Hot US Labor Market Dents Strong Start to the Year

Weekly News Wrap Up

Markets managed to eke out a gain in the first week of 2023. Participants digested the Fed’s hawkish Dec meeting minutes, which affirmed official’s resolve to contain inflation and showed that no officials think 2023 warrants easing in financial conditions. On the flipside, U.S. PMI was weaker-than-expected (48.4 actual vs 48.5 consensus). However, towards the end of the week, strong ADP payroll number (235k actual vs 150k consensus) and initial jobless claims coming in below expected (204k actual vs 225k consensus) caused the markets to capitulate as both were too hot for Fed’s taste.

U.S. equity markets closed in the green: SPX +1.45%, DJIA +1.46% and NASDAQ +0.98% in the first week of 2023. Chinese equities started the year on strong footing with iShares MSCI China ETF (MCHI) +10.02% as it played catch-up to global equities and positive news around Alibaba’s Ant Group with its financing plan approved. BTC +2.27% and ETH +5.84%, receiving a boost in the last 4H session of the week with momentum continuing this morning, allowing BTC to break above $17,000 and ETH approaching $1,300.

On-chain, the number of whale addresses holding 1k+ BTC is at its 3-year low as this downward trend continues into 2023. Elsewhere, BTC total supply held by long-term holders (BTC held more than 6 months) is at its ATH. This hints at the market’s positive outlook on BTC as the accumulation of BTC by these long-term holders despite macroeconomic problems such as the energy shortage and crypto factors such as the FTX saga and decrease in BTC miner’s profitability.

chart patterns btc

chart patterns eth

Cryptocurrency News

  • Indonesia to launch a national crypto exchange in 2023. The move comes as part of the plan to shift the regulatory oversight from the Commodity Futures Trading Regulatory Agency of Indonesia (Bappebti) to the Financial Services Authority (FSA), the securities-focused authority.
  • Italy approves 26% capital gains tax on crypto-asset trading over EUR 2,000. The Italian Senate approved the new tax rate for crypto trading as part of the budget legislation for 2023.
  • Turkey to use blockchain-based digital identity for online public services. E-Devlet, Turkey’s digital government portal used to access a wide range of public services, will use a blockchain-based digital identity to verify Turkish citizens during login.
    Our View: application of blockchain technology is not limited to cryptocurrencies. It might impact our day-to-day lives without us noticing – for example, educational qualifications in Singapore are verified using a blockchain-based platform since 2019.
  • The United States Securities and Exchange Commission (SEC) objects to Binance.US’s acquisition of Voyager Digital until the company discloses more about its finances and corporate relationship with the global Binance exchange.
    Our View: given FTX’s failed acquisition of Voyager, regulators are placing more scrutiny on the deal. This is also an opportunity for regulators to uncover Binance’s finances, something that has remained largely a mystery since Mazar’s “audit” report of their reserves.
  • Crypto bank Juno advises clients to self-custody or sell their assets amid their custodian’s, Wyre, turmoil. The decision comes as Wyre prepares to wind down its operations and Juno seeks to partner with a new custodian.
    Our View: the failure of FTX highlighted the popular adage among the crypto community of: “not your keys, not your coins”.
  • Lido overtakes MakerDAO to have the highest Total Value Locked (TVL) in DeFi. The liquid staking protocol has a TVL of $5.97 billion overtook MakerDAO’s, the organization behind the protocol that creates the DAI stablecoin, $5.92 billion according to data from DefiLlama.
    Our View: the growth of Lido Finance highlights the surge in demand for liquid staking post-Ethereum’s merge in September as it allows smaller token holders to accrue staking rewards circumventing the required minimum of 32 ETH.

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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