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Market Swings Amid Fed Uncertainty
President Trump's decision to pause reciprocal tariffs on April 9 sparked a significant rally in the S&P 500 and Nasdaq, with technology stocks leading substantial gains. This positive momentum was further reinforced on August 22 when veteran market analyst Walter Deemer identified a rare bullish signal: a 91.5% upside volume day. Historically, such high-volume days often precede major market trend reversals or the commencement of a new bull market, aligning with Deemer's emphasis on strong momentum in early market advances.
Despite these bullish indicators, the market remains highly volatile, experiencing a correction on Monday following Friday's rally. This fluctuation is primarily driven by ongoing uncertainty surrounding the Federal Reserve's monetary policy. Investors are closely scrutinizing the Fed's stance on inflation and potential interest rate cuts, with recent economic data and new tariffs making the central bank cautious. Fed Chairman Jerome Powell's speech on August 22, while hinting at future rate cuts, underscored the delicate balance the Fed maintains between controlling inflation and fostering low unemployment, leading to continued market swings.
Trump's Global Trade and Tech Standoff
President Donald Trump has escalated his rhetoric, threatening "substantial additional tariffs" and restrictions on U.S. technology exports to nations with digital regulations he deems discriminatory against American companies. This stance is primarily aimed at the European Union, whose Digital Services Act (DSA) and Digital Markets Act (DMA) aim to regulate online platforms for issues like misinformation and fair competition. The European Commission firmly defends its sovereign right to establish these rules, asserting they are non-discriminatory and apply universally, regardless of a company's origin.
Concurrently, Trump has asserted the U.S. holds significant leverage in its trade dispute with China, specifically citing airplane parts as a bargaining chip against China's control over rare-earth magnets. He noted China's near-monopoly on rare-earth production but countered with the U.S. ability to withhold crucial airplane components. Trump suggested potential tariffs up to 200% on Chinese goods if trade issues, particularly regarding magnets, remain unresolved, even as China reportedly dispatches a senior trade negotiator to the U.S.
Germany and Canada are deepening defense and critical minerals collaboration to reduce reliance on Russia and China for vital resources.
President Donald Trump announced the firing of Federal Reserve Governor Lisa Cook over mortgage fraud allegations, a move seen as an attempt to exert greater control over the central bank.
Norway's $2tn sovereign wealth fund has excluded Caterpillar and five Israeli banking groups on ethical grounds, citing the use of bulldozers in Palestinian property destruction.
Papa John's is set to re-enter the Indian market by October, planning an ambitious expansion of 650 stores to challenge Domino's in the $1.4 billion market.
Electric vehicles in China are now cheaper than gasoline cars, averaging €21,900, a significant milestone not yet mirrored in the U.S. where EVs remain pricier.
Japan Post is suspending some parcel deliveries to the US for items over $100 due to new U.S. tariffs, which revoked a global exemption for lower-value packages.
Cryptocurrency Markets Face Significant Downturn
Cryptocurrency markets recently experienced a substantial correction, resulting in nearly $900 million in liquidations across various assets. Ether (ETH) traders bore the brunt with $320 million in forced unwinds, while Bitcoin (BTC) traders saw $277 million liquidated. This sharp decline, which saw ETH fall from $4,700 to $4,400 and BTC slip to $110,200, was primarily attributed to overleveraged positions and a broader dip in risk assets, including the S&P 500.
A significant factor contributing to this volatility was the activity of "OG whales"—early Bitcoin investors with substantial unrealized gains. One such whale reportedly initiated a rapid sell-off by transferring approximately 24,000 BTC to a decentralized platform, then rotating 18,142 BTC into 416,590 ETH, and staking a large portion of the acquired Ether. This action briefly wiped an estimated $45 billion from Bitcoin's market cap, causing Bitcoin to slide from $114,500 to $112,050 in just nine minutes.
Following these events, Bitcoin continues to exhibit bearish momentum, trading below the $112,500 resistance zone and the 100 hourly Simple Moving Average. The cryptocurrency tested the $108,750 level, and a failure to overcome immediate resistance at $110,750 could lead to further declines towards $105,500. Market analysts now assess a 35% chance of BTC revisiting the $100,000 mark by September-end, underscoring persistent downside risks.
Ethereum Reaches New High Amidst Volatility and Market Correction
Ethereum recently achieved a new all-time high, surpassing its 2021 peak and trading above $4,900. This significant surge followed three years of consolidation, primarily fueled by increased institutional demand and a substantial short squeeze on Binance. The growing interest from institutional investors, alongside inflows into spot ETH exchange-traded funds (ETFs), played a crucial role in propelling its market capitalization.
However, following this peak, Ethereum has initiated a fresh decline, falling below the $4,550 mark and the 100-hourly Simple Moving Average. Technical analysis indicates a developing bearish trend line, with immediate resistance identified at $4,510. This correction mirrors broader market movements, including a notable pullback in Bitcoin, signaling increased short-term volatility.
Despite the current pullback, the overall altcoin market, excluding Bitcoin, shows signs of recovery, with the Total2 index indicating strong support and an ascending trendline. While the ETH/BTC pair demonstrated a 125% recovery, it now faces a powerful descending trendline on the weekly chart, posing a challenge for continued upward momentum. Analysts anticipate further highs for Ethereum, but caution about potential market corrections, as detailed in recent market analyses.
Stellar's XLM experienced significant price volatility, dropping to $0.380 with a 115% surge in daily trading volumes, influenced by market developments including a new crypto ETF.
Sharps Technology plans a $400 million private placement to establish a Solana-focused digital asset treasury, aiming to become a major corporate holder of SOL amidst its rapid growth.
Strategy, formerly MicroStrategy, expanded its Bitcoin reserves by acquiring 3,081 BTC for $356.9 million during a market correction, reinforcing its position as the largest corporate holder.
The World Federation of Exchanges (WFE) urged global regulators, including the US SEC, to tighten oversight on tokenized stocks, expressing concerns over investor rights and market safeguards.
The tokenization of real-world assets (RWAs) is poised to unlock a $400 trillion traditional finance market, with projections indicating the RWA market could reach $16 trillion by 2030.
