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A curated weekly summary of forward-focused crypto news that matters. This week, low unemployment numbers in the United States increase the likelihood of interest rate hikes, Sam Bankman-Fried prepares to testify in front of the House Committee on Financial Services, and sales of hardware wallets spike.
The price of Bitcoin (BTC) finished off the week with a 2.9% improvement in price versus the previous week and now sits at ~US$17K. Ether (ETH) saw a moderate 3.5% improvement, now sits at ~US$1.26K. Binance-coin (BNB) saw a 7.3% drop, presently trading for ~US$290.
The US Bureau of Labor Statistics (BLS) published its unemployment numbers for November on Friday (December 2nd). Payroll employment increased by 263,000, and the low 3.7% rate remains within what we have observed since March this year (never peaking above the 3.7% level for any month). Notably, these are within pre-COVID levels; for all twelve months prior to March 2020, unemployment never reached higher than 3.8%.
With November’s latest low unemployment numbers, the Fed is likely to announce interest rate hikes again in its FOMC meeting on Wednesday (December 14th) of next week — especially if November’s Consumer Price Index (CPI) numbers to be published on Tuesday, the day before the FOMC meeting, prove to be high. A high CPI indicates to the Fed that they have work to do to bring down inflation, and raising interest rate targets is the usual tool of choice for central bankers.
As the Fed tries to bring inflation down to its stated goal of 2%, continued rate hikes remain likely, although recent statements from the Fed indicate that the rate of increases may continue to taper (decline) over time.
It is important to remember that the market for crypto assets likely already takes expected rate hikes into account, and these expectations are likely already reflected in digital asset prices even now. And as crypto assets are still considered risk-on, this manifests itself in downward price pressure. Whether stronger upward price pressure from elsewhere will be successful in countering downward pressure from the Fed in a price tug-of-war remains to be seen.
Congresswoman Maxine Waters (D) and Congressman Patrick McHenry (R) have requested Sam Bankman-Fried (SBF) to testify to the US House Committee on Financial Services on Tuesday, December 13th.
In what looks to be something of a Madoff-Theranos-Mt. Gox cocktail mix, regulators, investors, retail customers and the like all scramble to make sense of the FTX collapse and Sam Bankman-Fried himself. But even beyond FTX’s bankruptcy and (to say the least) sloppy business practices, the matter remains particularly complicated in that SBF had a cozy relationship with regulators and policymakers.
In the recent US midterm elections, SBF was the second largest donor to the Democratic Party, second only to George Soros, and was the sixth largest donor overall (between Dems and Reps). This brings about questions about possible special treatment for any wrongdoing.
In the immediate aftermath of FTX, the market now struggles as trust in centralized entities declines. (Just last week, we covered how centralized exchanges were working to prove their reserves to customers). But, interestingly, there is at least one area of the industry that seems to be doing well (as, perhaps, they should be). Both Ledger and Trezor hardware wallet manufacturers have reported unprecedented spikes in sales as the industry learns the importance of self-custody.
13 December
Sam Bankman-Fried requested by Congresswoman Maxine Waters (D) and Congressman Patrick McHenry (R) to testify to the US House Committee on Financial Services.
13 December
The US Bureau of Labor Statistics will release its Consumer Price Index (CPI) numbers for the month of November. This is a key indicator the Fed will look to when it considers even further rate hikes going forward.
14 December
The Federal Open Market Committee (FOMC) will be meeting. Possible additional interest rate hikes will be announced. Markets are presently leaning towards a fifth interest rate hike but to pivot away from the previous four consecutive 75 bps hikes to “only” 50 bps.
Another week of only moderate (single-digit) price changes for Brave New Coin’s top 10 digital assets by market cap — albeit with minor recoveries from Ether (ETH, up 3.5%) and Bitcoin (BTC, up 2.9%). XRP suffered a minor 3.9% decline in price following Coinbase Wallet’s announcement on Tuesday of last week that it would remove support for XRP, citing “low activity”. BNB dropped by 7.3% following an exploit of a derivative tied to it, aBNBc, was exploited and dumped aggressively. aBNBc is tied to the ANKR protocol, which suffered heavy losses as a result of the exploit.
With FTX occupying the lion’s share of industry headlines, one could almost be forgiven for failing to notice that Bitcoin miners are operating under the highest sell pressure they have endured for about five years. Additionally, the November selloff turned out to be the fourth largest realized loss event in Bitcoin’s history, and as it turns out, the net position change of shrimps (holders with fewer than 1 BTC) nearly ‘hockey-sticked’ since the FTX implosion. In other words, smaller players are buying the dip at unprecedented levels.
A curated weekly summary of forward-focused crypto news that matters. This week, Binance begins publishing Proof-of-Reserves, another centralized exchange is breached, and the trend of BTC being moved off exchanges into self-custody continues.
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A curated weekly summary of forward-focused crypto news that matters. This week, the FTX collapse drives the price of Bitcoin to new lows, FTX contagion causes connected crypto firms to tremble, and assets flow out of exchanges as traders lean towards self-custody.
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A curated weekly summary of forward-focused crypto news that matters. This week, the US CPI print for September comes in hot as prices in the country soar, Bitcoin difficulty hits a new all-time high, and Cardano continues work on scaling solutions.
