Monday, 6 February 2023

Market Summary

Market Summary 6 February 2023

Bitcoin Price: US$ 22,932.91 (-1.69%)
Ethereum Price: US$ 1,629.02 (-2.24%) 


Markets Setup for Rollercoaster Ride in 2023

  • Recent increases in global liquidity have been a driving factor in this year’s market rally.
  • There is evidence supporting potential trend continuation in the coming weeks, as there are still multiple headwinds that could drag on markets as we move closer to late Q1/Q2.
  • Funding liquidity will remain a key risk throughout the year, especially for high-growth industries (like crypto). We’ve noted that the move to a more expansionary global liquidity environment is the most important catalyst for a renewed and sustainable bull run in our view.
  • The global liquidity cycle showed signs of bottoming back in Q4, which coincided with the October lows.
  • The effects of this reversal on financial markets usually lags anywhere from 6-18 months, which is why we’re more bullish on 2H 2023 and 2024-2025.


Institutional Traders Shifting Attention from Blockchain to AI: JP Morgan

  • More than half of the institutional traders surveyed by global financial services giant JP Morgan said that artificial intelligence and machine learning will be the most influential technology in shaping the future of trading over the next three years—cited four times more often than blockchain and distributed ledger technology.
  • JP Morgan’s e-Trading Edit report is now in its seventh year, the latest report drawn from a January survey of 835 institutional traders in 60 global markets. The annual assessment of trader sentiment spans several asset classes and is intended to reveal “upcoming trends and the most hotly debated topics.”
  • The tumultuous bear market in crypto—coupled with the recent consumer and commercial hype over accessible AI technology like ChatGPT—seems to have shifted the outlook of financial industry professionals. Last year, blockchain and distributed ledger technology tied for second with AI and machine learning with 25 percent of respondents declaring them key to the future. Mobile trading applications came in first, with 29 percent.
  • Now, AI dwarfs every other major category of technology, its 53% citation rate far and away ahead of API integration (14%) and blockchain (12%). The top 2022 technology, mobile apps, fell to 7%, along with quantum computing and natural language processing.
  • Tackling crypto specifically, JP Morgan found that 72% of traders “have no plans to trade crypto [or] digital coins,” with 14% predicting they plan to trade within five years.
  • Even so, respondents clearly felt that other players were bullish on the space.
  • “Crypto and digital coins, commodities, and credit are predicted to have the biggest increases in electronic trading volumes over the next year,” the report notes, with participants predicting 64 percent of their activity will be in the crypto space by 2024.


FTX Wants Politicians, PACs to Return Donations—And May Sue to Recover Funds

  • FTX told the political world Sunday the bankrupt crypto exchange wants its money back, after millions of dollars flowed into the hands of candidates and action committees under the direction of founder and former CEO Sam Bankman-Fried or others in his regime.
  • FTX’s newly-appointed CEO John John Jay Ray III, who was installed to oversee the exchange’s Chapter 11 bankruptcy after it collapsed in November, had previously said that donations linked to the exchange should be returned.
  • But Sunday’s statement was firmer, requesting “contributions or other payments” to be returned by Feb. 28, and echoing a previous warning that the company would go after funds not returned voluntarily through legal means “with interest accruing from the date any action is commenced.”
  • “The FTX Debtors are sending confidential messages to political figures, political action funds, and other recipients of contributions or other payments,” the press release states.
  • The company also reiterated that recipients who’ve donated funds connected to FTX to third parties like charities are not off the hook, and that the company will still seek to recover the money regardless.


FTM Soars 35% on the Week as Fantom Preps Stablecoin Relaunch

  • Over the past week, FTM has soared roughly 35%. Chatter around a new stablecoin for the project alongside a host of new updates have likely been the key motors behind the latest move.
  • These developments also suggest that DeFi developer Andre Cronje’s return to crypto is much more than just a phase.
  • After saying goodbye to the game (again) last March, then returning in November, it now looks like the mind behind Yearn Finance and Keep3r (and numerous other high-profile projects) is rolling up his sleeves and getting back to work.
  • He’s long been associated with the speedy layer-1 blockchain called Fantom, wearing the title of co-founder and architect of the Fantom Foundation, and now it appears he’s re-building the network’s native stablecoin, fUSD.
  • It’s currently dire straits for the dollar-pegged coin, which currently trades at $0.86 and hit a low of $0.22 back in November.
  • The token’s mechanics, which let users mint the stablecoin using an overcollateralized amount of Fantom’s native FTM token, fell apart and have essentially been stuck that way as the community has placed little trust in fUSD’s revival.


Jack Dorsey-Backed Decentralized Twitter Alternative Damus Banned in China

  • It was a good run: just under 48 hours. 
  • That’s how long the Chinese government allowed Damus, a decentralized, Apple-native Twitter alternative backed by Jack Dorsey, to live on the country’s version of Apple’s App Store. On Thursday, Damus announced the Cyberspace Administration of China (CAC) had demanded the app’s removal, due to alleged violation of national speech laws. Apple immediately complied with the request.
  • Damus is just one of several projects currently being built atop Nostr, a decentralized social media protocol favored by Dorsey. Last year, the Twitter co-founder donated 14 BTC (about $327,000 at writing) to fund Nostr’s development. The app also integrates the Bitcoin Lightning Network for payments.
  • Nostr is an open-source protocol based on cryptographic keypairs that aims to become the foundation of a global, decentralized, censorship-resistant social network. Anyone can build an app on top of Nostr; on such apps, users can’t be banned, and posts can’t be censored, as clients are run by all users. Nostr developers created Apple-compatible Twitter analog Damus as a proof of concept of Nostr’s potential. Other projects built atop the protocol include would-be Telegram replacement Anigma and chess app Jester. 

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