Markets are mostly down this week. The Bitcoin price is flat, dropping recently below 60,000 US dollars. The Ether price is losing more than 2%. All top 10 cryptocurrencies are in the red except Solana and stablecoins of course. In the top 100, market performances are visibly scattered.
Toncoin is losing nearly 18% following the arrest in Paris of Telegram’s CEO Pavel Durov. The arrest was initially rumored to be linked to the EU’s Digital Services Act, the DSA. This act basically requires internet companies including social platforms to forbid or remove illegal content, but also more broadly to handle disinformation. But a spokesman for the European Commission told Euronews on Monday that, I quote:
‘it has nothing to do with the DSA’. And ‘criminal prosecution is not among the potential sanctions for a breach of the DSA’. End of Quote.
There are other relevant EU laws to this case, including anti-terrorist laws. But it’s unclear whether these laws are used here.
The Belgium electronic communications operator responsible for regulating Telegram for the EU, and it was not involved in the arrest. So the initiative appears to be French. The judicial court in Paris published a press release on Monday detailing complicity charges that are considered against Durov. There are 12 serious charges considered, and we ll know soon whether these charges will actually be pursued.
Because after the custody period ending today, Durov must be charged or released.
Of course the consequences for Telegram and the price of TON are uncertain, and we can expect more volatility in the coming days.
The price of TON lost nearly 12% on Saturday, but the 5 dollar support is holding for now.
Furthermore the TON network was down today for more than 6 hours as reported first on X by ‘lookonchain’ - so the blockchain stopped producing blocks for more than 6 hours this morning. The network is supposed to be the most reliable, so it added to the uncertainty.
To be clear, there is no reason at this point to believe that this has anything to do with Durov’s arrest.
The culprit could be the airdrop of a meme coin called DOGS. But we can see on this graph that there is no surge in the transactions per second, the TPS. The TPS dropped to 0 around midnight, but we can't see any peak preceding the drop.
As far as I know, we still don’t have a clear explanation from the TON network, which could certainly raise concerns.
Regarding the near future, there are very speculative rumors stating for some reason that Durov knew about his arrest, others or the same betting on an accumulation phase before a price rebound back to 7 US dollars.
All I can say is that a specific negative event affecting a company’s or cryptocurrency price is usually an opportunity to buy, But the condition is that it has little to do with the project’s core business model.
In this particular case, Telegram is specifically targeted by the French authorities, maybe the EU, and in the worst case scenario it is, in fine, an attempt to enforce changes to the Telegram model.
So Back to markets -> traditional markets first.
The US dollar represented by DXY in green on this graph continues to fall: it is losing nearly 4% this month. The S&P500 in blue is up nearly 8%, and the price of Gold in red is up by 5%. The 1y government yield in purple is circling around 4.4%, but heading down as markets are now expecting interest rate cuts totaling more than 1% before August next year.
Everything that we see on this graph, except of course the purple government yield curve, is priced in US dollars. We can see that the Gold’s performance offsets the US dollar underperformance. Gold is really fulfilling its role here as an effective fx hedge.
We had on Friday Jerome Powell’s highly anticipated speech at the annual economic symposium held in Jackson Hole. And the message was clear: “the time has come for policy to adjust”. Basically, the fight against inflation is over, the Chair is confident that we will be reaching the 2% inflation target soon. We didn’t get any clear schedule of course but according to the 3M government yield, markets are expecting total adjustments summing to nearly half a point in the next three months.
Concern is now shifting to the cooling labor market, and to some extent to consumption. I am saying to some extent because we had a good August Consumer Confidence metric released yesterday.
It came out at 103 points, but most importantly it came out 2.4 points better than expected. We will have the ADP nonfarm employment change on Thursday next week which is a good estimate of the jobs added to the private sector: this excludes farming, it also excludes self-employment or sole proprietorships.
ackson Hole’s speech triggered a rally across markets, including the cryptocurrency market. The Bitcoin price jumped by nearly 6%, tried to consolidate, but eventually failed. The reason is specific to the tech sector. The nasdaq underperformed the S&P500 by 1.2% this week. The uncertainty surrounding the AI impact on company results is still weighting on the tech sector. We’re expecting NVIDIA Q2 earnings results today, after market hours. It can really set the mood for the sector.
The uncertainty, combined with the lack of liquidity explains the sharp price movements that we see on the crypto markets. Regarding liquidity, we’re heading towards the lowest monthly volumes since November 2023 despite the sharp price movements that we see.
Arkham intelligence noted that a whale transferred 2,300 Bitcoins from its wallets to Kraken 13 hours ago. The transfer coincides with the timing of the drop. This is more likely explaining the drop. This whale still holds more than 18,000 Bitcoins.
This is the most likely explanation for the drop.
This panic movement also broke a streak of positive inflows: 8 consecutive days of inflows into Bitcoin ETFs.
Finally, on a bearish note: Glassnode is reminding us that total Bitcoin holdings held between 3 and 6 months are dropping. A trend that started in July which would indicate lower speculation, and historically a potential predictor of bear markets..
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