Crypto news: 📉Bitcoin drops 3% to $57,500 in the week dominated by the Fed decision 🗽

• Weak sentiment persists in the cryptocurrency market.  Bitcoin is losing 3% and testing $57,500, below key resistance at $60,000 (EMA200)
• Polygon and Dogecoin are losing close to 5%. Record net inflows into ETFs (+230 million USD) last Friday failed to stop declines in the BTC market
• U.S. bond yields fall along with indexes on Wall Street.  Nasdaq loses -1%, dominated by declines in the semiconductor sector
• Markets expect the Fed to cut rates by 50 bps.  The NY Fed regional index fell today to its highest since 2022 (11.5 vs. -4.3 forecast and -4.7 previously)
• S&P Global pointed to the risk of transparency problems with the reserves of Tether, the company behind the stablecoin USDT issue (75% market share)

Despite the decline in dollar strength and yields, bitcoin seems not be markets preferred 'anti-dollar hedge' (until US recession concerns are real) and is giving way to gold, which is breaking successive historical records. All this means that the strength or weakness of BTC is starting to be seen again as a global barometer of risk appetite, which caught a temporary breathlessness during the holiday season. Investors in the cryptocurrency market have a right to be disappointed, and if the sentiment of the stock markets weakens further, a resignation and another downward impulse is not out of the question. Exactly on September 18, the Fed will make a decision on interest rates. The impact of the decision on Bitcoin may depend strictly on the indexes, against which its correlation has recently increased somewhat. Today's session shows that investors are still feeling some stress ahead of the historic first US rate cut in 4 years.

Bitcoin (D1 chart)

The price respects the 200-day exponential moving average as a major resistance level, currently running around $60,000. A rebound from this level and a nearly 5% downward movement suggests apparent market weakness. Record inflows into ETFs failed to help sentiment, and Microstrategy's (MSTR.US) reported record purchase of BTC (about $1.1 billion) failed to permanently improve sentiment. We see a slight bullish divergence on the RSI, but a pennant formation may precede another stronger downward movement. Key support levels are around $51,000 and $48,000 marked by Fibonacci retracements and previous price reactions.

Source: xStation5

Last week, Friday's net inflows into BTC were at a record high since the beginning of September, at $263 million. However, they failed to permanently improve the mood of the market, and the average holder of an ETF on BTC at the present time is again, for the first time since the beginning of August, suffering a loss of nearly 10% according to on-chain data. The average purchase price by short-term holders (STH) is currently oj. 62 thousand USD. This implies a discount to spot prices in the mid-single digits. A drop below $55 thousand could potentially trigger a wave of sell-offs and a test of recent, important supports for the continued bull market.

Source: Bloomberg Finance L.P. , XTB Research

Is the 'fear of Tether' returning?

S&P Global has indicated that Tether, the world's largest stablecoin issuer (USDT) still hasn't completed any independent audits in 2024; Tether itself received a low rating of 4 out of 5 from the ratings giant. Regulators in the U.S. and the UK are currently investigating transactions amounting to some $20 billion on Russia's Garantex exchange. In January, Cantor Fitzgerald, who works with Tether, indicated that he sees evidence that Tether actually holds as much in reserves as it claims - but no comment was made on 'why'.

Tether according to Coin Terminal had $400 million in revenue in the past 30 days, and in its Q1 results reported that it holds more than $90 billion worth of US Treasury bonds. USDT's total reserves on the exchanges currently stand at $20.4 billion. Potentially Tether-USD depeg would be destroying event for the whole crypto industry, however USDT/BTC was not vulnerable to any so-called 'programmed stablecoins' depegs in 2022, FTX and UST (Luna) collapse as well as the Circle (USDC) temporary depeg last year. Bitcoin would be a potential beneficiary of so-called 'stablecoins' depegs (potential of rising inflows to BTC).

Source: Consumers Research