Monday, 1 August 2022

Market Summary

Market Summary 1 August 2022

Bitcoin Price: US$ 23,293.32 (-1.48%)
Ethereum Price: US$ 1,678.12 (-1.11%) 


Not-So-Bad News is Good News

  • Earlier this week, the White House found itself at the center of drama (yet again) when people noticed a surprising update to the website. The screenshot below quickly made its rounds as it became clear the White House was trying to give the market an early warning of today’s GDP data, which confirmed a second consecutive quarter of negative growth (the actual print was even worse than expected despite the WH hint).
  • Traditionally speaking, many have used these GDP contractions to signal the onset of an economic recession. The White House downplayed these signals, stating that this is “neither the official definition nor the way economists evaluate the state of the business cycle”. And that’s fair.
  • The definition used by US government agencies when determining economic conditions comes from the National Bureau of Economic Research (NBER). NBER defines a recession as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.”
  • The White House provided additional clarity on some of the economic activity that proves the US is not actually in a recession, including the labor market, consumer & business spending, industrial production, and incomes. This clarification more accurately represents a “holistic view” of the economy.
  • On Wednesday, the FOMC raised interest rates another 75 bps, as expected. Markets rallied almost immediately after the FOMC statement was released, and maintained those gains throughout much of Powell’s press conference. Thursday brought us Q2 GDP numbers, which came in even worse than expected (-0.9% vs. 0.2%). After a brief bout of downside volatility, markets continued to climb with crypto out in front leading the charge.
  • This is perhaps indicative of shifting sentiment as not-as-bad news is actually received as goods news; we tend to see this type of market behavior towards the latter stages of a bear market.
  • Continue on Delphi Digital…


Bitcoin due ‘one of greatest bull markets’ as July gains circle 20%

  • Bitcoin (BTC) spoofed a breakout to fresh six-week highs into July 31 as a showdown for both the weekly and monthly close drew near.
  • Data from Cointelegraph Markets Pro and TradingView showed BTC/USD canceling out all its gains from early in the weekend, dropping from $24,670 to $23,555 in hours.
  • The resulting chart structure was all too familiar to long-term market participants, creating a “Bart Simpson” shape on hourly timeframes.
  • Liquidations nonetheless remained manageable, with the cross-crypto tally totaling $150 million in the 24 hours to the time of writing, according to data from analytics resource Coinglass — less than on previous days.
  • For popular trader and analyst Rekt Capital, there was no reason to believe that the coming weekly candle close would confirm that Bitcoin had reestablished a key trendline as support after weeks of failure.
  • Eyeing potential performance in the second half of 2022, Mike McGlone, senior commodity strategist at Bloomberg Intelligence, left little doubt as to how Bitcoin in particular would fare.
  • Hints that the Federal Reserve would address rate hikes on a “meeting by meeting basis,” as per Chair Jerome Powell this week, “may mark the pivot for #Bitcoin to resume its tendency to outperform most assets,” he argued on social media.
  • “July marked the steepest discount in Bitcoin history to its 100-and 200-week moving averages, with implications for it to recover,” he added about the 200-week trendline:
  • “I see risk vs. reward tilted favorably for one of the greatest bull markets in history.”


Hong Kong university to inaugurate mixed reality classroom in Metaverse

  • The Hong Kong University of Science and Technology (HKUST) announced to host the launch party of a virtual reality classroom over on the Metaverse on September 1. The launch marks the commencement of HKUST’s plan to promote immersive learning by building a virtual campus in the Metaverse, to be called MetaHKUST.
  • An academic from the HKUST institution told South China Morning Post that the launch of the mixed reality classroom represents the opening of a new campus in the city of Guangzhou, Hong Kong. Pan Hui, chair professor of computational media and arts at the Guangzhou campus, added that:
  • “A lot of guests might be overseas and can’t attend [the opening], so we will host it in the metaverse.”
  • By building MetaHKUST, the institution plans to create a learning environment that virtually connects the two campuses — in Hong Kong and Guangzhou. By virtually connecting the campuses, HKUST hopes to help students overcome geographical constraints when attending classes.


Historically accurate Bitcoin metric exits buy zone in ‘unprecedented’ 2022 bear market

  • Bitcoin (BTC) is enjoying what some are calling a bear market rally and has gained 20% in July, but price action is still confusing analysts.
  • As the July monthly close approaches, the Puell Multiple has left its bottom zone, leading to hopes that the worst of the losses may be in the past.
  • The Puell Multiple is one of the best-known on-chain Bitcoin metrics. It measures the value of mined Bitcoin on a given day compared to the value of those mined in the past 365 days.
  • After hitting levels that traditionally accompany macro price bottoms, the Puell Multiple is now aiming higher — something traditionally seen at the start of macro price uptrends.
  • “Based on historical data, the breakout from this zone was accompanied by gaining bullish momentum in the price chart,” Grizzly, a contributor at on-chain analytics platform CryptoQuant, wrote in one of the firm’s ”Quicktake” market updates on July 25.
  • The Multiple is not the only signal flashing green in current conditions. As Cointelegraph reported, accumulation trends among hodlers are also suggesting that the macro bottom is already in.
  • As sentiment exits the “fear” zone, market watchers are pointing to unique phenomena which continue to make the 2022 bear market extremely difficult to predict with any certainty.


Dubai permits full operation to FTX subsidiary FZE via first MVP license

  • On Friday, FZE, a subsidiary of crypto exchange FTX, was awarded Dubai’s first Minimal Viable Product (MVP) license, allowing full operation of the exchange in the region. 
  • Dubai’s Virtual Asset Regulatory Authority (VARA) issued the operating license to FZE under the MVP program, which according to Helal Saeed Almarri, the director general of Dubai WTC Authority, is designed for secure and sustainable growth in Dubai. For now, the FTX FZE exchange’s operations are in the test phase and will be focused on providing various crypto services.
  • According to FTX CEO Sam Bankman-Fried, the newly licensed exchange will operate under a model incorporating regulatory oversight and Financial Action Task Force (FATF) compliance controls catering to Tier 1 international financial markets. In addition, Almarri revealed that the exchange’s operations will be used as a regulatory trial for future commercial services using virtual assets.
  • “The MVP Phase, exclusive to select, responsible international players like FTX, will allow VARA to prudently structure guidelines and risk mitigation levers for secure commercial operations,” said Almarri highlighting the region’s willingness for extensive crypto adoption.


KuCoin crypto exchange debuts USDT-dominated NFT ETF

  • Seychelles-headquartered cryptocurrency exchange KuCoin has launched an exchange-traded fund (ETF) tied to major nonfungible token (NFT) assets like Bored Ape Yacht Club (BAYC).
  • KuCoin’s NFT ETF Trading Zone went live on Friday, the firm announced. The new investment product is launched in collaboration with NFT infrastructure provider Fracton Protocol.
  • The KuCoin NFT ETF is a Tether (USDT)-dominated product that marks particular underlying NFT assets like Bored Ape Yacht Club. BAYC is one of five NFT ETFs that KuCoin is launching. Trading under the symbol hiBAYC, the asset is an ERC-20 token representing 1/1,000,000 ownership of the target BAYC in the BAYC meta-swap of Fracton Protocol.
  • The ETF aims to increase liquidity as it enables exposure to NFTs via the USDT stablecoin instead of Ether (ETH). It also eliminates the risks and concerns around managing NFT infrastructure elements like wallets, smart contracts and marketplaces like OpenSea.
  • In addition to hiBAYC, the investment covers CryptoPunks (hiPUNKS), Koda NFTs (hiKODA), hiSAND33 and hiENS4. Starting with hiBAYC on Friday, the investment product is scheduled to list hiPUNKS on Aug. 4. Listings for hiKODA, hiSAND33 and hiENS4 will be announced at a later date, the exchange said.


Ethereum will outpace Visa with zkEVM Rollups, says Polygon co-founder

  • zkEVM Rollups, a new scaling solution for Ethereum, will allow the smart contract protocol to outpace Visa in terms of transaction throughput, said Polygon co-founder Mihailo Bjelic in a recent interview with Cointelegraph. 
  • Polygon recently claimed to be the first to implement a zkEVM scaling solution, which aims at reducing Ethereum’s transaction costs and improving its throughput. This layer-2 protocol can bundle together several transactions and then relay them to the Ethereum network as a single transaction.
  • The solution, according to Bjelic, represents the Holy Grail of Web3 as it offers security, scalability and full compatibility with Ethereum, which means developers won’t have to learn a new programing language to work with it.
  •  “When you launch a scaling solution, you ideally want to preserve that developer experience. Otherwise, there will be a lot of friction,” explained Bjelic. 
  • According to Sandeep Nailwal, Polygon’s other co-founder, this solution will slice Ethereum fees by 90% and increase transaction throughput to 40–50 transactions per second.
  • As Bjelic pointed out, if further upgraded, ZkEVM Rollups could one day handle thousands of transactions per second, thus outpacing mainstream payment systems like Visa.


Semantics? Analysts unpack ‘technical recession’ as crypto markets recover

  • Data from the United States commerce department suggests America has entered a technical recession, but market analysts have highlighted key metrics that suggest investors are optimistic.
  • The American economy shrunk for the second consecutive quarter, according to government data released on Thursday, fitting the criteria for a technical recession. The Biden Administration maintains that the U.S. is not in a recession, highlighting low unemployment rates and other metrics that counter the argument.
  • Mati Greenspan, founder & CEO of Quantum Economics, addressed the topic in his latest QE newsletter, noting a paradoxical effect between the GDP drop and a surge in stocks and other risk assets.
  • He attributed this move to the U.S. Federal Reserve’s decision to raise interest rates by 0.75%, which saw cryptocurrency markets outperform stocks, with Ethere (ETH) surging 5% immediately after the announcement.
  • Greenspan conceded that the current unemployment rate was “extremely low” when compared to other periods of recession but was not convinced that this was enough to prove that the U.S. economy has not receded:
  • “For a President to insist there’s no recession when the technical definition is met does make sense from a political standpoint. Better to allow people to argue semantics than to admit you’ve made the economy shrink.”

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