Daily News | Powell's Hawkish Remarks Spark Global Sell-Off As Crypto Moves Away from the Dollar; MakerDAO Considers US Treasury Investment

2023-03-08, 01:46

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## Crypto Daily Digest: US Market Sell-Off Amidst Powell's Hawkish Stance on Rate Hikes and Crypto Market Shifts Away from the Dollar

Good morning, traders! Let's seize this Wednesday relentlessly and make the most of it! 🚀

Federal Reserve Chair Jerome Powell's recent comments on potential rate hikes have led to a sell-off in the riskier corners of the market, with the S&P 500 dropping below 4,000 or down 1.5%. The Fed indicated it was prepared to quicken the pace of tightening if inflation continued to run hot, with the swap market indicating a half-point hike in March was more likely than a quarter-point move.

Asian stocks are expected to decline after hawkish comments from Fed Chair Powell drove the US dollar higher and rattled risk sentiment. Short-end yields surged, prompting a shift higher in rate-hike bets, with the two-year Treasury yield reaching 5%, the highest level since July 2007. This rate surpassed its 10-year equivalent by a full percentage point for the first time since 1981, a sign of curve inversion that is often seen as a potential recession harbinger. In Australia, the 10-year bond yield rose 2 basis points to 3.7%, while the Aussie held steady after falling more than 2% on Tuesday.

Meanwhile, crypto companies are finding it harder to access dollars to buy digital assets as the network of payment providers shrinks in the US. According to a report by blockchain analytics firm Kaiko, the dominance of the dollar in the crypto market has been waning since the collapse of the FTX exchange, with euro- and stablecoin-denominated <a href="/fr/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> trading pairs gaining traction. The decline of the dollar after FTX’s collapse could be linked to a drop in institutional trading activities, according to the report. The number of new fiat trading pairs listed by exchanges has fallen with the rise of stablecoins, while an unfriendly US regulatory and banking environment could be an opportunity for European markets, the report added.

<a href="/fr/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> dropped to a low of $21,900 but later traded at around $22,250, while ether fell by 0.2% to $1,565. Grayscale's GBTC rose around 9.6% to $12.90, and its ETHE product increased 2.8% to $7.12. Other crypto stocks saw minor declines but were mostly stable. The correlation between crypto and stocks has been declining since late 2022, but a big movement in crypto prices could still occur if the Fed's interest rates hike turns out "much different" than consensus expectations. Billionaire Ken Griffin also warned that a US recession could be on the horizon, with the Fed needing to increase interest rates further.

## Topic of the Day: MakerDAO Proposes Major Investment in US Treasuries to Boost DAI Stability

MakerDAO is currently evaluating a proposal to invest an additional $750 million in US Treasuries, bringing the total investment to $1.25 billion if approved. The aim is to capitalize on the current favorable yield environment, and the proposed strategy involves a ladder approach with biweekly rollovers that would allow MakerDAO to make any necessary adjustments. The asset strategy would be managed by Sygnum Bank, and it is expected that partner BlockTower will propose a comparable allocation structure soon.

On the positive side, the investment could result in a more stable DAI by further collateralizing the stablecoin, which could help maintain its peg to the US dollar. This, in turn, could increase confidence in DAI among investors and traders, potentially driving up demand for the stablecoin and supporting its value. Furthermore, the investment could generate significant returns for MakerDAO, potentially boosting the value of MKR, its governance token. The ladder approach with biweekly rollovers is expected to provide a flexible and cost-effective investment strategy for MakerDAO, which could translate into increased profits and positive sentiment toward MKR.

However, investing such a large amount of money in US Treasuries also carries potential risks, particularly given the volatility and unpredictability of global financial markets. If the investment performs poorly, it could lead to significant losses for MakerDAO, potentially undermining confidence in its governance and negatively impacting the value of MKR. Additionally, while the investment may be intended to increase stability, it could also be seen as deviating from the decentralized and trustless nature of MakerDAO's platform. Some members of the community may view such a large investment in a traditional financial instrument as a departure from MakerDAO's original vision, potentially leading to controversy and dissent among its user base.

It remains to be seen how MakerDAO will proceed with this proposed investment strategy. If approved, it could provide significant benefits, including increased stability for DAI and potentially higher profits for MakerDAO. However, the potential risks associated with the investment should also be taken into account, particularly in light of MakerDAO's decentralized and trustless platform. As such, it will be important for MakerDAO to weigh the potential benefits and risks carefully before making any final decisions.

## MakerDAO (MKR) $927.94 (+0.72%) - Neutral Outlook

**Overview:**

- ***Closest daily support zone: 877.5 - 844.4***
- ***Closest daily resistance zone: 944.2 - 1004.8***
- ***Key Level: 844.4 (Monthly High of Aug. 2020)***

<br>
![](https://gimg2.gateimg.com/image/article/1678239900Untitled03081.png)

![](https://gimg2.gateimg.com/image/article/1678239915Untitled03082.png)

On a weekly basis, MKR has formed three consecutive "higher-high" price actions, indicating an increase in momentum in the relative strength indicator (RSI). However, on the daily timeframe, MKR has encountered resistance under a descending trendline, forming a double-top. This resistance coincides with the monthly Fibonacci extended golden zone. If MKR experiences a pullback above the daily Fibonacci golden zone [829.2 - 799.6], or even better above the monthly level of 844.4, it may see more buyers enter the market, breaking through the current resistance. Alternatively, it may attempt to break above the resistance level of 944.17 before a pullback, and if successful, could reach the supply zone of 1116.6 - 1160.0. If, however, MKR experiences a pullback and falls below the daily 200EMA [~810.8], it could target the demand zone of 737.5 - 695.8. It is important for traders to exercise patience, wait for better entry points, and avoid chasing a narrative play.

**Daily Resistance zones**

1. 944.2 - 1004.8
2. 1116.6 - 1160.0
3. 1205.5 - 1360.6

<br> **Daily Support zones**

1. 877.5 - 844.4
2. 829.2 - 799.6
3. 779.7 - 737.6

<div class="blog-details-info">
<div>Author:** Peter L.**, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

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