Macro Pulse Update 21.04.2024
HALVING is the biggest milestone in 2024
War tensions worsens amidst Dubai turned into an Oasis
3 key metrics that point to the economy post-halving👇🧵
Macro Pulse Update 21.04.2024, 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
Last Week
Next Week
2️⃣ Bitcoin Buzz Indicator
Crypto Market and Platform Updates
Binance Converts $1 Billion SAFU to USDC
Hong Kong Greenlights Bitcoin and Ethereum ETFs
Puffer Finance Secures $18 Million for Expansion
Tether Integrates USDT and XAUT on TON Blockchain
Exchange and Wallet Enhancements
OKX and Polygon Debut Zero Knowledge Network
Kraken Introduces Privacy-Focused Crypto Wallet
Staking and Security Developments
EigenLayer's No-Cap Policy Spurs $157 Million Influx
Trust Wallet Issues Security Alert for Apple Users
Influential Moves and Legal Challenges
Vitalik Buterin Endorses Privacy Protocol Railgun
Worldcoin to Launch Bot-Discouraging Layer-2
Yuga Labs Sells Game IP Amidst NFT Market Drop
Policy Changes and Brand Collaborations
PayPal Changes Policies on NFT Transactions
Adidas Partners with STEPN for NFT Sneakers
Altcoin
German banking giant LBBW set to roll out crypto custody services in H2 2024.
Solana rallied as developers launched an update to tackle network congestion.
VALR crypto exchange received a regulatory license as a CASP in South Africa.
Base asset tokenization protocol lost $1.7M due to a private key leak.
Arbitrum unveiled a new protocol to enhance network security.
Arkham’s top 5 doxed crypto hodlers own $3.5B, but 35% is untouchable.
Homium raised $10M and tokenized home equity loans on Avalanche.
AI tokens FET, AGIX, and OCEAN merger set to go live in May.
Drift planned a governance token launch with 100M DRIFT airdrop.
P2 Ventures committed $50M via Hadron FC to startup founders in the Polygon ecosystem.
TikTok's parent company partnered with Sui to explore on-chain possibilities for Web3 gaming and AI.
Ragnarok entered Web3 through a Ronin partnership.
a16z raised $7.2B for venture strategies, pushing for AI and Web3 gaming.
White hat hacker group SEAL launched a crypto threat-sharing center.
Tranchess, Scroll, and StakeStone launched a new yield product, Queen Stone.
Centrifuge planned institutional RWA lending on Coinbase's Base, raising $15M in VC investment.
Xai expanded to staking rewards.
Parcl's TVL plunged 40% following an 80M PRCL airdrop to users.
Zignaly announced a Cosmos-based ZIGChain and a $100M ecosystem fund.
Pi Network reached 10M KYC’d users, but the token is still not tradeable.
Omni Network's token fell 55% after an airdrop, as a fake token completely rugged.
Sweden demanded $90M in outstanding tax from crypto miners.
Web3 funding saw an uptick in Q1 as startups secured nearly $1.9B.
Crypto Wealth Management Firm Abra launched new platforms for private clients.
Ondo Finance brought tokenized treasuries to the Cosmos ecosystem with Noble integration.
Aptos struck a DeFi partnership with Microsoft, Brevan Howard, SK Telecom.
Scroll introduced a loyalty program, excluding China and U.S. users.
Tribe Capital-backed Nibiru Chain allocated over $15M in developer grants.
Polkadot introduced the JAM upgrade and a 10 million DOT prize to enhance network capabilities.
Mango Markets' attacker was found guilty of fraud over a $110 million exploit.
A DAO acquired rights to the image behind the Doge meme.
Blockchain data-availability protocol Avail announced a 600M token airdrop.
The SEC said Justin Sun 'traveled extensively' to the US, giving sway to a lawsuit.
DeFi platform Hedgey Finance was hit by a $44 million exploit.
FTX emptied its FTT treasury wallet, transferring assets worth over $250 million.
3️⃣ Market overview
Recent global events have significantly impacted financial and cryptocurrency markets: Iran's attack on Israel sparked a crypto selloff, U.S. Federal Reserve's hawkish comments stirred market volatility, and Hong Kong launched its first Bitcoin and Ethereum spot ETFs. Meanwhile, new U.S. legislation aims to regulate stablecoins, and a Solana-based Perp DEX announced a substantial token airdrop.
Middle East Tensions: Iran's missile and drone attack on Israel over the weekend escalated regional tensions, leading to a sharp selloff in cryptocurrencies, with Bitcoin dropping significantly.
Federal Reserve's Hawkish Stance: Comments by Federal Reserve Chairman Jerome Powell suggested a less likely reduction in interest rates in 2024, causing further fluctuations in Bitcoin prices and raising concerns in financial markets.
Advancements in Hong Kong's Crypto Market: Hong Kong has approved its first Bitcoin and Ethereum spot ETFs, aiming to strengthen its position as a major financial hub for cryptocurrencies in Asia, although the reception of these ETFs remains uncertain.
Ethereum's Decline Against Bitcoin: Ethereum's value relative to Bitcoin has fallen to a three-year low, despite recent regulatory approvals and technological updates, affected by ongoing issues such as high transaction fees.
U.S. Regulatory Moves on Stablecoins: New legislation proposed by U.S. Senators seeks to regulate stablecoins more tightly, requiring issuers to obtain federal licenses and maintain full reserves, reflecting a cautious approach towards integrating stablecoins with the traditional financial system.
Token Airdrop by Solana-Based DEX: Drift, a decentralized exchange on the Solana network, announced an airdrop of 100 million tokens, stirring excitement about its potential growth in the decentralized finance sector.
4️⃣ Key Economic Metrics
🔴 The persistent inflation challenges the likelihood of a "soft landing" for the US economy and raises the prospect of higher interest rates for an extended period, reminiscent of the 1990s.
US inflation in March was higher than expected, with the consumer price index up 3.5% year-over-year, leading investors to significantly reduce expectations for interest rate cuts by the Federal Reserve this year.
Core inflation (excluding food and energy) did not accelerate in March, remaining at 3.8% year-over-year, but is stalling after declining from higher levels.
Shelter/housing costs are a major driver of persistent inflation, up 5.7% year-over-year, though the rate has been gradually declining from its peak.
Services inflation remains problematic at 5.3% year-over-year, driven by a tight labor market and rising wages.
The Federal Reserve aims to weaken the labor market through tight monetary policy to reduce wage pressure and cool inflation.
Investors now expect only two Fed rate cuts in 2024, down from previous expectations of more aggressive easing, aligning more closely with the Fed's signals.
The shift in expectations is due to the unexpectedly strong US economy and concerns that the decline in inflation is stalling, potentially requiring higher rates for longer.
Higher US rates put upward pressure on the US dollar, impacting other central banks' policy decisions and currency valuations.
Large investors are shifting from US Treasuries to European sovereign debt, anticipating earlier rate cuts from the European Central Bank compared to the Fed.
🟡The worsening credit conditions point to slowing economic activity in the eurozone, increasing pressure on the ECB to start lowering rates soon. However, the ECB decided to wait at least two more months before considering a cut, despite falling inflation, likely assessing incoming data. Their policy path may diverge from the Fed's based on their respective economic conditions.
Eurozone Credit Conditions:
Credit conditions for businesses and households in the eurozone worsened in Q1 2024 according to the ECB's credit conditions survey.
Credit standards tightened slightly for business loans, driven by a worsening in Germany.
There was a "substantial" decline in loan demand from businesses, signaling weaker investment spending ahead.
Credit standards eased moderately for household mortgages but tightened further for consumer credit.
ECB Interest Rate Decision:
Despite slowing inflation and weak demand, the ECB kept its benchmark rate unchanged at the historic high of 4.0% in its latest meeting.
A minority voted for an immediate rate cut, but there was broad agreement to consider a cut at the June meeting.
ECB President Lagarde said the decision was "data-dependent, not Fed-dependent", suggesting ECB policy will not simply follow the Fed.
However, she noted the ECB will "probably cut first but may then move more slowly if the Fed delays cuts."
Markets are pricing in around 75 basis points of rate cuts in the eurozone this year, more than expected Fed cuts.
5️⃣ China Spotlight🔴
Persistently low inflation and even deflation remain a concern for China, contrasting with other major economies. Policymakers face a dilemma in stimulating demand versus risking more overcapacity from an export-driven investment approach amid sluggish global demand.
China is facing the risk of deflation amid weak demand and excess supply, unlike most other major economies battling higher inflation.
The Chinese government has eased monetary policy but inflation remains subdued, raising questions about additional stimulus measures needed.
China aims to boost export capacity in new technologies rather than domestic consumer demand through fiscal stimulus.
However, this export-driven strategy risks further excess industrial capacity if exports disappoint.
Some data points to a modest economic strengthening in China, like rising copper prices on expected higher demand.
Yet Chinese producer prices fell 2.8% year-over-year in March, reflecting commodity price weakness and continued capacity expansion.
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