Is the Worst Behind Us?
Last week I wrote about how Bad News is Good News for Bad News for the markets, and the last week, we could observe markets react positively to the announcement of the official inflation numbers coming out slightly more positive than expected (8.5% versus the 8.7% expected by analysts).
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What’s is Going on?
There’s naturally a myriad of factors to take into account when assessing economic data but the most significant element to observe currently remains, in my opinion, the narrative about high inflation.
On one side we have high inflation numbers and on the other side we have an economic recession looming. In the middle, there’s the Federal Reserve and other central banks trying to find balance between the two.
Until lately, the FED has been adamant about the goal of bringing down inflation at all costs, which in turn (among other factors) has caused quite the commotion for financial markets.
However, with the latest inflation numbers coming out better than expected and the FED’s change of tone lately regarding its forward guidance on the matter, we may be inching closer to a point where the focus can shift from fixing inflation to fixing the economy. In other words, ”the worst may be behind us”.
The current market environment for crypto brings strong associations to the end of 2018/beginning of 2019, where sentiment readings were similarly low.
At that time, a series of negative events drained confidence among investors and trading volume and activity plummeted dramatically. After a long consolidation around the valuation lows, the markets finally gave sign of life and a longer term uptrend started emerging.
The current markets in crypto feel similarly gloomy and has done so for quite some time. The latest spark of positivity in the equities market has, not surprisingly, rubbed off on crypto.
BTC currently looks ripe to break the 25.000 USD threshold and ETH is likewise looking strong climbing upwards towards the 2.000 USD mark in anticipation of its upcoming protocol merge.
Macro still remains king and I continue to think everything will be correlated for as long as the picture continues to be muddy.
As mentioned above these last few weeks have shown more than a few negative events popping up. The below are the ones I paid most attention to.
Nomad Drained for 200 Million Dollars
Yet another devastating situation unfolding as cross-chain service Nomad was exploited.
8.000 Solana Wallets drained due to Exploit
The Phantom wallet was subject of an exploit pertaining the wallets support of Solana.
Software-bug Identified for Many Hot-wallets on Solana
More bad news for the Solana crowd as an inherent bug was identified for many of the networks hot wallet services.
Nuri filed for insolvency following Celsius Collapse
German based crypto exchange Nuri sent out its notice about insolvency earlier in the week. Although not mentioned in their public statement, the insolvency most likely is yet another fallout from unhealthy exposure to Celsius.
Acala’s Stablecoin Falls 99% After Exploit
Following the discovery of a critical exploit, a hacker managed to successfully mint 1.2B extra tokens.
Regulators on the Move
Regulators are consistent in their attempts to juggle the digital assets space. Lately, there’s been more than a few notable movements.
Tornado Cash Banned on Several Networks and Exchanges
On Monday the US Treasury Department sanctioned the popular mixer Tornado Cash. To follow with sanctions for privacy coins soon?
The CFTC Presents Bill to Regulate BTC and ETH as Commodities
The Commodities Futures Trading Commission presented a bill to classify BTC and ETH as commodities.
SEC Active in Pursuing Crypto Exchanges
The Securities and Exchange Commission has embarked on an industry-wide crusade towards crypto exchanges. Lately, Coinbase has been under scrutiny.
VISA and Mastercard Stops Servicing Pornhub
Not really crypto news per say. But interesting to see how specific industries are struggling finding payment methods. A move to crypto could be expected for Pornhub.
Lastly, allow me to send thanks for all the positive vibrations I have felt in the wake of writing these letters.
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