deaton’s bid for the US Senate.
Crypto Wealth Club – The Crypto Wealth Report 2024 from Henley & Partners, which includes “exclusive stats on crypto and Bitcoin millionaires, centi-millionaires, and billionaires from New World Wealth,” found that between July 1, 2023, and June 30, 2024, the number of crypto millionaires increased by 95%, while the number of Bitcoin millionaires surged 111% to 85,400. Henley & Partners also released The Henley Crypto Adoption Index 2024, which found that Singapore ranked the highest in terms of crypto adoption, followed by Hong Kong and the UAE. The top three jurisdictions for crypto adoption all have one thing in common: none of them levy capital gains tax, “which is a significant advantage, especially for crypto investors and high-net-worth individuals,” the report said. The one region that has been less welcoming to crypto is India.
And in the World of New Legal Developments…
Preparing to Appeal – The legal team for Ripple Labs has requested to stay the monetary portion of the Aug. 7 judgment requiring the firm to pay $125 million as part of the SEC’s case against the XRP issuer. According to a filing with the US District Court for the Southern District of New York, Ripple’s lawyers said the SEC had agreed to a request to delay payment of the judgment after Sept. 6. The legal team proposed that Ripple place 111% of the judgment amount, roughly $139 million, into a bank account until 30 days “after the time to appeal expires or the resolution of any appeal.” Analysts said the filing appears to be laying the groundwork for a potential appeal by the SEC as the judgment was largely seen as a victory for Ripple, considering the regulator initially sought $2 billion in fines for the alleged violations.
DOGE Dismissal – The U.S. District Court for the Southern District of New York dismissed a class action lawsuit filed in 2022 that accused Elon Musk and Tesla of engaging in market manipulation and insider trading targeting Dogecoin (DOGE). The plaintiffs, represented by Colby Gorog, Joshua Flint, Louis Robinson, and Michael Lerro, claimed that Musk, the CEO of Tesla, sought to engage in a DOGE pump-and-dump scheme by leveraging his influence online, citing his past tweets regarding the meme coin, which they argued misled investors and resulted in substantial financial losses. According to the plaintiffs, Musk’s comments sought to inflate Dogecoin's price for personal gain as part of an alleged pump-and-dump scheme, and they sought $258 billion in damages from Tesla and Musk.
DeFi Crackdown – The U.S. CFTC charged decentralized exchange developer Uniswap Labs with illegally offering leveraged cryptocurrency trading to US retail investors. Uniswap Labs ultimately agreed to settle the charges by adhering to an order requiring the DeFi developer to pay a $175,000 civil penalty and cease violating the Commodity Exchange Act (CEA). The DEX also agreed to halt trading of the specific leveraged tokens that triggered the CFTC action, including the BTC 2x Flexible Leverage Index token (BTC2XFLI) and the ETH 2x Flexible Leverage Index token (ETH2XFLI), among others, according to the CFTC’s Sept. 4 Order. The CFTC’s enforcement division said it “will vigorously enforce the CEA as digital asset platforms and DeFi ecosystems evolve” and stressed that “DeFi operators must be vigilant to ensure that transactions comply with the law.”
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