This morning, we witnessed some relative stability in the cryptocurrency market, led by Bitcoin, which stabilised near the $27,000 level, and Ethereum at $1,640.
All sectors of the market are looking at the upcoming decision of the Federal Open Market Committee (FOMC) on the interest rate.
While it is almost entirely likely that the Fed will keep interest rates at their current levels without change, with a probability of 99%, according to CME’s FedWatch Tool. While all eyes will be on Jerome Powell’s speech following the meeting to try to anticipate the central bank’s next steps.
It is also worth noting that yesterday we witnessed members of the FOMC adjusting their projections about the future interest rate, in what is known as a dot-plot. The new expectations seem to indicate the members’ intention to raise the interest rate one final time this year by 25 basis points, and this is what the markets have begun to expect during the past two weeks, in light of the strength shown by inflation to the softness of the labor market and the continuation of the economic recovery.
Yesterday we also saw talk of Grayscale applying to launch an Ethereum futures ETF. While this request was not the first from the asset manager. However, the new application is in accordance to the Securities Law of 1933, unlike the previous application, which was based on the Investment Company Law of 1940. While the reasons behind this step remain unknown, it is believed that it may increase the possibility of approval to launch this ETF.
As for the regulatory side, and not far from Grayscale, we witnessed a talk from the company’s CEO, Michael Sonnenshein, in an interview with Yahoo Finance, when he praised the efforts of legislators in Congress to seek to shape the legal and regulatory environment for this market. Sonnenshein believes that the United States can dominate this market while continuing to regulate it.
Also on the regulatory side, one of the executive directors of the German Federal Financial Supervision Authority (BaFin) spoke about the necessity of regulating the cryptocurrency market. While he warned that lax regulation may cause other major collapses, such as the one we witnessed when the FTX exchange collapsed.
It seems that the regulatory and legal aspect may continue to occupy the focus of traders in the cryptocurrency market until the features of the regulatory and legislative environment for this complex market become clear, although it may seem distant at the present time. But without it, we may see momentum continue to cool and sentiment weaken in the long term.