Markets Emerge Unscathed from Central Bank Superweek

Markets survived the data and central bank superweek with the U.S. Fed (+25bps), ECB (+50bps) and BoE (+50bps) raising rates. Investors interpreted Powell’s comments post-FOMC as “dovish”, providing a boost to risk sentiment. ECB on the other hand pivoted from the Fed, indicating another 50bps hike in its March meeting. Chinese PMI data and US labor data (non-farm payrolls) surprised on the upside, further providing optimism to the markets. In crypto, BTC shines once again in struggling economies as Nigeria and Lebanon face devaluation (more in Cryptocurrency News below).

U.S. equity markets rallied on Powell’s comments for the week: SPX +1.62%, DJIA -0.15% and NASDAQ +3.31% with U.S. Tech boosted by Meta’s better-than-expected earnings. In crypto, upside momentum fades as BTC +0.49% and ETH +4.00%,meeting resistance at $23,000 and $1,670.

On chain, both BTC and ETH supply on-exchanges remain at a 1-year low despite the bull run we’ve seen, indicating that holders are not in a rush to take profits.

Source: Treehouse Insights

chart patterns btc 6 feb

chart patterns eth 6 feb

Cryptocurrency News

  • Statement from the White House urges Congress to “step up its efforts” in crypto-regulation. It called for an expansion of regulators’ powers, increased transparency and disclosure requirements, stricter penalties and collaboration with international partners. It also discouraged allowing pension funds to invest in cryptocurrencies to avoid deepening ties to the financial system.
    Our View: a pretty strong-worded statement addressed to Congress, but nothing drastically new in terms of regulation. The statement was issued the same day the U.S. Federal Reserve denied digital asset Custodia bank membership in the Federal Reserve System, which might be an indication of tighter regulation to come?
  • South Korea plans to deploy a cryptocurrency tracking system in 2023. The
    “Virtual Currency Tracking System” will be used to monitor transaction history, extract information related to transactions and check the source of funds before and after remittance. The move comes as a means to counter money laundering initiatives and recover funds linked to criminal activities.
    Our View: the skeptic in me might draw connections to the country’s implementation of its proposed cryptocurrency tax that has been delayed to 2025.
  • Elon Musk wants Twitter payments systems to accommodate cryptocurrencies, The Financial Times reports. The company is designing a system to permit payments through the social media platform.
    Our View: Musk’s visionary plan of creating a “super app” faces many regulatory and technological roadblocks – especially after culling half of the workforce since taking over. In addition, blockchain-based social apps like Damus on the Nostr protocol, touted as the “Twitter Killer”, also pose serious threats to the company. Damus went live on Apple’s app store on 31 Jan.
  • Demand for BTC in Nigeria sees BTC premium reach 164% amid the country’s move to invalidate current notes and implement cash withdrawal restrictions. Price of BTC surged as high as $62,499 on local peer-to-peer (P2P) platform LocalBitcoins. In other news, Lebanon devalued its currency by 90% on 01 Feb 2023, destroying its citizens value of savings and wages amid an environment of hyperinflation.
    Our View: once again BTC has shown to be a viable alternative store-of-value in countries that have weaker financial infrastructures, highlighting its appeal of decentralization where faith in the country’s central bank is low.
  • Strike expands Lightning Network-powered remittances to the Philippines, one of the world’s largest remittance markets at $35 billion. According to the release, the Strike app converts dollars into bitcoin and sends a Lightning payment to a third-party partner in the recipient’s country. The partner converts that bitcoin into local fiat currency and forwards the money to the recipient’s bank or mobile money account.
  • Ordinals launches NFTs on the Bitcoin network, sparking controversy. The protocol facilitates the transfer of individual satoshis, the smallest unit of a Bitcoin, using a process called “inscription” to inscribe data such as video and images to each individual satoshi. Some of Bitcoin’s biggest backers are calling it an affront to Bitcoin principles.
    Our View: if, according to Ordinals’ creator, the transactions do not take up block space and drive up transaction costs, then why not? I am a big fan of innovation, and this could potentially increase user-adoption and awareness. What are your thoughts – NFTs on Bitcoin network, Yes/No?
  • ImmutableX to launch an all-in-one passport system to streamline onboarding gamers into web3. The new tool (Immutable Passport), scheduled to launch in April 2023, will act as a non-custodial wallet, gamer profile and authentication solution.
    Our View: creation of a “gateway” to games is a critical infrastructure to traditional gaming, with platforms like Steam and (Blizzard). This could be a significant step for the development of GameFi by bridging gamers and game developers through a marketplace-like platform.
  • Blockchain provider SIMBA Chain awarded $30M by US Air Force Strategic Technology Focus Initiative (STRATFI) program. The investment will be used to develop blockchain applications in supply chain management and programs that will be used by several government organizations. This is a follow-on partnership between the U.S. Air Force and SIMBA Chain that developed a budgeting and accounting system for tracking and monitoring the military’s cash flow and supply chain quality and management back in June 2022.
    Our View: blockchain is not just about cryptocurrencies. The partnership between key U.S. ministries and SIMBA Chain is an acknowledgement of the benefits that the underlying blockchain technology can bring.

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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