CPI Affirms Bullish Sentiment

CPI affirm bullish sentiment

Weekly News Wrap Up

Heavily anticipated US Consumer Price Index (CPI), a measure of inflation, printed exactly at market expectation (6.5% YoY). In combination with the previous week’s slower wage growth (hourly wage growth 4.6% YoY actual vs 5% consensus) and downward-revised previous month NFP (263k revised down to 256k), this revived market’s expectation of a scenario of US economy’s soft landing. In crypto, troubles at DCG, parent company of bankrupt Genesis, continues to grow and layoffs across the industry gain momentum with Coinbase, Huobi, Blockchain.com and ConsenSys joining the list.

U.S. equity markets had a decent rally last week: SPX +2.67%, DJIA +2.00% and US Technology playing catch-up with NASDAQ +4.82%. In crypto, BTC +21.93% and ETH +20.44% rallied hard into the weekend +5% and +7% respectively in the first 4H of Sat (14 Jan) breaking $20,000 and $1500 likely on short covering post-CPI event.

Looking on-chain, the number of addresses holding more than $100K in USDT has continued to increase and is inches away from its previous all-time high. There are now 21,549 addresses with more $100k in USDT, which can be indicative of a high amount of dry powder held by sharks and whales who are waiting for the right moment to deploy capital.

chart patterns bitcoin 16 jan

chart patterns ethereum 16 jan

Cryptocurrency News

  • China includes Digital Yuan in cash circulation data for the first time. The digital yuan, e-CNY, represented 0.13% of cash and reserves held by the central bank
    Our View: it is almost ironic that China seemed to have the strictest stance towards cryptocurrencies when it implemented its ban in 2021, but is making the most headway in the development of its Central Bank Digital Currency (CBDC). This could serve as a roadmap for other central banks to follow in their development of their own CBDC.
  • Digital Currency Group (DCG) under investigation by US authorities, Bloomberg reports. The investigation centers around internal transfers from DCG to its subsidiary crypto lending firm Genesis Global Capital. The latter halted withdrawals on 16 Nov 2022 that impacted Gemini’s Earn program, causing its clients to be unable to withdraw their assets.
    In separate news, the U.S. Securities and Exchange Commission (SEC) charged Genesis and Gemini with illegally selling securities through their crypto lending program.
    Our View: after Genesis’ solvency issues related to 3AC, DCG assumed its subsidiary’s liabilities and extended a $1.1 billion promissory note with a 10Y maturity and $575 million intercompany loan due in May 2023. DCG also has a $350 million credit facility with Eldridge that would immediately fall due if Genesis declares bankruptcy. It appears that DCG has limited options to shore up necessary liquidity, and can’t afford to have Genesis declare bankruptcy or it will be dragged down with it – another crisis brewing here?
  • Immunefi estimates $3.9 billion was lost in the cryptocurrency market in 2022. Hacks were found to be the main cause, accounting for 95.6%, with fraud, scams, and rug pulls comprising the remaining 4.4%. Additionally, DeFi was the most targeted sector, accounting for 80.5% vs. CeFi’s 19.5%. You can view the full report here.
    Our View: this reinforces our view that DeFi is not for the faint-hearted. It is still a very early-stage technology, latent with security vulnerabilities, absent of any real regulation.
  • Mastercard partners with Polygon to launch a web3 musician accelerator program. The program will help five emerging artists set up and manage their brands in the Web3 space, and is also aimed at educating people in the music scene on what avenues Web3 tech can offer them.
    Our View: global payments companies are unable to deny the threat of disruption from cryptocurrencies, and have been actively investing in this area: for example, Mastercard partnered with Coinbase last Jan to enable the use of their cards for purchasing NFTs, partnered with Paxos in mid-Oct to allow banks to offer crypto trading to their customers, and also launched a crypto fraud protection tool to safeguard its banking clients.

Investment Consideration

Our best strategy for medium to long term investment is to take at least 1-3 years in Moderate Portfolio because it has a good defense with 50% Fixed Deposit , 30% In DCD and 20% in Staking because we still have potential return in DCD and Staking especially in BTC.

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