Crypto markets are driven by major policy changes and new technological developments. The highlight of the month was the Federal Reserve’s 50 basis point rate cut, which brought optimism to the market and sparked a strong rally in risk assets, including cryptocurrencies. This dovish stance was echoed by similar actions by the European Central Bank (ECB) and the Bank of England (BoE), reversing the market’s previous decline, with Bitcoin leading the rally.
Bitcoin’s Bullish Breakout
Bitcoin started the month on a volatile trading note, reaching as low as $52,700. However, after the Fed announced a rate cut, Bitcoin rallied from $58,000 to a recent high of $66,000 before closing at $63,300, a gain of more than 20%. This rally was reflected across the cryptocurrency market. With Bitcoin now targeting the key $70,000 resistance, the macro outlook for the remainder of 2024 appears positive, especially with the continued impact of Federal Reserve policy.
Recession risk
Global markets are keeping a close eye on central bank policies in September. Recent forecasts from the Federal Reserve have left GDP growth forecast unchanged at 2% for 2025 and 2026, signaling confidence that the economy can withstand continued policy changes. At the same time, the inflation outlook remains within control. However, with unemployment expected to rise, the Fed's actions reflect that the labor market may be facing some pressure.
Federal Reserve Data as of September 18, 2024
USD/JPY - Key variables to watch
However, market participants are closely watching variables such as the USD/JPY exchange rate, which could affect global liquidity if the Bank of Japan continues to raise interest rates.
Technological Innovation: Fractal Bitcoin Mainnet
One of the most important technical developments this month was the launch of the Fractal Bitcoin mainnet on September 9. Fractal Bitcoin is a Layer 2 solution that improves Bitcoin's transaction efficiency while maintaining compatibility with the main Bitcoin network. It allows for extended functionality, such as the OP_CAT opcode, which enables developers to test new features without hindering the core system. This innovation has made Fractal Bitcoin one of the top three proof-of-work chains by hashrate, with support from the ViaBTC mining pool and CoinEx becoming the first exchange to list its native FB token.
For CoinEx’s analysis of Fractal Bitcoin, see “Fractal Bitcoin: The Pioneering Network of Bitcoin - Analysis of Technical Innovation and Challenges”.
Challenges facing the Ton ecosystem
Despite the optimism in the crypto market, the Ton blockchain has faced challenges with its new tokens CATI and HMSTR. The two tokens have performed poorly since listing, falling 55% and 35% respectively. Concerns about the sustainability of the “click-to-earn” model as market saturation may limit the appeal of similar projects. The future of the Ton ecosystem will largely depend on its ability to provide a unique value proposition to sustain long-term growth.
The meme token craze sparked by social media
September also saw a resurgence in meme tokens, fueled by viral social media trends. Animal-themed tokens such as Moo Deng, a dwarf hippo from Thailand, penguins (PESTO), and frogs (OMOCI) have sparked speculative interest, especially on the Solana blockchain. Daily token creation levels on Pump.Fun have returned to highs seen earlier this year. Despite the attention meme tokens have attracted, they are extremely volatile, and investors are advised to remain cautious amid the craze.
Looking ahead: Economic data and market sentiment
Despite a slowdown in stablecoin inflows, September still ended at $2.9 billion, reflecting continued investor confidence in the market. As October unfolds, market participants will be keeping a close eye on economic data and the U.S. elections, which could bring the next wave of activity to the crypto space.
All in all, September 2024 is a critical month for cryptocurrencies, with macroeconomic policies, technological innovation, and speculative trends playing a significant role in shaping the direction of the market. The outlook remains positive heading into 2025 as global monetary policy becomes more accommodative and technology advances.
