Inflation Pulls Back Again, Building Case for September Rate Cut

Welcome to our Weekly Market Update.* Explore weekly crypto price movements, read a quick digest of notable market news, and dive into a crypto topic — this week we learn more about NFTs and the art industry.

Takeaways

• Inflation cools again: Consumer prices in the US increased just 2.9% in July compared to the previous year, the slowest mark in three years, according to the US Department of Labor.
• Kamala Harris has overtaken Donald Trump in odds to win the US presidential election on Polymarket: Harris's campaign has reached out to the crypto industry, but it's unclear where she stands on regulating digital assets.
• Three Arrows Capital’s liquidators have filed a $1.3 billion lawsuit against Terraform Labs: The suit, stemming from losses during the 2022 Terra network collapse, alleges market manipulation by Terraform.
• Tether hit back at a $2.4 billion lawsuit from Celsius Network, deeming it unfounded and asserting its compliance with prior agreements: The dispute revolves around the liquidation of bitcoin assets to offset Celsius's debt.
• US spot ETH ETFs experienced $4.9 million in net inflows on Monday, ending a three-day streak of outflows: Grayscale’s ETHE logged zero flows, while VanEck’s ETHV was the only ETF to report negative flows.
• Grayscale has launched a new fund investing in MakerDAO’s governance token (MKR): The token saw a price increase following the announcement, with the fund structured as a closed-end product available to accredited investors.

Inflation Pulls Back Again, Building Case for September Rate Cut

The Consumer Price Index increased just 2.9% year-over-year in the US in July, giving the Federal Reserve ample reason to cut the benchmark federal funds rate at their next meeting in September. The Fed uses CPI, which excludes volatile food and fuel prices, as a key gauge to measure inflationary pressures on the economy. They have held rates at 5.3% since July 2023, the highest mark in roughly two decades.

Cryptocurrency prices had a muted reaction to the positive report Wednesday, with bitcoin and ether staying relatively flat. Both are widely viewed as “risk assets” that perform better when interest rates are lower. But bitcoin has faced continued selling pressure from defunct exchange Mt. Gox distributing billions in repayments to creditors. On Wednesday, a wallet associated with the US government sent almost $600 million bitcoin previously seized from Silk Road to a Coinbase Prime wallet.

Despite the recent volatility, bitcoin and ethereum have had a positive 2024 so far, rising 28.8% and 8.1% year-to-date, respectively.

NFTs and the Art Industry: A Cryptoart Revolution

Before diving into the finer details of contemporary cryptoart, it’s helpful to take a brief look at the history of digital art prior to the emergence of non-fungible tokens (NFTs). Digital art is one of the more popular subgenres of contemporary art, and has been around since the 1970s. It’s a catch-all term for a number of phenomena. Digital art may reference works created or enhanced with software, digitally rendered animations, or interactive art consumed through a digital device. There’s also “generative” digital art, which artists produce mostly by using algorithms.

Some digital artists are using blockchain technology itself as their medium — employing custom software and code, along with a slew of new decentralized applications (dApps) to create their work. Once it’s on the blockchain, digital art falls into the realm of cryptoart. So what is cryptoart exactly? As with all things crypto, the vocabulary and definitions surrounding this art movement are dynamic and iterative, but there is a baseline distinction: Cryptoart is art on the blockchain — natively published as an NFT.

These rare digital artworks — sometimes called crypto-collectibles, NFT art, nifties, or cryptoart — are represented by unique and provably rare tokens. Because they are native to the blockchain, NFT artworks can be bought, sold, and owned with cryptographic security and veracity. Each is unique and the decentralized, open nature of blockchain technology allows for transparent proof of this. Learn more

Onward and Upward,

Team Gemini