Is “Crypto Winter” Melting Into Spring?

Is crypto winter thawing into spring?

The ailing cryptocurrency industry is still suffering from the humiliating market crash earlier this year. The price of many widely traded tokens plunged while popular narratives about the merits of digital coins as a hedge against inflation or as a store of value were abandoned.

At the same time, some once-prominent companies in the industry — including crypto lending platform Celsius and hedge fund Three Arrows — have collapsed in the wake of unrelenting market pressures.

However, prices have stabilized in recent weeks.

Bitcoin, the world’s flagship cryptocurrency, has been trading broadly around the $20,000-$25,000 mark after falling from a high of just under $69,000 in November. The Merge — as Ethereum’s shift to a greener, less energy-intensive blockchain system is called — has so far failed to propel the respective coin to previous highs of nearly $5,000.

Overall, crypto futures volume has not gained momentum either. Data shared with the Financial Times by analytics platform Crypto Compare shows that overall futures volume has been flat for the past three months.

Still, the relative stability of the industry’s most popular tokens over the past few weeks has fueled debate among speculators as to when the so-called “crypto winter” may have rolled into spring. Scott Chipolina

Did consumer prices in the US cool down in September?

US inflation is likely to have risen at a slightly slower pace in September than in the previous month, supported by a fall in energy prices.

Economists polled by Reuters expect the US CPI to return 8.1 percent year-on-year in September, compared to 8.3 percent in August. CPI is expected to have risen 0.2 percent month-on-month, compared to 0.1 percent in August.

The strain on the CPI is likely to be partly due to a fall in energy costs, said Barclays analyst Jonathan Hill, who expects the data to show a roughly 6 percent drop in gasoline prices.

However, forecasts show that core CPI – which masks the impact of volatile food and energy sectors – could be supported by the continued rise in housing costs.

CPI is expected to have hit 6.5 percent yoy and 0.5 percent mom in September, from 6.3 percent and 0.6 percent in August, respectively. US home prices have fallen in recent months as higher interest rates have pushed mortgage rates higher. That, in turn, has boosted the rental market, where Barclays expects inflation data to show rents rising 0.6 percent from the previous month.

The CPI data is due one day after the minutes of the Federal Reserve’s September meeting are released. Both the data and minutes are likely to affect market expectations for the November Fed meeting.

Futures markets are currently pricing in expectations for a fourth straight 0.75 percentage point rate hike next month. The tone of the minutes and the state of inflation could support this view. Kate Duguid

Did UK GDP fall in August?

The UK economy is expected to have contracted slightly in August after stagnating for most of this year as a result of rising prices which hit household demand and business activity.

Economists polled by Reuters are awaiting data on Wednesday showing that GDP fell 0.1 percent between July and August after stagnating in the three months to July.

The data is also expected to show that industrial production contracted 0.2 percent month-on-month, while service sector output rose 0.1 percent.

In the three months to August, the economy is expected to be 0.2 percent smaller than in the previous three months.

The UK’s economic outlook has not improved, economists say, despite government plans to help with rising energy costs and proposed tax cuts.

The government has frozen household energy bills and cut taxes to boost growth. However, some economists are expecting a deep recession in the UK economy as the ‘mini’ budget led to rising interest rate expectations and added a cost-of-living crisis to a cost-of-living crisis.

Sanjay Raja, an economist at Deutsche Bank, said the UK’s economic outlook “continued to deteriorate” after the September 23 policy announcement. He expects household spending and business investment to be weaker than before the government announced tax cuts as unemployment is expected to rise from next year.

Despite fiscal measures designed to support real disposable income, “tighter financial conditions will wipe out much of the gains in fiscal policy,” Raja said.

He now expects the UK economy to recover to pre-pandemic levels only in 2024. This is in sharp contrast to all other G7 countries, which have already made up ground lost during the health crisis. Is “Crypto Winter” Melting Into Spring?

Adam Bradshaw

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