Weekly News Wrap Up
Risk sentiment improved last week as Fed Chairman Powell said that he sees the central bank in position to reduce the size of rate hikes as soon as next month, but also cautioned that monetary policy is likely to stay restrictive until real signs of progress emerge on inflation. US labor market also shrugged off recession fears as non-farm payrolls increased by 263,000 vs. expected 260,000 in November and the unemployment rate stayed flat at 3.7%.
US equities continued their gain from last week with SPX +1.07% and NASDAQ +2.09%. USD -1.47% in reaction to comments from Powell as the probability of a smaller 50bps rate hike in the next meeting increased. BTC and ETH continued their recovery +4.22% and +7.18% respectively, breaking above $17,000 and $1,200. An update from the Ethereum Developer Conference indicates that the highly anticipated Shanghai upgrade may take place in March 2023, including EIP-4895, which allows withdrawals from POS staking.
For on-chain, the BTC hash ribbon has initiated a bearish crossover. The 30D MA (green) has just crossed below the 60D MA (blue), which is historically a leading indicator of miners capitulation as falling hash rate could indicate rising mining costs relative to profits. BTC miner-to-exchange flows have also been increasing significantly in the past few weeks, which might be indicative of miners positioning themselves to sell their BTC. The miner net position change has been reflecting this, as it is heavily negative from BTC miner selling as the effects of a liquidity crunch coupled with a steeply declining hashrate puts pressure on miners.
Cryptocurrency News
- BlackRock’s Larry Fink says technology behind crypto is still relevant despite FTX and believes the “next generation for markets and next generation for securities will be tokenization of securities”.
Our View: we share the similar view that the FTX-event, while unfortunate, was caused by human greed and malfeasance rather than the underlying technology. It is also interesting that the theme of “tokenization of securities” was one that was shared by many traditional finance participants at a recent Hubbis conference we attended in Singapore - Nexo and Gemini approved for registration with the Italian regulator, allowing the crypto exchanges to serve customers in the country. Entry into the registry maintained by Organismo Agenti e Mediatori (OAM) is mandatory to operate in the country.
Our View: it is good to see business-as-usual activity across the industry despite FTX’s collapse, a sign that regulators globally are not “freezing up” - BlockFi files for bankruptcy and conducts major layoffs as FTX contagion claims another, Decrypt reports. BlockFi halted withdrawals on 11 November, the same day FTX filed for bankruptcy. In June, the company received a revolving $250 million line of credit from FTX after it ran into liquidity issues post-Terra’s collapse.
Our View: a double-whammy for the crypto lender this year amidst a worsening backdrop for crypto lending. Data from The Block shows a declining trend in DeFi lending which results in a compression in yield - Belgian authorities do not view Bitcoin and Ether as securities. The Financial Services and Markets Authority declared that crypto assets without issuers are not securities, but other regulations may apply if they have a payment or exchange function.
Our View: it is a positive development in the ongoing debate about whether cryptocurrencies should be classified and regulated as security or commodity. We previously reported about LBRY losing against the SEC as setting a dangerous precedent for the industry - Telegram plans to build out its crypto infrastructure with a decentralized exchange and non-custodial wallet on its Telegram Open Network (TON) blockchain. The messaging application has sold $50 million in usernames in less than a month on Fragment, a blockchain-based auction platform built on top of TON.
Our View: an interesting development given that Telegram is used widely by the crypto community, allowing the company to generate new revenue streams from its millions of users.
Summary:
- The negative news in the market is slowly decreasing since the fall of FTX although we noted the domino effect is not yet over for several other companies that have been impacted by the fall of FTX. Several other positive notes were seen across few countries’ regulators who opened more doors towards crypto players, plus the continuous new development within the Crypto industry such as the recent plan by Telegram..
- Our best strategy for the moment 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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