Daily News | US and UK Reported In-Line Data, TradFi Rallied but Cryptos are Losing Momentum

Fundamental & Technical Outlook:

Good morning, today is Wednesday, Nov. 16, 2022.

TL;DR

🔹 US PPI came in lower than expected while UK Q3 GDP was in-line with expectations, further adding signs to a recovering global economy and bolstering bullish sentiment.

🔹 Wednesday: Investors look to UK and Canada’s inflation rate and US retail sales to gauge the Fed’s reaction and subsequent rate hike adjustments.

🔹 BTC’s correlation with gold is at -0.81, down from 0.08 a week ago. At the same time, BTC’s correlation with the dollar is at 0.69, up from -0.66 a week ago. Correlations with equity indices are also in the negative zone. A positive correlation implies the same movement while an inverse correlation means the underlying assets move in opposite directions.

🔹 The topic of the Day: SBF Hasn't Given Up on FTX, Still Seeking Over $10 Billion in Emergency Financing

🔹 Happenings of the Week: Crypto lender BlockFi preps for possible bankruptcy; On-chain data shows investors are moving assets away from exchanges and some whales increased their distribution rate; CZ proposes six requirements for centralized exchanges to follow…

💰 . . .

Bitcoin (BTC) 24-Hour Change: 16,808 (+1.15%)

Ether (ETH) 24-Hour Change: 1,256 (+1.05%)

Two of the largest coins by market cap recouped more gains on Tuesday as bullish sentiment picks up across TradFi during the latest development at the G20 summit and both the US and UK reported in-line economic data that further calmed the market on the macro front.

Markets appear to be pricing in a best-case scenario of a soft landing and falling inflation triggering a Fed pause. However, these are just a few data points on inflation that need to be sustained. Even if the Fed eventually pauses, it might not be able to prevent a shallow recession.

Meanwhile, the FTX saga continues in the decentralized space as Bloomberg reports FTX.US employees are said to be exploring the sale of its prized asset LedgerX and American and Bahamian authorities have been discussing sending SBF to the US for questioning.

On Wednesday, investors look to UK and Canada’s inflation rate and US retail sales to find any more hints of a slowing recession.

US October PPI

US producer price growth stepped down in October by more than expected in the latest sign that inflationary pressures are beginning to ease.

After peaking in March at 11.7% on an annual basis, producer price growth has moderated amid improving supply chains, softer demand and a weakening in many commodities prices.

The producer price index for final demand advanced 8% from a year ago, the smallest annual gain in more than a year. US equity futures and Treasuries rallied after the report, while the dollar index fell. Crypto markets were also bolstered by positive sentiment.

UK Q3 GDP

On Tuesday, data showed Britain’s job shortages showed no signs of easing in Q3 as more people dropped out of work and wages grew at the fastest pace in over a year.

The unemployment rate remained near four-decade lows at 3.6%, slightly above forecasts for 3.5%. Staff shortages are also pushing up pay, with average weekly earnings excluding bonuses up 5.7% from a year ago.

The figures from the Office for National Statistics underline the case for the central bank to keep raising interest rates. The BOE expects unemployment to climb above 6% over the next three years. However, companies’ immediate response to the downturn may be to freeze hiring rather than actively cut jobs.

Eastern Europe

Economies in the European Union’s east slowed in Q3 as consumers were hit by spiking energy costs triggered by the war in Ukraine and soaring interest rates.

GDP in Poland, the region’s biggest economy, grew 3.5% in the July-to-September period, down from 5.5% in the previous quarter, data showed on Tuesday. Output in Romania and Hungary both slowed to 4% from 5.1% and 6.5% respectively.

Those three, together with the Czech Republic, are heavily dependent on trade with the 19-nation bloc that shares the euro, where the economy is now shrinking and will continue to contract during Q1 of next year, the European Commission’s forecasts showed.

3️⃣ . . .

Wednesday

07:00 UTC

UK Inflation Rate YoY

Actual: Awaiting data; Consensus: 10.7%; Previous: 10.1%

• In September, the annual inflation rate in the UK rose to 10.1% from 9.9% in August, returning to the 40-year high hit in July and surpassing market expectations of a 10% rate.
• The largest contribution to the increase was from food (14.8% vs 13.4% in August), namely oils and fats and dairy products. Consumer costs also grew sharply for housing and utilities (20.2% vs 20%), amid soaring prices for electricity, gas, and home fuels.

13:30 UTC

Canada Inflation Rate YoY

Actual: Awaiting data; Consensus: 6.9%; Previous: 6.9%

• In September, Canada’s annual inflation rate slowed to 6.9% much below the 39-year peak of 8.1% hit in June but slightly above market estimates of 6.8%.
• On the other hand, costs accelerated for food and non-alcoholic beverages (10.3% vs 9.8%), as prices for food purchased at stores rose at the fastest pace since 1981.

US Retail Sales YoY

Actual: Awaiting data; Consensus: 1%; Previous: 0.0%

• In September, Retail sales in the US rose by 8.2 percent year-on-year, easing from an upwardly revised 9.4 percent growth in the previous month.
• It was the smallest increase in retail trade since April, as high inflation and rising borrowing costs hit demand.

2️⃣ . . .

Tuesday

07:00 UTC

UK Unemployment SEP

Actual: 3.6%; Consensus: 3.5%; Previous: 3.5%

• The unemployment rate in the UK edged higher to 3.6% in the three months to September of 2022 from 3.5% in the previous period, which was a new low since 1974. The economic inactivity rate increased to 21.6%, driven by those who are long-term sick, who increased to a record high.
• Employment fell by 52K, twice the market forecast of a 25K drop and the employment rate was 75.5%, largely unchanged on the previous quarter. An increasing number of businesses are now reporting holding back recruitment because of economic pressures.

13:30 UTC

US PPI OCT

Actual: 0.2%; Consensus: 0.4%; Previous: 0.2%

• The Producer Price Index for final demand in the US rose 0.2% month-over-month in October of 2022, the same as a downwardly revised 0.2% increase in September and below market forecasts of 0.4%.
• Goods cost went up 0.6%, the largest advance since a 2.2% rise in June, mainly pushed by a 5.7% jump in gasoline cost. Prices for diesel fuel, fresh and dry vegetables, residential electric power, chicken eggs, and oil field and gas field machinery also advanced.

💡 . . .

Today's Markets

BTC +1.15%; Ether +1.05%.

Asia: Japan -0.76%; Hong Kong -0.95**%**; China +1.64%; India +0.41%.

Europe: London -0.26%; Paris +0.49%; Frankfurt +0.46%.

Futures at 01:30: Dow -0.32%; S&P -0.39%; Nasdaq -0.41%.

US Two-year Treasury Yield down 5bps at 4.332%.

US Ten-year Treasury Yield down 8bps at 3.783%.

UK Ten-year Government down 6bps at 3.281%.

US Dollar Index +0.24% at 106.35.

FX at 01:30: GBP: -0.19%; EUR: -0.10%; JPY: +0.43%; CNY: +0.21%.

**Gold -**0.21%; Brent Crude +0.77%.

Catalysts this week

• 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: 15,530 - 15,275
• Key resistance level: 16,690 - 16,880

Analysis as of Nov. 16 - 20 Session.

BTC Weekly Resistance zones

1. 16,690 - 16,880
2. 17,085 - 17,450
3. 18,090 - 18,750

BTC Weekly Support zones

1. 15,530 - 15,275
2. 14,650 - 14,030
3. 13,965 - 13,455

BTC Daily Timeframe:

• Closest support zone: 16,745 - 16,630
• Closest resistance zone: 17,085 - 17,205
• Key Level: 15,952 (Weekly Close Between Nov. 02 - 09, 2020)

Nov. 16 01:40 UTC Update:

Bitcoin (BTC) was trading at $16,837, or +0.80% in a 24hr period.

BTC Daily Resistance zones

1. 17,085 - 17,205
2. 17,575 - 18,025
3. 18,215 - 18,430

BTC Daily Support zones

1. 16,745 - 16,630
2. 16,280 - 16,010
3. 15,535 - 15,200

🌐 . . .

🔵 ETH

Weekly Timeframe

• Major Level - 757 (Monthly High of Dec. 2020)
• Closest support zone: 1,190 - 1,075
• Key resistance zone: 1,270 - 1,410

Analysis as of Nov. 16 - Nov. 20 Session.

ETH Weekly Resistance zones

1. 1,270 - 1,410
2. 1,500 - 1,575
3. 1,710 - 1,855

ETH Weekly Support zones

1. 1,190 - 1,075
2. 1,045 - 975
3. 910 - 875

ETH Daily Timeframe

• Closest support zone: 1,240 - 1,220
• Closest resistance zone: 1,255 - 1,265
• Key Level: 1,346 (Weekly High of Jan. 04 - 10, 2021)

Nov. 16 01:50 UTC Update:

ETH was trading at $1,258, or -0.08% in a 24hr period.

ETH Daily Resistance zones

1. 1,255 - 1,265
2. 1,300 - 1,325
3. 1,345 - 1,390

ETH Daily Support zones

1. 1,240 - 1,220
2. 1,175 - 1,140
3. 1,120 - 1,060

📌 . . .

📌 Today's topic: SBF Hasn't Given Up on FTX, Still Seeking Over $10 Billion in Emergency Financing

On Nov. 15, the Wall Street Journal reported that FTX founder SBF (Sam Bankman-Fried) is still raising new money after the company declared bankruptcy, according to people familiar with the matter.

Over the weekend, SBF and several other employees went around seeking new commitments from investors, as SBF still feels it can raise enough money to revive itself. SBF and several other employees called around over the weekend seeking commitments from investors to fill a gap of up to $8 billion and repay FTX customers, the person familiar with the matter said.

In total, more than $10 billion in emergency funding is still being sought, and "prospective letters of intent" have been sent to potential investors.

Among these, SBF has provided two options in the letter of intent,

• One is a "traditional investment", divided by the type of investment (equity and conversion, etc.) and size (greater or less than $2.5 billion);
• The other is a so-called "all-together set (AT ), which is similar to a crowdfunding campaign with a minimum target, and involves the launch of an "all-together set" if investors invest a total of $6 billion or more in FTX, but the investors cannot specify any terms of their investment.

Will SBF be able to raise money to get through this?

👁️ . . .

Happenings of The Week (Nov. 11 - Nov. 16):

📣 Notables

🔹 French central banker calls for global cooperative regulation, not allowing the next 'crypto winter' to remain financially unstable.

🔹 U.S. and Indian finance ministers emphasize in meeting: Crypto regulation requires international cooperation.

🔹 U.S. Treasury Secretary Yellen: FTX crash exposes weaknesses in the Crypto industry, the government will regulate the industry under the presidential executive order.

🔹 Hong Kong Financial Secretary: We must prudently promote the development of the virtual asset industry in Hong Kong.

🔹 Russia and Turkey will cooperate to combat crime-related crypto transactions.

🔹 Bahamas Financial Crimes Investigation Bureau has officially intervened in the investigation of the FTX incident.

🔹 Financial Crimes Investigation Bureau in Turkey, Bahamas officially involved in the investigation of the FTX incident.

📣 Nov. 16

🔹 Prominent Lawyer Considers Class Action Lawsuit Against Celebrities Who Promoted FTX. Wall Street ace litigator David Boies is discussing with clients a class-action lawsuit against celebrities who promoted FTX, and it's unclear which celebrities are included in the suit. Other celebrities include basketball star O'Neal, television star Larry David, "Shark Tank" host and businessman Kevin O'Leary, and baseball star David Ortiz, among others. The lawsuit may be similar to a previous class action filed against billionaire Mark Cuban and the Dallas Mavericks, who promoted the bankrupt crypto lender Voyager.

🔹 Crypto lending platform Salt has stopped accessing funds due to the FTX collapse.

🔹 CZ proposes six requirements for centralized exchanges to follow: 1) No risk-taking with customer funds. 2) Never use your own issued tokens as collateral. 3) Share real-time proof of assets. 4) Maintain adequate reserves. 5) Avoid excessive use of leverage. 6) Strengthen and enforce security protocols. As previously reported, CZ said Monday he is working to create an industry organization to work with global regulators. At the same time, he is working to create a recovery fund for projects affected by the FTX.

🔹 Hardware wallet makers Ledger and Trezor sales up sharply. Last Sunday was Ledger's biggest sales day ever, according to Ledger's chief experience officer, and Trezor's analysts say its sales grew exponentially after Nov. 7.

📣 Nov. 15

🔹 Yuga Labs Launches NFT Museum Donation Program, Begins with CryptoPunk #305 to the Institute of Contemporary Art Miami

🔹 Fed's Harker: I think the pace of rate hikes will slow in the coming months.

🔹 Circle now allows partner businesses to accept Apple Pay as a payment method.

🔹 Cryptocurrency balances on centralized trading platforms have fallen to their lowest levels since November 2018.

🔹 The EU may ban privacy tokens like Zcash, Monero and Dash, the draft was circulated to the other 26 EU member states for comment.

🔹 Singer JJ Lin has set his Twitter self-promotion to jjlin.eth

🔹 25% to 40% of crypto hedge funds have direct exposure to FTX or FTT.

🔹 Alameda has used FTX on insider information to hoard tokens on several occasions.

🔹 Digital asset manager Valkyrie lays off 30% of its workforce.

🔹 CFTC Chairman: FTX derivatives business still operating healthy should be credited to government regulation.

🔹 Manchester United debuts official digital collection and launches Web3 community and plans to distribute NFT digital collections to its supporters through a Tezos-based platform.

🔹 Venture capitalist Kevin O'Leary considered bailing out FTX, but was blocked by SEC chairman.

🔹 FTX hackers lost a lot of tokens in a hasty move, but still hold $339 million in digital assets.

📣 Nov. 14

🔹 Musk: Bitcoin will succeed, but may experience a long winter.

🔹 CZ: In the long run, the FTX bankruptcy will have a positive impact on the cryptocurrency industry.

🔹 Vitalik Buterin recently sold 3,000 Ether via Uniswap.

🔹 Chinese National Television (CCTV2 CCTV) financial channel reported "FTX declared bankruptcy.

🔹 Visa terminates its partnership with FTX.

🔹 Bloomberg: Most of FTX's assets have been devalued, and customers may have difficulty recovering most of their deposits.

🔹 Musk abruptly lays off 80% of Twitter's contract workers, 4,400 in total.

📣 Nov. 13

🔹 CZ: In the future, I will be more outspoken about the problems I see in the industry.

🔹 BitCoke says it is suspending coin withdrawals due to an investigation into the head of finance.

🔹 SBF and others have been placed under surveillance by relevant Bahamian agencies and have tried to flee to Dubai.

🔹Fidelity Analyst: FTX Crash May Trigger Institutional Investors to Abandon Cryptocurrency Market Investments.

🔹Forbes: FTX Crash May Spark Wave of Solana Eco-NFT Selling.

📣 Nov. 12

🔹Musk had rejected SBF's $5 billion participation in the Twitter acquisition and questioned its liquidity.

🔹 Twitter will launch a crypto wallet in the near future.

🔹 Vitalik: FTX's fraud is worse than Mt. Gox.

🔹 SoBTC on Solana is down over 77% and can no longer be redeemed.

📣 Nov. 11

🔹 SBF has resigned as CEO of FTX and FTX has filed for bankruptcy in the US.

🔹 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 a "written business improvement plan" in place.

🔹 Aptos enters into a partnership with Google Cloud.

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

🔹Musk: The possibility of Twitter going bankrupt exists.

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

🔹 YAHAHA, Metaverse UGC (User-generated content) platform, has closed a $40 million Series A+ funding round, co-led by Temasek and Alibaba, followed by Sanji Mutual Entertainment, with T&H Capital acting as exclusive financial advisor. YAHAHA will continue to support its community of over 100,000 creators through studio partnerships, gas pedals, global events, Game Jams, and other diversified approaches.

🔹 Web3 game monetization platform PlayEmber closes $2.3 million seed round led by Shima Capital. PlayEmber aims to make it easier to transition game ad revenue from the web2 marketplace to web3 by implementing a Unity-based software development kit for custom monetization solutions. The startup is also backed by the NEAR Foundation and PlayEmber's beta product is now live.

🔹 Web3 native brand engagement platform Kalder closes $3 million pre-seed round with participation from Indigo Fund and others. The Kalder platform, which allows companies and creators to work together to launch campaigns, use the blockchain to track online brand engagement data and provide incentives to on-chain users, will reportedly use the new funding to enhance Web3 brand experience features and scale its team.

🔹 NFT Marketplace Joepegs Closes $5 Million Seed Round Led by FTX Ventures and Avalanche Foundation. The Joepegs team says the FTX Ventures funding arrived in June of this year, before FTX's bankruptcy restructuring. Launched in May, the Joepegs NFT marketplace is said to have quickly grown to become the largest NFT marketplace in the Avalanche ecosystem, with more than $3.4 million in secondary NFT sales and over 12,000 users. Joepegs features license-free, off-chain price storage, filtering, rarity display, and more.

🔹 Ping, a digital payment solution, closed a $15 million seed round with participation from Y Combinator and others. Built on Latamex, a Latin American provider of cryptocurrency and fiat money access, Ping enables any individual, organization or company to create a free international account in US dollars and receive bank transfers, allowing users to trade cryptocurrencies such as Bitcoin.

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

🔹 DeFiAI project got rug pulled, contract deployer profited about $40 million, according to blockchain security audit company Beosin's Beosin EagleEye.

🔹 Crypto security expert (@officer_cia) tweeted that the FTX app should be uninstalled immediately, as the FTX app may now have the potential to leak important information such as private keys.