The US Markets took a dive on Wednesday as the red wave of expected Republican gains in the midterm elections appeared more a slight pink. The news from the crypto sector was bad as Binance is seen increasingly unlikely to follow through on its takeover of FTX.com, and tomorrow we get the upcoming inflation data that will provide clues about the severity of future interest rate hikes.
Whilst Republicans were still favored to win control of the House of Representatives, key races were too close to call, with a better-than-expected showing by Democrats diminishing the prospect of a so-called red wave of Republican gains.
Major indexes added to declines as Treasury yields climbed further after a poor auction of 10-year notes by the U.S. Treasury. Treasury yields reversed and fell later in the day. The 10-year was last at 4.099, while the 2-year was at 4.5816. Traders are split over whether the Fed will raise rates by 50 basis points or 75 basis points in December.
In tech, Meta Platforms bucked the trend lower to rise more than 5% after the social media company detailed plans to cut more than 11,000 jobs or 13% of its workforce. The cost-cutting was welcomed by Wall Street amid frustrations about the company’s ongoing plan to invest in the metaverse.
Binance signed a non-binding agreement on Tuesday to buy FTX’s non-U.S. unit to help cover a “liquidity crunch” at the rival exchange, but the deal was subject to further due diligence.
“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com,” Binance said in a statement.
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Cryptocurrency lender Celsius Network Ltd. filed for Chapter 11 bankruptcy, the latest casualty of a $2 trillion crash that has wiped out some of the industry’s biggest names and exposed hundreds of thousands of individual investors to steep losses.
We can again see the cross-leverage between large crypro-firms, how individuals are at the end of the unsecured creditor queue, and that many will lose their shirts in the largely unregulated and speculative market.
Celsius, which has more than 100,000 creditors, said it took the step to stabilize its business and work out a restructuring for all stakeholders. The filing was made in the Southern District of New York and listed Alameda Research, the trading firm co-founded by crypto billionaire Sam Bankman-Fried, among major creditors.
The platform held about $4.3 billion of assets against $5.5 billion of liabilities as of Wednesday, according to court papers. The company has been trying to obtain new financing from third parties.
Celsius invested about $500 million in Celsius Mining and even prepared it for an initial public offering in May.
“The Mining Center is an essential driver of growth in the debtors’ business and will allow the debtors to expand and more profitably mine Bitcoin.” according to the filing.
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Well, those following my channel over recent years will know that I have been quite skeptical of Crypto wave, and while Crypto has gone through several major drops in its history, this time could be different. I was not impressed with so called celebrities starting spruiking them, including Kim Kardashian, but when financial mainstream started getting involved, my concerned grew. In the US, Fidelity’s plans to offer Bitcoin in 401(k)s – their equivalent of superannuation – could impact an entire generation.
Its worth recalling the sector spiked to around $3 trillion in total assets last November, before plunging to less than $1 trillion, with Bitcoin and a range of altcoins plunging from record highs.
What started this year in crypto markets as a “risk-off” bout of selling fueled by a Federal Reserve suddenly determined to rein in excesses has exposed a web of interconnectedness that looks a little like the tangle of derivatives that brought down the global financial system in 2008. The collapse of the Terra ecosystem — a much-hyped experiment in decentralized finance — began with its algorithmic stablecoin losing its peg to the US dollar, and ended with a bank run that made $40 billion of tokens virtually worthless. Crypto collateral that seemed valuable enough to support loans one day became deeply discounted or illiquid, putting the fates of a previously invincible hedge fund and several high-profile lenders in doubt.
The recent crypto plunge, with Bitcoin down about 70% from its peak, is fueling widespread financial troubles for companies involved in the space. Lenders like Celsius Network, Babel Finance and Vauld have suspended withdrawals, while firms such as Coinbase Global Inc. are cutting jobs. This is what is now being called a crypto winter – but will spring ever come?
Go to the Walk The World Universe at https://walktheworld.com.au/
Digital Finance Analytics (DFA) Blog
This Crypto Winter May Not Turn To Spring! [Podcast]
Well, those following my channel over recent years will know that I have been quite skeptical of Crypto wave, and while Crypto has gone through several major drops in its history, this time could be different. I was not impressed with so called celebrities starting spruiking them, including Kim Kardashian, but when financial mainstream started getting involved, my concerned grew. In the US, Fidelity’s plans to offer Bitcoin in 401(k)s – their equivalent of superannuation – could impact an entire generation.
Its worth recalling the sector spiked to around $3 trillion in total assets last November, before plunging to less than $1 trillion, with Bitcoin and a range of altcoins plunging from record highs.
What started this year in crypto markets as a “risk-off” bout of selling fueled by a Federal Reserve suddenly determined to rein in excesses has exposed a web of interconnectedness that looks a little like the tangle of derivatives that brought down the global financial system in 2008. The collapse of the Terra ecosystem — a much-hyped experiment in decentralized finance — began with its algorithmic stablecoin losing its peg to the US dollar, and ended with a bank run that made $40 billion of tokens virtually worthless. Crypto collateral that seemed valuable enough to support loans one day became deeply discounted or illiquid, putting the fates of a previously invincible hedge fund and several high-profile lenders in doubt.
The recent crypto plunge, with Bitcoin down about 70% from its peak, is fueling widespread financial troubles for companies involved in the space. Lenders like Celsius Network, Babel Finance and Vauld have suspended withdrawals, while firms such as Coinbase Global Inc. are cutting jobs. This is what is now being called a crypto winter – but will spring ever come?
Go to the Walk The World Universe at https://walktheworld.com.au/
The U.K.’s Advertising Standards Authority said last week that it had issued notices to over 50 companies that advertise cryptocurrencies, asking them to review their ads to ensure compliance with existing rules.
The ASA has published several rulings about the advertising of cryptocurrencies which fall within its remit. Ads for cryptocurrencies have been ruled misleading and socially irresponsible and also in breach of rules which apply to ads for financial products.
In Australia, it’s a pretty unregulated field. Grey Yanco, ASIC’s executive director of market supervision said advice on cryptocurrency and digital currency could not be monitored by ASIC due to loopholes caused by cryptocurrency not being registered as a financial product.
He told the ABC the lack of protections were ‘concerning’ for the commission.
‘ASIC is not able to regulate crypto assets that are not financial products. So if you do invest in those products, you’re effectively on your own,’ he said.
And I would add the general advertising standards in Australia provide little or no protection other than advertising shall not be misleading or deceptive or be likely to mislead or deceive and should be clearly distinguishable as an ad.
So I believe the template of the UK reforms should be copied here. And the black hole where ASIC has no role in supervising crypo needs to be closed.
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We already covered the recent market falls in our show yesterday, but there was not time to cover the market movements in Crypto land. I have suggested that Bitcoin for example, being a pure digital play, with no underlying, is more exposed to volatility in times of uncertainty. So while Gold when nowhere, as markets fell, Bitcoin shed a fifth of its value on Saturday thanks to a combination of profit-taking and macro-economic concerns. This triggered nearly a billion dollars worth of selling across cryptocurrencies.
At one stage Bitcoin was 22% down to as low as $41,967.5 during the session, taking total losses for the day to 22%. It subsequently recovering from the biggest drop in crypto since September 7th and is sitting at 49,038 a mere 7% down.
The broad selloff in cryptocurrencies also saw ether, the coin linked to the ethereum blockchain network, plunge more than 10%.
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In today’s show we look at some the latest developments in the digital finance space against the latest economic news.
First American consumers — the U.S. economy’s main engine — showed little hesitation on spending last month despite the fastest inflation in three decades, setting up the economy for a year-end growth spurt. Purchases of goods and services, unadjusted for changes in prices, increased 1.3%, the most since March, the Commerce Department said Wednesday. Even after accounting for higher prices, spending still exceeded projections in a sign that consumers started their holiday shopping early.
Jerome Powell of course has been renominated to lead the Fed. One factor to consider is the potential impact on digital currencies. In fact. Powell appears to deliberately avoid the central bank digital currency (CBDC) hype, despite many other central banks pushing hard for CBDCs. He consistently splashes cold water on that idea. Given the benefits the US gets from the US Dollar as global reserve currency, this perhaps symbolizes a break with globalist interests in favour of American banking interests.
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Digital Finance Analytics (DFA) Blog
In This Inflationary World, Where Are The Digital Chips Falling? [Podcast]
The RBA’s head of payments, Tony Richards, said the value of many cryptocurrencies, which have surged to $US2.6 trillion, could crash when central banks decide to assert control over their monetary systems.
He has warned users and investors in fad-fuelled cryptocurrencies such as bitcoin they risk holding speculative assets with “niche” uses that could lose most of their value.
Go to the Walk The World Universe at https://walktheworld.com.au/
Today’s post is brought to you by Ribbon Property Consultants.
If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.
Buying property, is both challenging and adversarial. The vendor has a professional on their side.
Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.
Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.
Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.
We look at rulings against crypto stablecoin Tether and Bitfinex which once again shows bad corporate behaviour is spilling over into Crypto. Some things never change!
