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Tether Excess Reserves increase by $850M to reach $3.3B, revealing Energy-Related Investments and $72.5B overall exposure in US T-Bills
Tether Holdings Limited has released its Q2 2023 assurance opinion carried out by BDO, a top five-ranked global independent public accounting firm. The attestation confirms the accuracy of Tether's Consolidated Reserves Report (CRR), which provides insight into the assets held as of June 30, 2023.
For the first time, the report outlines Tether's indirect exposure to US Treasuries via Money Market Funds and exposure to US Treasuries collateralizing its Overnight Repo. The CRR revealed an increase in excess reserves of around $850M, taking the total to approximately $3.3B, emphasizing Tether's stability. The report also disclosed a $115M USD share buyback and investments in energy-related initiatives.
Tether's Q2 operational profits exceeded $1B, a 30% increase from the previous quarter. Furthermore, Tether disclosed it holds about $72.5B in Treasuries backing its stablecoins. The CRR, along with BDO's attestation, confirmed that Tether's consolidated assets surpassed its consolidated liabilities.
Traders Short on Curve's CRV Amid Fears of Founder's Loan Liquidation
Decentralized exchange Curve's token, CRV, continues to slide as traders bet on a price decline amid fears of a potential liquidation of founder Michael Egorov's massive crypto borrowings of ~$100M. Egorov has borrowed significantly against his CRV holdings, and the devaluation of the token threatens these positions, potentially leading to a destabilization of Curve and the wider crypto market. CRV's value dropped to its lowest since November 2022, and traders have increased their short positions in anticipation of further declines. If Egorov's borrowed positions are liquidated, the resulting sell-off could inject volatility into the broader market.
Shanghai Unveils Plan for Urban Blockchain Infrastructure Development 2023-2025
The Chinese city of Shanghai has announced an implementation plan to develop its urban blockchain digital infrastructure system between 2023 and 2025. This initiative is part of Shanghai's strategic goal for digital transformation and will further enhance the application of blockchain in the economy, public services, and urban governance.
The infrastructure system aims to support municipal affairs, public services, and industry applications, and assist in coordinating blockchain network resources in China's Yangtze River Delta region. This plan forms part of China's broader efforts to incorporate emerging technologies in various cities, including initiatives such as the deployment of the digital yuan across multiple cities and the introduction of the China Metaverse Technology and Application Innovation Platform in Nanjing.
Trading Desk Insights
The S&P 500 fell to start August as investors navigated a flood of corporate earnings reports as well as a few negative economic reports. Looking at a daily chart of the S&P500 futures, we notice some bearish divergence as prices recently made higher highs while the RSI has posted a lower high, indicating potential trend exhaustion. If prices manage to break below 4560, we expect further downside towards 4500 level which should act as key support in the short term.
Bitcoin went for a dive overnight and traded lower by 3% from 29,350 to a session low of 28,480. The market keeps posting lower highs and lower lows, a clear indication of a downtrend. As long as this persists, it seems to be a good strategy to short the rallies. Every time the RSI gets close from this declining trend line, the market reverses and trends lower, which means it’s an important indicator to follow. For now, the ultimate trend reversal indicator would be the 20-day moving average located near 29,900.
A federal judge in New York rejected the Ripple ruling distinction in the SEC’s case against Terraform Labs and founder Do Kwon. The SEC first filed a suit against Terraform Labs and its founder, Do Kwon, on Feb. 16, alleging them of “orchestrating a multi-billion dollar crypto asset securities fraud." This decision muddies the regulatory outlook for digital assets and now increases the likelihood for the SEC to appeal the Ripple decision.
In other news, the stablecoin issuer Tether reported an increase in its excess reserves of $850M, bringing its total excess reserves to approximately $3.3B at the end of Q2. The overcollateralization brings strength and confidence to the whole system. 85% of its investments are held in cash and cash equivalents while the amount of Treasuries backing Tether’s stablecoins is about $72.5B.
Economic Calendar:
TUESDAY
ISM manufacturing PMI
JOLTS job openings
Earnings → AMD & MicroStrategy
WEDNESDAY
ADP non-farm employment
Earnings → PayPal & Robinhood
THURSDAY
BOE decision
US unemployment + ISM services PMI
Earnings → Amazon, Apple, Block & Coinbase
FRIDAY
US Non-farm payrolls + unemployment
Technical Charts
Altcoins - Binance Coin (BNB)
Binance Coin has witnessed a lot of pressure lately due to the flow of negative news surrounding the Binance exchange which is why BNB has faced a lot of shorting activity in recent weeks. As of July 25, 2023, the total amount of BNB shorts is over $1 billion, which is equivalent to about 10% of the total BNB supply.
Looking at the daily chart, we noticed a bottom pattern taking shape right now with prices ranging between 220 and 260 with most action between 235 and 260. If prices manage to break above 260, we can expect further upside towards 275 and potentially 300.
Disclaimer
This research is for informational use only. This is not investment advice. Other than disclosures relating to Secure Digital Markets this research is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. The information, opinions, estimates, and forecasts contained herein are as of the date hereof and are subject to change without prior notification. We seek to update our research as appropriate.
Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation. The price of crypto assets may rise or fall because of changes in the broad market or changes in a company's financial condition, sometimes rapidly or unpredictably. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments. We and our affiliates, officers, directors, and employees, excluding equity and credit analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives, if any, referred to in this research.
The information on which the analysis is based has been obtained from sources believed to be reliable such as, for example, the company’s financial statements filed with a regulator, company website, company white paper, pitchbook and any other sources. While Secure Digital Markets has obtained data, statistics, and information from sources it believes to be reliable, it does not perform an audit or seek independent verification of any of the data, statistics, and information it receives.
Unless otherwise provided in a separate agreement, Secure Digital Markets does not represent that the report contents meet all of the presentation and/or disclosure standards applicable in the jurisdiction the recipient is located. Secure Digital Markets and their officers, directors and employees shall not be responsible or liable for any trading decisions, damages or other losses resulting from, or related to, the information, data, analyses, or opinions within the report.
Crypto and/or digital currencies involve substantial risk, are speculative in nature and may not perform as expected. Many digital currency platforms are not subject to regulatory supervision, unlike regulated exchanges. Some platforms may commingle customer assets in shared accounts and provide inadequate custody, which may affect whether or how investors can withdraw their currency and/or subject them to money laundering. Digital currencies may be vulnerable to hacks and cyber fraud as well as significant volatility and price swings.
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