Market Wrap #2: In the Woods
On 6th Nov 1907, with NYSE dropping ~50% for the year, the US economy was facing a month-long financial crisis, also known as the “Panic of 1907”, as a number of banks and businesses in the country filed for bankruptcy. Under the urge of President Theodore Roosevelt, J. Pierpont Morgan bolstered the banking system with an infusion of his own money and an acquisition of dying companies that were crucial to the financial system, resulting in the market rebound 10 days later.
As SBF, CZ and Sun have opened up their pockets to bail out some crucial lenders to the ecosystem, if history serves as a useful guide at all, one may start to wonder if this is perhaps a sign that the bottom is near and question: are we out of the woods yet?
Chart of the Week
Under the hood, the options market shares the same sentiment as BTC skew softened as compared to 1 week ago, with market players starting to position themselves for any potential rebound in the short term.
With the stochastic momentum indicator and RSI both showing that we are at a relatively oversold territory, BTC is seemingly setting itself up for a green week ahead.
Should the bulls have enough buying pressure to close above $23,000, confidence may start building and a push towards $30,000 will not be too far-fetched an idea. That said, with earnings season and CPI numbers on the horizon, not forgetting Fed’s Brainard’s call to further tighten regulation on crypto, we would be cautious about putting all our chips on the table. Out of the woods? We aren’t quite there yet.
The information presented is not investment advice and does not constitute any offer or solicitation to offer or recommendation of any investment product. As always, please do your own research.
Market Recap
1. Crypto lender Vauld freezes withdrawals, weighs restructuring. Nexo has plans to acquire Vauld shares.
Singapore’s Cryptocurrency trading and lending platform Vauld has suspended all withdrawals, transactions and deposits on its platform due to market volatility and financial difficulties of its key business partners. Crypto lending platform Nexo plans to buy Vauld shares, a term sheet that gives them a 60-day window to finalize the acquisition was signed.
2. China’s Vice Premier Liu He discusses tariffs with Yellen as US looks to ease
Lifting tariffs and sanctions and the fair treatment of Chinese enterprises are crucial to China. Economic policies and the stabilising of global supply chains — Biden may announce a rollback of US tariffs on $300 B in Chinese goods. Chinese exports to the US rose 15.1% & imports rose 4% in the first 5 months of 2022.
3. Bitcoin Futures show repeat pattern seen before late 2021 swoon
The build up in open interest for BTC futures is similar to the contract that began the long descent in late 2021. The recent consolidation around the $20k mark is just a pause before another leg south.
4. Crypto broker Voyager seeks bankruptcy as lifeline fails
Voyager temporarily suspended trading, deposits and withdrawals amid challenging market conditions as they filed for Chapter 11 bankruptcy protection. CEO Stephen Ehrlich said “the default of 3AC require us to take this decisive action.”
FTX provided unsecured credit lines via Alameda Research to Voyager. After revealing that Alameda have $376m debt on Voyager, Binance founder CZ taunted Alameda — calling this an “interesting turn”; Binance is self-sufficient without borrowing from others. Alameda Research said in a tweet, “happy to return the Voyager loan and get our collateral back whenever works for voyager.”
5. Reddit is launching a new NFT based marketplace
Users can purchase blockchain-based profile avatar for a fixed rate. There will not be a need for a crypto wallet, just credit/debit cards will do. The NFT will then be stored in Reddit’s own wallet product.
6. Fundraising in crypto space
- Sequoia Capital China Arm raised $9B, exceeding its $8B target
- Klang Games raised $41M to build Seed virtual world with AI beings
- Bonfire Union wants to invest in Web3 with its maiden fund ($42M)
- OP Crypto launches $100M fund to back early-stage crypto VCs
- Animoca Brands leads $32M funding round for Planetarium Labs
- Early-stage Franco-German VC XAnge raises €220M
- Thalex — a new crypto options and futures exchange closed series A funding of €7.5M
Economic Summary/Market Stats
7d Market Update
Crypto
❇️ BTC: +6.37%% to $20,435
❇️ ETH: +8.56% to $1,142
❇️ SOL: +6.97% to $35.13
❇️ Overall Crypto Market Cap: +6.08% to $967.2B
🥴 Bitcoin Fear & Greed Index: Extreme Fear (22/100)
Equities
❇️ S&P 500: +1.94%
❇️ DJ Industrial Average: +0.77%
❇️ Nasdaq 100: +4.66%
🔻 Hang Seng Index: -3.59%
❇️ Stoxx Europe 50: +1.85%
Rates
💸 USDC Supply APY: 0.66%
💸 ETH Supply APY: 0.85%
💸 BTC Supply APY: 0.01%
💲3-Month US Dollar Libor: 2.35%
💲US Treasuries 2-Year: 3.097%
💲US Treasuries 10-Year: 3.078%
Key Economic Releases
11 July (Mon)
11am ET: US 3-year inflation expectations (previously 3.9%)
13 July (Wed)
8.30am ET: CPI Numbers for June. Median forecast for Core CPI (YoY) is 5.7% (previously 6%)
14 July (Thurs)
8.30am ET: Initial jobless claims (median forecast 234k, previously 235k).
8.30am ET: PPI Final Demand (median forecast 0.8% monthly)
15 July (Fri)
8.30am ET: Retail sales (median forecast 0.9%, previously -0.3%)
10am ET: UMich consumer sentiment index (preliminary), median forecast 50.2 (previously 50.0).
