July 19, 2023

Markets Insights

Next FOMC meeting: July 26 2023.

  • Probability of a 0bps hike → 0%
  • Probability of a 25bps hike → 100%

The News Room

Bitcoin miners hedging with recent sell-offs: Bitfinex report

Bitcoin miners are reportedly selling BTC to hedge their risks amid regulatory crackdowns and environmental concerns surrounding cryptocurrency mining. The selling pressure from miners has led to increased market supply, impacting Bitcoin's price and overall market sentiment. Regulatory uncertainties in various countries have put pressure on miners, prompting some to liquidate their holdings for more stable assets. Additionally, the environmental impact of energy-intensive mining practices has sparked discussions about the need for more sustainable mining solutions. These developments highlight the growing importance of regulatory clarity and sustainable mining practices for the long-term stability and adoption of cryptocurrencies like Bitcoin.


The European Commission’s Web4 strategy might be a flop

The European Commission's Web4 strategy has faced criticism and is being deemed a flop due to a lack of progress and concrete results. The strategy, which aimed to foster innovation and growth in the European tech sector, has not met its objectives, leading to disappointment among stakeholders. The Web4 strategy's shortcomings may be attributed to various factors, including bureaucratic challenges, changing market dynamics, and the complex nature of implementing such initiatives across multiple countries. For the European tech industry to thrive, policymakers may need to reassess their strategies, engage more effectively with the private sector, and create a conducive environment for innovation and investment.


Latest 'auto-burn' removes $480 million worth of BNB from circulation

The latest auto-burn mechanism in the Binance Coin (BNB) ecosystem has successfully removed $480 million worth of BNB tokens from circulation. The auto-burn mechanism is a deflationary feature implemented by Binance, where a portion of the exchange's profits is used to buy back and burn BNB tokens periodically. This process reduces the total supply of BNB, potentially increasing its value over time. The significant amount of BNB removed from circulation through this mechanism demonstrates Binance's commitment to token holders and its efforts to create a more deflationary and potentially valuable asset. Such mechanisms play a vital role in shaping the tokenomics and market dynamics of utility tokens like BNB.


Polygon announces new governance model comprising of ‘ecosystem council’

Polygon (formerly Matic Network) has unveiled a new governance model with the establishment of the Polygon Ecosystem Council. The council comprises major players in the Polygon ecosystem, including developers, DeFi projects, and other stakeholders. It aims to facilitate decision-making and governance-related matters in a more decentralized and collaborative manner. With a strong emphasis on community-driven governance, Polygon seeks to foster greater participation and representation from its diverse user base. This move reflects the growing importance of governance structures in the blockchain space, where projects aim to involve their communities in shaping the future direction of the platform and its ecosystem.


Trading Desk Insights

Starting with the TradFi market, this week continues to be watched closely by traders for further corporate earnings. Goldman Sachs' second-quarter profit saw a sharp decrease, plummeting 58% to $1.22 billion, or $3.08 per share, mainly due to significant falls in trading and investment banking. Losses attributed to GreenSky and real estate ventures subtracted roughly $3.95 from the per-share earnings. There was also an 8% reduction in revenue, bringing it down to $10.9 billion.

Notable enterprises, including Netflix, Tesla, IBM, and United Airlines, are scheduled to announce their earnings after market close.

Due to U.S. regulatory constraints, Nasdaq (NDAQ) has decided to abandon its intentions to launch a cryptocurrency custody service, which was originally scheduled to launch in the second quarter of this year.

On the economic data front, inflation in the UK has finally shown signs of slowing down with the CPI reading of 7.9% missing estimates of 8.25. The CPI for the rest of Europe reached 5.5%, aligned with expectations.

Equity indices are marching higher as the S&P500 and Nasdaq are both 5% away from record highs. This morning, the US Dollar Index is gaining momentum which is placing pressure on all risk assets.

Moving on with the cryptocurrency market.

BTCUSDT is feeling the pressure as every uptick is being sold. The 20-period moving average on the 4h chart has been acting as great resistance. Apart from that level, we’re noticing heavy resistance around 30,400. If prices break below 29,500, it would trigger a cascading effect of sell orders dragging prices lower towards $28,500.

Altcoin Watch - Cardano (ADA)

ADA’s TVL of $200 million lags behind other layer-1 smart contract alternatives such as Tron ($5.9 billion), BNB Smart Chain ($3.4 billion) and Avalanche ($727 million). This suggests that there is still limited demand for ADA’s services.

To solidify its position and potentially surpass the $0.40 mark, Cardano needs to continue growing and delivering on its promises, including the planned updates for 2023. Important upcoming updates include the Hydra L2 solution that uses sidechains to offload transactions from the main chain and Basho, an L1 scalability and performance improvement proposal for improved block structure, parallelization and pipelining.

ADA/USDT - Looking at the daily chart, price had a sharp downside reaction from the area of supply at 0.3758. This means ADA still bearish, despite many altcoins, such as AVAX turning bullish when looking at their daily structure.


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