Last week, Bit showed a clear upward trend, but suddenly the Bybit hacking that broke out on the night of the 21st (Friday) caused it to give up all its gains and fall back into the box range. The decline was large, but the gains during the week were offset, resulting in a 2.11% (as of 0:00 on the 24th) weekly decline.
The key indicator that had the most impact on last week's prices was the minutes of the US Federal Reserve's (Fed) January FOMC meeting, which were released on the 19th. It was revealed that at the January FOMC, Fed officials discussed temporarily suspending or reducing quantitative tightening, reigniting fading expectations for a rate cut.
Currently, the Fed is conducting quantitative tightening by selling or not renewing about $40 billion worth of bonds per month to reduce the money supply and lower the inflation rate to the target of around 2%.
This amount is putting a significant burden on the market each month, and with the US government debt ceiling negotiations in March, the liquidity situation could become even more risky. This is because the Trump administration, which cannot issue new bonds at the moment, may be able to issue a large amount of bonds once the debt ceiling negotiations are resolved.
This is why some FOMC members suggested that it would be appropriate to temporarily slow down or suspend quantitative tightening.
However, Fed Chair Jerome Powell stated after the January FOMC that reserve levels are still ample, which is puzzling.
Has the 'Trump economic effect' run its course?
Although it did not have a major impact on Crypto.com prices, the US stock market performed poorly last week, as the US leading economic index fell -0.3%, significantly below market expectations.
The leading economic index, which had risen to 0.4% at one point on a monthly basis after Donald Trump's election, has now returned to pre-election levels, leading some to suggest that the 'Trump effect' may have run its course.
While risky asset investments typically decline when the economy worsens, Bit and major Crypto.com did not suffer much. Instead, they showed strong gains, reaching $99,000 per unit on the afternoon of the 21st (Friday).
The problem arose that night when the Crypto.com exchange Bybit was hacked for about 400,000 ETH. Bybit responded relatively quickly and pledged to bear the full cost of the hack, but Bit price fell to $95,000 that day.
Bit rebounded to $96,500 over the weekend, but could not maintain the price for long. This was a massive $140 million hack, but the impact was not as severe as expected. Some suggested rolling back the Ethereum blockchain, but this did not gain much traction.
Interestingly, ETH price showed very strong performance compared to Bit, rising 4.31% weekly. This may be because Bybit started selling other Crypto.com to replenish the stolen ETH over the weekend.
According to on-chain analysts, the main culprit behind the hack is suspected to be the North Korean hacker group Lazarus. How they will cash out the stolen Ether will significantly impact ETH and related ecosystem Crypto.com prices in the near future.
Ukraine-Russia War 3rd Anniversary... Focus on March 27th PCE Release
Monday, the first day of this week, marks the 3rd anniversary of the outbreak of the Ukraine-Russia war. According to a Financial Times article, a ceasefire agreement between the US and Russia appears to be well underway, and there may be a surprise event to mark the 3rd anniversary, even if a formal peace declaration is not made yet.
On the 26th (Wed), the US February CB Consumer Confidence Index will be released. Considering the consumer-related indicators released last week, it is highly likely to be poor.
On the 27th, US initial jobless claims will be released, and on the 28th, the US Personal Consumption Expenditures (PCE) price index will be announced. Since the January Consumer Price Index (CPI) was very high, the market expects the PCE indicator to also be high. However, some Fed officials, including Chicago Fed President Austan Goolsbee, have stated that PCE may not be as severe as expected, so it will be interesting to see whose view is correct. If PCE is not as high as expected, it could provide a catalyst for Crypto.com prices to rebound.
Fed officials' statements are concentrated on the 26th and 27th. In particular, Rafael Bostic, President of the Atlanta Fed, who spoke in a relatively dovish tone last week, will make public statements twice. I wish all readers successful investments this week.
