Political instability and rate cut expectations boost crypto

Market snapshot

August ended on a weak note for crypto assets, but the first week of September has seen some stabilisation, or at least an end to the selling for the time being. Bitcoin, a big loser last month, albeit from a record high, has moved back above $110,000, and continues to hold above it, while ether has been supported around $4200.

What we’re watching

Fresh from the excitement of Friday’s weak payrolls report, which has certainly cemented the case for a September rate cut, we now turn to political turmoil in Japan, France and then US inflation data. While a new Japanese PM is expected with little excitement, in France the result of today’s vote has already been priced in, and French markets have stabilised ahead of the news. Signs of political instability continue to boost the appeal of crypto assets as a haven from changing governments, and a Fed rate cut will provide fuel for further gains in the space, as well as for equities. 

What our clients think

Clients remain firmly bullish on crypto overall, at 83% long for ether and 81% for bitcoin. The month has seen an even mix of buying and selling so far, reflecting some caution around recent price weakness while also hoping that the Fed rate cut will power risk assets higher.