OPEC+ Surprises Market with Oil Production Cut; Arbitrum Backtracks on Controversial Governance Proposal

Weekly News Wrap Up

Oil prices surged after a surprise OPEC+ production cut, further complicating the U.S. Fed’s inflation problem and labor market data showed signs of a slowdown. Elsewhere, the RBA paused rate hikes while RBNZ surprised markets with a hawkish 50bps increase. In Crypto, hype built around DOGE as Twitter replaced its logo briefly with DOGE’s iconic shiba-inu and Arbitrum caused a stir among its community after a controversial governance proposal shortly after launching its ARB token.

U.S. equities ended in the green during the holiday shortened week:  SPX+1.34%, DJIA +1.91% and NASDAQ +0.62%. Cryptocurrency majors: BTC +0.62% and ETH +3.49%, with the latter outperforming as we head into Shapella on 12 Apr. 

Looking on-chain, there has been speculation that Ethereum’s upcoming hard-fork, “Shapella”, could lead to selling pressure as stakers are finally able to withdraw their initial 32 ETH node collateral and staking rewards since the shift to proof-of-stake (PoS). However, @CryptoQuant notes that the number of validators has grown by 1.51% in the last 30 days and the total amount of ETH staked increased 2.82%, suggesting that investors remain confident in ETH price. Additionally, more than half of staked ETH (9.7 million out of 17.9 million) is currently at a loss based on current ETH prices, which might result in less sell pressure than expected.

Cryptocurrency News

  • TradFi banks collaborate to create a digital bonds trading platform on blockchain, with a goal of being environmentally friendly. France’s Credit Agricole CIB and Sweden’s SEB are creating a platform to allow companies to raise capital by issuing digital bonds on a blockchain network, and users will be able to manage securities and raise capital through smart contracts.
  • Major Brazilian investment bank BTG Pactual plans to issue USD-pegged stablecoin. BTG Dol aims to help its customers interact between the traditional financial system and the digital economy. BTG Dol is based on Mynt, BTG Pactual’s proprietary crypto technology platform launched a year ago that allows users to invest in cryptocurrencies like BTC and ETH.
    Our View: interest from TradFi companies into cryptocurrencies or blockchain technologies has been gaining traction, like the news above from European banks and LatAM banks.
  • Dogecoin soars after Twitter replaces its logo with the DOGE icon. The token surged more than 30%. No clear explanation was provided on the logo change other than a humorous tweet from Elon Musk. Some speculate that this was related to Musk’s request to dismiss a $258 billion lawsuit filed by investors who allege that he operated a pyramid scheme to promote Dogecoin.
  • Arbitrum Foundation backtracked on its controversial governance proposal after a community revolt. Under the proposal, a “special grants” program would be funded by 750 million ARB tokens, worth nearly $1 billion, and would be under the Foundation’s control without input from ARB holders. Concerns were raised about the centralized control of the Foundation and the fast-tracked proposal, which bypassed full on-chain governance. The Foundation began selling 50M ARB tokens before the community ratified its budget, causing a massive drop in ARB’s price. Following the backlash, the Foundation split the AIP-1 package into separate votes, the “special grants” program was rebranded as the “Ecosystem Development Fund”, and it pledged more transparency and context on how the funds will be used.
    Our View: the move above highlights how many of the Decentralized Autonomous Organizations (DAOs) in DeFi aren’t really decentralized and are actually Decentralized In-Name Only (DINO), exposing investors to rug-pulls and misappropriation of funds
  • Immfunefi: 73.3% of Q1 rug pulls happened on BNB Chain. It speculated that the large number of rug pulls on BNB Chain may be due to a culture that promotes forking open-source code. The report also stated that rug pulls and other frauds are a much smaller problem in the crypto community, accounting for only 4.3% of total losses, than hacks or exploits.
  • Peer-to-peer Bitcoin exchange Paxful to suspend operations. A message from co-founder and CEO Ray Youssef cited key staff departures and regulatory challenges.
  • Kaiko CEO: U.S. crackdown will push crypto “center of gravity” to Hong Kong. Ambre Soubiran of the institutional crypto market data provider commented while speaking to The Wall Street Journal.
    Our View: 2023 is shaping up to be a significant year for crypto regulation with the recent enforcement activity from the U.S., a final vote for the E.U.’s MiCA due this month, and a joint technical paper by the IMF and FSB to help in formulating regulatory architecture for crypto. This will guide the development of the industry towards more accommodative jurisdictions, like Hong Kong, and we’re already starting to see the trend with announced plans for new licensing and shifting of headquarters towards the country.

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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