Daily News | Cooler-Than-Expected US CPI Ignited TradFi Rally, But Crypto Loses Momentum Shortly

Fundamental & Technical Outlook:

Macro

Good morning, today is Friday, Nov. 11, 2022.

TL;DR

🔹 US Consumer prices cooled by more than expected in October at 7.7% vs. 8.2% a month ago, sending US equities upward with the DJIA (+3.70), SPX (+5.54%) & Nasdaq (+7.35) all closing the day with above-average gains.

🔹 At the same time, cryptocurrency markets were rescued by TradFi’s rally with Bitcoin and Ether rising to a height of +13.36% and +19.35%, respectively, before losing some momentum at 21:00 UTC.

🔹 SBF (Sam Bankman-Fried) said he’s closing Alameda Research, the trading house at the center of speculation while being investigated by the SEC for potentially mishandling customer funds. First, the Bahamas Securities Commission announced it has frozen the assets of FTX, then Genesis said it has about $175 million in locked funds on the platform.

🔹 USDT was down 0.6% ($0.9955) on several bourses, down 0.6% from its $1 peg. TRX Momentarily Surges 4,000% on FTX after Justin Sun emerges on Twitter as a beacon of hope for FTX users. Some Ledger users weren’t able to process withdrawals using Ledger Live during this time.

🔹 The topic of the Day: CZ decided to abandon the acquisition. Will SBF go bankrupt?

🔹 Happenings of the Week:

- The biggest known whale is now the U.S. government who holds at least 214,000 BTC.
- Some miners ave reached shutdown coin prices based on a $0.06/kWh electricity rate and based on current mining difficulty.
- Sequoia Capital: The return on our investment in FTX has gone to zero.

💰 . . .


Bitcoin (BTC) 24-Hour Change: 17,029 (+4.21%)

Ether (ETH) 24-Hour Change: 1,234 (+5.23%)

During early Friday session, the crypto markets are starting to lose steam after US inflation report showed monetary tightening is working in the nation, sending US equities higher Thursday, in turn giving the crypto markets a much-needed bullish rally. Later in the day, investors will look to UK Q3 GDP and US Consumer Confidence data in hopes of gauging when the Fed rate hikes will begin to stop.

US CPI

From commodities to bonds and stocks, just about everything jumped Thursday after softer-than-expected data (Previous: 8.2%) on October’s CPI (Actual: 7.7%) sparked speculation that the Federal Reserve will be able to slow down its aggressive monetary tightening.

Economists generally expect goods prices to continue to soften as a result of shifting consumer preferences, improving supply chains and lower commodity prices. However, services may keep upward pressure on wages and inflation for the foreseeable future.

FTX

The macro front may have offered a relief rally but crypto is amid one of its biggest game-changing events in history after Terra’s collapse and Ethererum PoS Merge. As the latest events are still unfolding, more updates will be provided in later updates.

- Crypto Lender BlockFi Pauses Withdrawals (13:45 UTC)
- FTX US Legal Chief Tells Working to Preserve Platform (12:00 UTC)
- Broker Genesis’ Derivatives Unit Has About $175 Million on FTX Platform (10:00 UTC)
- Bahamas Seeks to Place FTX Into Receivership (09:00 UTC)
- Ontario Teachers’ Pension Plan Says Investment in FTX Entities Was $95 million (07:00 UTC)
- FTX US Says Trading May Be Halted in a Few Days (05:00 UTC)
- Justin Sun’s Token Jumps After Offer of Help to FTX (04:00 UTC)
- SBF (Sam Bankman-Fried) Shuts Down Alameda Research (03:40 UTC)

5️⃣ . . .


Friday

15:00 UTC

UK GDP Growth Rate

Actual: Awaiting data; Consensus: 2.1%; Previous: 4.4%

After a round of lowering CPI data reported by China, Canada, and the US, which boosted a global outlook, will the UK break the trend? The GDP report will tell us which sectors are lacking in the nation and how their supply chains may affect certain commodities or equities on a global scale, which in turn would give us some clue as to where crypto may be headed.

- In Q2, the British GDP grew 4.4% YoY, higher than an initial 2.9% rise.
- Still, it is the smallest growth rate in five quarters.
- The level of real GDP is now estimated to be 0.2% below where it was pre-coronavirus at Q4 2019, downwardly revised from previous estimates of 0.6% above.

23:00 UTC

Michigan Consumer Sentiment

Actual: Awaiting data; Consensus: 59.5%; Previous: 59.9%

A stronger sentiment report would support the CPI data which in turn would push TradFi higher, effecting prolonging the crypto bull rally.

- During October, the consumer sentiment survey conducted by the University of Michigan was revised higher to 59.9 in October of 2022 from a preliminary of 59.8.
- The median expected year-ahead inflation rate rose to 5.0%, with increases reported across age, income, and education.
- Uncertainty over inflation expectations remains elevated, indicating that inflation expectations are likely to remain unstable in the months ahead.

4️⃣ . . .


Thursday

13:30 UTC

US Inflation Rate (Consumer Price Index)

Actual: 7.7% ; Consensus: 8.0%; Previous: 8.2%

At 7.7% versus 8.2% the month before, annual inflation in October was the slowest since January -- before the start of Russia’s war in Ukraine that triggered a worldwide surge in commodities and pump prices.

The Fed is looking closer to moderating aggressive interest-rate increases after welcome news on inflation, with four officials backing a downshift even as they stressed that monetary policy needs to stay tight.

- The annual inflation rate in the US slowed for a 4th month to 7.7% in October, the lowest since January, and below forecasts of 8%. It compares with 8.2% in September.
- Energy cost increased 17.6%, below 19.8% in September, due to gasoline (17.5% vs 18.2%) and electricity (14.1% vs 15.5%). A slowdown was also seen in food (10.9% vs 11.2%) and used cars and trucks (2% vs 7.2%).
- Still, figures continue to point to strong inflationary pressures and a broad price increase across the economy, mainly in the services sector while prices of goods have benefited from some improvements in supply chains.

💡. . .


Today's Markets

BTC -2.4%; Ether +2.9%.

Asia: Japan +2.62%; Hong Kong +5.19%; China +1.26%; India -0.71%.

Europe: London +2.07%; Paris +1.96%; Frankfurt +3.51%.

Futures at 02:00, Dow +0.06%; S&P +0.02%; Nasdaq +0.06%.

US Two-year Treasury Yield down 24bps at 4.330%.

US Ten-year Treasury Yield down 27bps flat at 3.811%.

UK Ten-year Government Bonds down 16bps at 3.286%.

US Dollar Index -2.19% at 107.90.

FX at 02:00: GBP: -0.44%; EUR: -0.24%; JPY: +1.00%; CNY: -0.07%.

Gold -0.41%; Brent Crude +1.10%.

Remaining catalyst on Nov. 11:

- Friday: UK Q3 GDP, November Michigan Consumer Sentiment

Catalyst next week (Nov. 14 - 18)
- Tuesday: Japan Q3 GDP, UK Unemployment, US PPI (Producer Price Index)
- Wednesday: UK CPI, Canada CPI, US Retail Sales
- Thursday: Japan’s Balance of Trade
- Friday: Japan CPI, UK Retail Sales,

🏦 . . .


🟠 BTC

BTC Weekly timeframe:

- Major Level: 13,965 (Monthly High of Jun. 2019)
- Closest support zone: 17,715 - 17,085
- Key resistance level: 17,450 - 18,755


Analysis as of Nov. 11 - 13 Session.

BTC Weekly Resistance zones
17,450 - 18,755
19,340 - 19,720

BTC Weekly Support zones
17,715 - 17,085
16,880 - 15,275

BTC Daily Timeframe:
Closest support zone: 16,875 - 16,280
Closest resistance zone: 17,085 - 17,545
Key Level: 15,952 (Weekly Close Between Nov. 02 - 09, 2020)


Nov. 11 03:46 UTC Update:
Bitcoin (BTC) was trading at $16,989, or +3.96% in a 24hr period.

BTC Daily Resistance zones
17,085 - 17,545
18,215 - 18,915

BTC Daily Support zones
16,875 - 16,280
15,535 - 15,310

🌐 . . .


🔵 ETH
Weekly Timeframe

Major Level - 757 (Monthly High of Dec. 2020)
Closest support zone: 1,150 - 1,100
Key resistance zone: 1,275 - 1,415


Analysis as of Nov. 11 - Nov. 13 Session.

ETH Weekly Resistance zones
1,275 - 1,415
1,435 - 1,560
1,500 - 2,090

ETH Weekly Support zones
1,150 - 1,100
1,060 - 990
907 - 698

ETH Daily Timeframe
Closest support zone: 1,245 - 1,220
Closest resistance zone: 1,325 - 1,300
Key Level: 1,346 (Weekly High of Jan. 04 - 10, 2021)


Nov. 11 03:55 UTC Update:
ETH was trading at $1,236, or +4.97% in a 24hr period.

ETH Daily Resistance zones
1,325 - 1,300
1,335 - 1,410
1,420 - 1,510

ETH Daily Support zones
1,245 - 1,220
1,175 - 1,120
1,070 - 1,060


📌 Today's topic: CPI below expectations, broader markets rising, SBF seeks over $9 billion in financing

U.S. CPI data for October finally landed, with 7.7% CPI data boosting market sentiment and cryptocurrency prices starting to climb after the asset plunged for two consecutive days, with Bitcoin once falling below $16,000 per piece. Bitcoin rose more than 12%, reaching a high of $18,188.20 in nine hours and is now at $17,213.2; ethereum followed with a rise of more than 21% and is now at $1,253.14.

Steve McClurg, chief investment officer at Valkyrie, said, "This is a relief rally after the previous massive sell-off, which rallied along with all other risk assets after weaker-than-expected CPI data and market speculation that the Federal Reserve may slow down its rate hikes."

Bitcoin's positive correlation with U.S. stocks, which hit an all-time high in late September, is now declining, but stocks also rallied more sharply after the CPI data was released.

Callie Cox, U.S. investment analyst at eToro, said, "The sector is changing before our eyes, and the high interest rate environment will impact the cryptocurrency market. But we know that the asset is moving towards a decentralized future and blockchain technology has proven to be very useful."

It's worth noting that despite today's rally, bitcoin prices are still more than 70% below the all-time highs set a year ago. Investors are still under the cloud of the FTX debacle.

In addition, SBF had sold its stake in the company to employees at a 50% discount this spring, The Block reported, citing sources familiar with the matter. SBF had previously assured the public that the U.S. branch of FTX was in good financial health. FTX US was a separate entity with independent management, technical infrastructure and licensing, and that the exchange continued to operate normally operations.

The SBF is still seeking to raise up to $9.4 billion in bailout financing for FTX.

SBF is in discussions to raise $1 billion each from BofA founder Sun Yuchen, OKX and Tether for a total of $3 billion; $2 billion from various investment funds; and the remainder from other investors. One of the investors currently in talks with FTX includes Daniel Loeb's hedge fund Third Point.

The source also said that SBF refused to file for bankruptcy and refused to appoint restructuring advisors. The Tether CTO later tweeted that Tether does not have any plans to invest or borrow from FTX and Alameda.

👁️ . . .



Happenings of The Week (Nov. 06 - Nov. 11):

📣 Notables
🔹 The U.S. White House has been informed of the FTX storm and will continue to monitor the situation. However, the White House has declined to make any recommendations on regulation at this time.

🔹 Russia's central bank released a report aimed at integrating crypto assets into the financial system.

🔹 South Korea's political committee will discuss the amendment to the Basic Act on Digital Assets on November 15.

🔹 On November 7, European Central Bank President Christine Lagarde said that the European Commission will "soon" present legislative proposals on the digital euro.

🔹 RBI deputy governor: Stablecoin can be completely replaced by central bank digital currency.

🔹China's Hengqin Guangdong-Macao Deep Cooperation Zone jointly issued a notice on ten taxation measures to support the development of metaverse industry.

📣 Nov. 11
🔹 FTX does business with over 53 auditors, payments and insurance companies, including Deloitte, Stripe and others.

🔹 Bitcoin's third-largest giant whale added 2,677 BTC to its holdings yesterday.

🔹 Japan's Financial Services Agency has ordered the suspension of FTX Japan's operations and has developed a "written business improvement plan".

🔹 Aptos has entered into a partnership with Google Cloud, which will support some of its authentication nodes and other services. the Aptos blockchain will also be indexed and added to Google Cloud's BigQuery service. In addition, Google and the Aptos Foundation will launch a gas pedal program and co-host a hackathon next year.

🔹 BlockFi: Due to the FTX incident, the company is unable to conduct business as usual and will suspend withdrawal services.

🔹 Musk: There is a possibility that Twitter will go bankrupt. Musk warned that while he is working to get Twitter's finances under control, there is still a possibility that the platform could go bankrupt. In addition, the U.S. Federal Trade Commission (FTC) said it is "closely monitoring Twitter's latest developments" as the regulator also continues to monitor it in light of the "consent agreement" it signed in 2011 promising to protect user data.

📣 Nov. 10
🔹 Arthur Hayes: The Last Drop is Coming. Arthur Hayes, the founder of BitMEX, published a blog post discussing the FTX event and its impact on the market, in which he reviewed the S&P's trend after the 2008 financial crisis. is coming. At the same time, Arthur points out that FTX is not the first, but will not be the last trading platform to crash.

🔹 JPMorgan: The cryptocurrency industry is undergoing a new round of deleveraging. Nikolaos Panigirtzoglou, managing director of global strategy at JPMorgan Chase, said the cryptocurrency industry is undergoing a new round of deleveraging as problems with FTX and Alameda Research surface, and the number of entities with stronger balance sheets that can rescue low capital and high leverage is decreasing, and a cryptocurrency market collapse will inevitably reignite regulatory issues and push more crypto trading infrastructure providers to improve transparency. However, Nikolaos Panigirtzoglou believes that the scale of the new round of cryptocurrency deleveraging should not be as dramatic as the market shocks caused by the Terra/Luna, 3AC and Celsius crashes.

🔹 Zhu Su deduced: Alameda has been acting as a counterparty to FTX users, however, in the LUNA burst, LUNA saw three consecutive days of one-sided selling market, Alameda is likely to have caused huge losses because of the large amount of liquidity provided to FTX.

🔹 Vitalik Buterin: The flaw of effective altruism is that there is no good theory for the effective distribution of "social" capital. Vitalik Buterin, co-founder of Ether, has published a critique of "effective altruism" on social media, pointing out that the biggest problem with effective altruism is that there is no good theory for effectively distributing "social" capital. "Make crazy big bets and keep accumulating wealth because you tell yourself you'll give it away later; if you give out a coin, there's no need to keep some for yourself first, you can just donate it to charity". CZ then replied below the tweet in support, saying "if you need to donate, you can use the top 10 coins".

🔹 CZ said after a phone call with Salvadoran President Nayib Bukele revealed that El Salvador does not have business dealing with FTX.

🔹 USDT in 3pool on Curve is over 80%, heavily skewed

🔹 EOS Network Ventures to Launch $100 Million EOS Ecosystem Fund.

🔹 Sequoia Capital: The return on our investment in FTX has gone to zero.

🔹 bitcoin price has approached the coin price of mainstream mining machines such as Sleipnir M30S and Ant T19.

📣 Nov. 09
🔹The biggest known whale is now the U.S. government who holds at least 214,000 BTC.

🔹Canada's Third Largest Pension Fund, Teachers, May Face Huge Investment Losses Due to FTX Incident.

🔹Mitsubishi UFJ announces entry into the metaverse.

🔹Su Zhu, founder of Three Arrows Capital, resurfaced on Twitter after a long absence, saying that he was lost in the quiet life and the reconstruction of new goals, and was still unsure of how to go about his life's direction.

🔹Crypto regulation bill pushed by SBF may not pass due to the FTX incident after SBF donated $39.2 million to the U.S. midterm elections.

🔹Prominent trader Arthur Hayes said he has bought puts on Bitcoin at $15,000, expiring in March 2023.

🔹 Yuga Labs co-founder Wylie Aronow suggested a permission list that would check wallet addresses and known royalty-respecting smart contracts to maintain creator royalties for new NFT contracts.

📣 Nov. 08
🔹 Animoca Brands announces a new NFT bike project with 3D printing startup Arevo Inc. where each bike will have NFT verification and a matching NFT image.

🔹 CMHK announced that its all-encompassing smart life mobile application MyLink has surpassed 5 million users, and launched MyLink Metaverse Digital Space and developed NFT Free Bazaar.

🔹 Watchmaker Rolex has recently filed trademark applications with the United States Patent and Trademark Office (USPTO) covering NFTs.

🔹Federal Reserve Bank of New York: Cryptocurrencies are no longer the top 10 most frequently cited potential risks.

📣 Nov. 07
🔹Theirsverse Series NFT Rises to #1 on OpenSea Trend.

🔹Musk releases 'Twitter Rules' with emphasis on privacy, authenticity and 5 other key points.

🔹Twitter co-founder and former CEO Jack Dorsey has unfollowed FTX CEO Sam Bankman-Fried (SBF) on Twitter.

🔹Appliance maker LG Electronics is hiring chief technology officers (CTOs) for two divisions, business development and service design, to lead the company's growing Web3 business.

🔹Circle to issue Euro Coin, a euro-stabilized coin, on Solana in early 2023.

📣 Nov. 06
🔹Biden: Twitter is "an institution that spreads lies to the world."

📣 This week’s fundraising activities include but are not limited to:
🔹 Ansible Ventures, an early venture capital company, closed $8 million in funding and will focus on investing in Web3, consumer Internet and SME/MSME.

🔹 The second fund of pi Ventures closed $8 million in funding, pi Ventures will focus on investment in blockchain, artificial intelligence and deep technology.

🔹NFT-based physical product identity company colletID closes $3.5 million funding round with participation from SeventySix Capital and others.

🔹Web3 strategy game creator platform Theia Studios closes $2.4 million in funding with participation from Plum Ventures and others.

🔹Any World, a metaverse AI animation tool development company, closed $7.5 million in funding with participation from Warner Music and others.

🔹Job Protocol, a decentralized recruitment network, has closed a $1.5 million round of funding at a $7.5 million valuation led by Tioga Capital with participation from Portal Ventures and Syndicate One.

🔹South Korean gaming giant NCSoft has invested $15 million in Sui developer Mysten Labs as part of the latter's previous $300 million funding round.

🔹JPMorgan said in a research note that suggest venture capital funds are reluctant to deploy capital in the digital asset space, increasing the likelihood that the current weakness in the crypto market may persist for some time.

🔹 UAE-based digital payment services platform Pyypl closed a $20 million Series B funding round with undisclosed investor information.

🔹 Blockchain startup Assert AI closes $2 million funding round with participation from Quona Capital and others.

📣 This week’s onchain criminal activities include but are not limited to:

🔹 Monday, U.S. attorneys announced that James Zhong pleaded guilty to wire fraud charges for illegally obtaining bitcoins from the Silk Road darknet in 2012. In November 2021, law enforcement officials seized over 50,676 bitcoins, then valued at more than $3.36 billion, from Zhong's home. The case is set for sentencing on February 22, 2023, and the DOJ says it carries a maximum sentence of 20 years in prison, with the exact length of the sentence set by Congress.



Author: Gate.io Researcher Peter L. & Byron B.
This article represents only the researcher's views and does not constitute any investment advice.
Gate.io reserves all rights to this article. Reposting the article will be permitted provided Gate.io is referenced.
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