Bitcoin goes nuclear 💣
Inflation is still too high for the Fed's comfort
6 factors that will make or break the economy🧵👇
Macro Pulse Update 20.08.2023, covering the following topics:
1️⃣ Macro events for the week
2️⃣ Bitcoin Buzz Indicator
3️⃣ Market overview
4️⃣ Key Economic Metrics
5️⃣ China Spotlight
1️⃣ Macro events for the week
Past week
Upcoming week (nothing significant)
2️⃣ Bitcoin Buzz Indicator
Altcoins:
ARB: An ARB whale bought 1.27 million tokens. Arbitrum will unlock $1.2B ARB in March 2024.
AVAX: Avalanche Foundation provided $3M in AVAX tokens to Dexalot.
ALGO: Algorand reached a new all-time low amid market downturn.
AllianceBlock: Backed Nexera DEX, looking at institutional adoption with decentralized KYC, AML.
AXS: Philippines law enforcement warned about risks with “play-to-earn” games, including Axie Infinity.
Mantle: Discussed pausing token migration to stop FTX converting $43M in BIT tokens to MNT. Crossed $40 million in TVL within a month.
BNB: BNB Chain hacker lost $62.5M after getting liquidated in Friday's crash.
Tether: Discontinued USDT support on Bitcoin, Kusama, and Bitcoin Cash due to low usage.
CRV: Aave DAO voted to acquire CRV tokens with USDT.
ADA: Number of Cardano whale and shark wallets surged to 16-month high despite bear market (Santiment).
CHZ: Chiliz announced two proposals to upgrade for smart contracts.
FXS: Frax V2 enabled permissionless DeFi validators.
HNT: Helium Mobile debuted a crypto wireless network in Miami for $5 a month.
MKR: Maker's profit expectation dropped from $80M to below $2M (Messari).
NEXT: Connext to airdrop native token 'Next' in early September.
OPNX: 3AC founders’ crypto project penalized with $2.7M in Dubai.
RUNE: THORChain rose nearly 40% even after market bloodbath.
SAND: The Sandbox unlocked $133M worth of tokens.
SEI: Sei Mainnet went live, but the token took a hit.
SHIB: Shibarium launch faltered, community still supports; lead dev said ‘Funds are SAFU.'
SRM, SNM, YFII: Binance to delist and cease trading on all pairs for these tokens.
XRP: Institutional investors led to 57% growth in AUM; a 45% crash in XRP/USDT contract on Bybit; 150 million XRP moved to Bithumb.
YFI: Wintermute proposal to borrow YFI faced criticism from the DeFi community.
3️⃣ Market overview
Macro
Inflation persisting higher than the Fed would like, signs of slowing consumer demand and China's financial/property distress, all contribute to an uncertain economic picture weighing on markets.
The July Fed minutes revealed officials remain worried about persistent inflation, though some pushed back on further rate hikes. Markets expect no more hikes this year, but await signals from Jackson Hole conference.
U.S. stocks fell as the minutes highlighted the Fed's inflation concerns while noting the risks of overtightening. Retail earnings were mixed, with Target's sales suffering from reduced discretionary consumer spending.
Asian equities also declined, impacted by the ongoing issues in China's economy and financial system
China's shadow banking sector is facing mounting distress, as seen in Zhongrong Trust missing payments, triggering protests. This highlights the broader strains on China's financial system from the property downturn.
There are worries about a negative feedback loop between real estate stress and financial sector turmoil, which could constrain credit and hurt growth. Beijing may need more aggressive intervention to restore stability.
Crypto
It was a volatile week for crypto, driven by negative news/sentiment and market structure. However, there were also some constructive developments like the EU bitcoin ETF launch and Coinbase's regulatory approval. The key question is whether bitcoin can stabilize and hold support around the $25k level.
Bitcoin and crypto prices have fallen sharply this week, with bitcoin dropping from around $29k to near $25k. The sell-off comes amid a confluence of negative news and developments.
The drop was triggered by a Wall Street Journal report about SpaceX selling bitcoin holdings, as well as Evergrande's bankruptcy filing. Market structure and massive liquidations exacerbated the decline.
The move lower also followed hawkish Fed minutes suggesting further interest rate hikes. However, the market still expects the Fed to hold steady on rates at its September meeting.
In positive news, the first EU-based spot bitcoin ETF launched in Amsterdam this week. This comes as US regulators have yet to approve a bitcoin spot ETF.
Coinbase received regulatory approval to offer crypto futures trading to US customers. This expands Coinbase's offerings, though its share price increase after the news was short-lived.
4️⃣ Key Economic Metrics
Cooling US inflation and still-healthy household finances are constructive economic developments, though inflation remains above target and risks are present on both fronts.
🟡 Although headline US inflation ticked up slightly in July, underlying data suggests a continued deceleration in inflation. Core inflation fell again and monthly price increases moderated.
🟢 Falling energy and airfare prices are driving the inflation slowdown. Food inflation remains elevated, while shelter inflation should moderate as housing cools.
🔴 Durable goods inflation has turned negative as pandemic demand fades. Service inflation is still high, potentially worrisome given the tight labor market that drives wage growth.
🟡 The trends support hopes for a "soft landing," though risks exist if Fed tightening spurs financial turmoil. It's unclear if they've done enough tightening or need to do more.
🟡 US household debt hit a record high but financial conditions remain favorable - debt is manageable given asset and income growth.
🟡 Mortgage and credit card delinquencies are very low historically. Student and auto loan delinquencies are a bit higher but still below pre-pandemic levels overall.
5️⃣ China Spotlight🔴
Deflation and plummeting trade underscore China's economic struggles despite the end of COVID restrictions. Authorities face difficulties in turning around weak domestic demand and contending with global headwinds.
China has fallen into deflation, and its hurting consumer and business spending through higher real borrowing costs. It also encourages saving over spending. The government expects inflation to rebound somewhat, but it will likely remain low given economic weakness.
Chinese exports and imports both dropped sharply in July, more than expected. Export declines were seen across major categories and destinations. Imports falling means other countries' exports to China are also suffering.
Trade weakness compounds challenges for China's economy. Stimulus efforts to boost domestic demand have struggled. The global economy is also impacted by lower Chinese demand.
Twitter: https://twitter.com/arndxt_xo/status/1693221349987418430
perfect! exactly what I need in the end of the week! well done mate!