Market analysis

The State of Crypto Report: August 2023 edition

5 min read

Welcome to our brand new monthly State of Crypto Report, where we look back at the top news stories from the previous month to gauge current market sentiment. Over the month of August, several positive news stories raised hopes of a bull market resurgence. However, digital asset prices failed to respond to this stimulus and instead experienced a sell-off mid-month. The end of August did finally see prices soar, but even this was short-lived. Let’s take a look at August’s top crypto news stories and evaluate the prevailing sentiment during the month.

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August was a mixed bag when it comes to crypto sentiment. However, as our overview of the month’s top crypto news shows, negative news stories were marginally more plentiful than positive headlines, which could explain why digital asset prices remained in the doldrums for much of the month.

🫣 The bad: Macroeconomics and market dynamics

Indeed, market dynamics, macroeconomics and rumors that SpaceX has written down some $373 million of bitcoin holdings weighed heavily on the market in the middle of the month, causing bitcoin’s price to drop 11% – its largest weekly sell-off since the collapse of FTX – while the rest of the market followed.

Another reason for this, as our CIO Lucas Kiely explained in this Cryptonews article, was the news that China’s property giant Evergrande Group had filed for bankruptcy protection in the US. This news came on the back of widespread concerns over an economic slowdown in China, which has far-reaching consequences for other global markets – including cryptocurrency.

Meanwhile, the US also had its share of worries. Earlier in the month, leading credit ratings agency Fitch Ratings downgraded US corporate debt by one notch from its top AAA rating. The Federal Reserve’s annual Economic Symposium in Jackson Hole also revealed that its Chairman Jerome Powell may have more interest rate hikes on his mind – though recently released economic data, which showed the economy beginning to slow, may yet change his mind.

😀 The good: Lawsuit wins and regulatory approvals

Yet all this is not to say that the month was full of negative news. On the contrary, it appeared that lawmakers were moving closer to accepting crypto after Coinbase gained approval to sell crypto futures to US clients. This development had all the potential to rekindle “hope and momentum” in the market, Lucas told Reuters, but fell short. Similarly, it looks likely that the Securities and Exchange Commission (SEC) will approve a swathe of ETH futures ETFs later this year.

It is, however, the BTC spot ETF that the crypto community really wants to see, and it seems little else will suffice. On that front, Europe is far ahead of the US, with the first spot BTC ETF launched on the Amsterdam stock exchange in August. However, US news still moves crypto prices, and the SEC’s decision to delay its verdict on a spot ETF, though largely expected, caused another sell-off in early September.

August, however, ended on a high, after Grayscale won its long-standing battle with the SEC over its proposal to convert its Grayscale Bitcoin Trust (GBTC) into an ETF. This is a long way from an ETF approval, though, so the market’s joy was short-lived.

It could, however, indicate a slow and steady power shift when taken in aggregate with several other regulatory wins for crypto during July and August. These include Ripple's historic victory in July and Uniswap’s win of a class action lawsuit in the Southern District Court of New York (SDNY) in August.

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🚀 August top launches

Finally, August also saw several prominent launches. Traditional payments giant PayPal unveiled its own regulated USD-pegged stablecoin, PayPal USD (PYUSD). However, so far this has failed to garner investor support and has angered US regulators. Coinbase, meanwhile, launched its Layer 2 network, Base. This also got off to a rocky start as $BALD, a meme coin created on the network, turned out to be a rug pull and led to investor losses.

🍂 September outlook

At the time of writing, as crypto prices struggle to regain momentum, news around the BTC spot ETF is likely to dominate market sentiment. With the decision already delayed until October, and further delays possible, it could be a while until prices resume their climb. On the macroeconomic side, worries about the downturn in China and the economic slowdown in the US are likely to continue making headlines.

As ever in crypto, though, it’s hard to predict what – if anything – will truly move the needle in September. Keep an eye on our monthly State of Crypto Report for a quick digest of the biggest headlines in the world of Web3 and read our regular LinkedIn news roundup for a more in-depth dive into the leading news stories.

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