Daily News | Main Street Abandons Crypto, Embraces Equities As US Saw Stellar Gains While Crypto Falter and Stagnate

TL; DR

🥂 Good morning, today is Thursday, Dec. 22, 2022.

Macro: US equities saw stellar gains as investors responded to better-than-expected earnings reports and an increase in consumer confidence, although futures are pointing to a mixed Asian opening. Germany’s consumer confidence rose and Canada’s inflation fell, further boosting main street optimism.

Crypto: Nearly every crypto market traded in the red, with BTC and ETH falling slightly, yet some crypto investors found refuge in TONCOIN as it rose another 6%. The Dollar Index which is inversely correlated to BTC and ETH, curiously, rose along with equities and appears to have a larger impact on crypto.

Topic of the Day: Bitcoin Miner Core Scientific Files for Bankruptcy

Notable Headlines: US Senator introduced a stablecoin bill that aims to guide Congress toward future crypto regulation; The $1 billion merger between Swyftx and Superhero has collapsed; Yuga Lab’s Meebits dropped an album in collaboration with the generative AI music platform WarpSound…

Macro at a Glance

On Wednesday, technology firms led gains in US equities as investors responded to better-than-expected earnings reports and an increase in consumer confidence. Both the tech-heavy Nasdaq 100 and the S&P 500 saw gains of 1.4%, with a strong performance from Apple Inc (+2.3%). and Microsoft Corp. (+1.1%) contributing to the rise. In addition, strong earnings from FedEx Corp. (+3.3%) and Nike Inc. (+12.2%) provided some relief for US equities that had been under pressure due to the Federal Reserve's hawkish stance.

Fresh data on Wednesday suggested that the Fed's ongoing rate hikes are slowing the economy, but a recession may still be avoided. While sales of previously owned homes in the US fell for the tenth consecutive month in November, consumer confidence rose more than expected to reach its highest level since April, due in part to easing inflation.

Treasuries were relatively stable throughout the day, with the 10-year yield hovering around 3.68% after reaching 3.70% on Tuesday. The yen weakened against the dollar, following its biggest daily rally in 24 years on Tuesday. The dollar also saw some fluctuations after falling against a basket of currencies for two consecutive days. Meanwhile, oil prices continued to rise for a third day following a report showing a decline in US crude inventories.

In Germany, the GfK Consumer Climate Indicator rose to -37.8 in January 2023, marking the third consecutive month of improvement in sentiment due to government energy measures. In Canada, the annual inflation rate was 6.8% in November 2022, slightly down from the prior month but above market expectations. Prices rose at a slower pace for transportation and clothing and footwear goods, but accelerated for food and shelter. On a monthly basis, consumer prices in Canada rose by 0.1%.

💡 Today's Markets at Dec. 21 23:12 UTC
BTC -0.84% at $16,772; Ether -0.72% at $1,210.

Asia: Japan -0.68%; Hong Kong +0.34%; China -0.17%; India -1.01%.

Europe: London -0.11%; Paris +2.01%; Frankfurt +1.54%.

US Spot Indices: Dow +1.60%; S&P +1.49%; Nasdaq +1.54%.

US Index Futures: Dow +0.15%; S&P +0.20%; Nasdaq +0.19%.

US Two-year Treasury down 4bps at 4.223%.

US Ten-year Treasury down 2bps at 3.673%.

UK Ten-year Government down 2bps at 3.574%.

US Dollar Index +0.29% at 103.86.

FX in 24hrs: GBP: -0.92%; EUR: -0.17%; JPY: -0.44%; CNY: -0.31%.

Gold -0.01% at 1,814; Brent Crude +0.24% at 79.99.

🧠 Catalysts this week
-Wednesday: Germany GfK Consumer Confidence, Canada Inflation Rate
- Friday: Japan Inflation Rate, US Personal Income & Personal Spending, US Durable Goods Orders

Crypto Daily Digest

Cryptocurrency prices were mostly trading in the red over the past day, with Bitcoin trading at around $16,800 and ether remaining relatively flat. Binance's BNB and Ripple's XRP saw declines of up to 2.0%, while Dogecoin and Shiba Inu also dropped roughly 2.0%.

US equity indices futures rose, with the S&P 500 gaining 0.16% and the Nasdaq 100 adding 0.12%, pointing to a potential mixed opening in Asia. Coinbase (+0.51%) and Block (+1.91%) shares traded higher in pre-market hours, while MicroStrategy (-0.02%) was largely unchanged and Silvergate (-0.59%) shares were moderately down.

Per IntoTheBlock data, Bitcoin’s correlation coefficient with the S&P continued to decline to 0, down from 0.01 yesterday and 0.08 a week ago. With Ether, the outlook is entirely opposite, with the correlation rising to 0.29, up from 0.28 yesterday and 0.17 a week ago. This implies the S&P’s performance has a relatively larger impact on Ether than Bitcoin.

With the Nasdaq, BTC and ETH’s correlations stood at 0.07 and 0.36, declining and rising from 0.19 and 0.29 a week ago, respectively, implying tech stocks in the US are more correlated with Ether though the effects can still be felt in BTC, albeit slightly lower.

With the US Dollar Index (DXY), their inverse correlations were at -0.77 and -0.6, down from -0.83 and -0.71 yesterday and -0.88 and -0.87 a week ago. Due to the macro setting surrounding inflationary concerns and the 2023 outlook, the dollar’s effect on BTC and ETH is stronger than that of equity indices, as suggested in the sluggish performance of crypto yesterday despite a stellar performance from US equities. The dollar index rose by a modest 0.25% but the inverse effect was apparent.

🌐 Top 20 Coins Performance

BTC -0.56% at 16,800; ETH -0.31% at 1,213.

BNB -2.00% at 247; XRP -1.42% at 0.346; DOGE -2.15% at 0.0734.

ADA -2.63% at 0.253; MATIC -1.49% at 0.792; DOT -2.99% at 4.48.

TRX -0.46% at 0.0548; SHIB -2.04% at 0.00000824; LTC -0.73% at 65.46.

SOL +1.47% at 12.10; UNI -1.25% at 5.29; AVAX -2.47% at 11.70.

TONCOIN +6.36% at 2.58; GT -0.45% at 3.416.

Topic of the Day: Bitcoin Miner Core Scientific Files for Bankruptcy

Core Scientific, one of the largest Bitcoin miners by computing power, filed for Chapter 11 bankruptcy protection on Wednesday and reached a deal with some of its creditors to restructure its debt. The company's estimated liabilities are between $1 billion and $10 billion, and its estimated assets are also between $1 billion and $10 billion. At the end of the third quarter, Core Scientific's assets were valued at $1.4 billion, while its liabilities were about $1.3 billion.

The miner, which accounts for about 10% of the computing power on the Bitcoin network and operates 143,000 mining rigs and hosts another 100,000, expects to receive up to $75 million in debtor-in-possession (DIP) facilities from some of its convertible noteholders to help it through the bankruptcy process. Existing convertible note holders will "equitize their debt into a significant majority of the common stock of the reorganized company," according to a press release.

Other holders of general unsecured claims and existing common shareholders will also receive recoveries in the form of reorganized common stock and warrants under the restructuring deal. Core Scientific has struggled amid rising energy prices and low bitcoin prices, which have reduced revenue. Several other miners have also faced challenges, including Compute North, which filed for Chapter 11 bankruptcy in September, and Argo Blockchain, whose deal to sell $27 million of equity to fund operations fell through in November.

🔽 Core Scientific Inc. (NASDAQ: CORZ): $0.510 (-75.53%)


🔽 Bitcoin (BTC): $16,794 (-0.50%)

The good news for BTC is that we’ve seen an increasing amount of volume over the past two weeks after four weeks of consecutive decline. The bad news is volatility remains unfathomably and unforeseeably low. By using the pitchfork tool (based on Fibonacci ratios) on the weekly timeframe, we’ll be able to zoom out and notice a distinct downtrend that began all the way back in Mar. 2021, meaning the bull rally in the latter half of 2021 served as the basis for a concentration of capital inflow.

Following the peak, we saw two distinct bear rallies of distributions between Nov. 2021 and Jan. 2022, and Mar. 2022 - Jun. 2022. Then from Aug. 2022 until now, BTC’s downward momentum began to slow, indicating sellers are mostly gone and buyers are unwilling to let go of their positions, turning the current outlook into a stalemate.

But, but, but. We’re not done yet. According to the Elliot wave theory, there’s one more plunge incoming, even if we start counting from Aug. 2022. However, before we see that happen we’ll likely find BTC making a failed attempt to push past $20,000 within a few weeks before the plunge really begins.

Interestingly, the current stagnant phase of BTC has put the prices in a range between $17,875 - $15,310, which is also a weekly Fibonacci Extension zone derived from Jun. 27 - Jul. 04, 2022. Another interesting thing about the current range is that this was actually a buy zone back in Nov. - Dec. 2020, which was a monthly Fibonacci Extension zone derived from Jan. - May. 2019.

So to sum it up, since BTC is relatively mainstream, or at least that’s what non-crypto people are most familiar with, combined with a weakening macro outlook and no more free money from the Fed, we’ll likely see more sluggishness in BTC in the short term.

Since crypto people aren’t willing to buy and TradFi people would rather allocate their assets to traditional havens such as gold, bonds, and oil amid a highly anticipated recession/stagflation period going into 2023, we’ll likely see BTC hit $12,000 - $10,000 by mid-2023, which is coincidentally a buy zone back in Aug. - Oct. 2020 (also a Fibonacci Extension zone derived from Sep. 2019 - Mar. 2020). If you’d like us to cover any specific token or macro data, feel free to reach out to us by dropping a message in [our Reddit community].

BTC Overview
- Closest daily support zone: 16,745 - 16,335
- Closest daily resistance zone: 16,875 - 16,930
- Daily Key Level: 15,955 (Weekly Close of Nov. 9 - 16, 2020)

- Nearest weekly support zone: 16,845 - 16,430
- Nearest weekly resistance zone: 17,875 - 18,455
- Weekly Key Level: 13,965 (Monthly High of Jun. 2019)


BTC Daily Resistance zones
1. 16,875 - 16,930
2. 16,995 - 17,090
3. 17,100 - 17,205

BTC Daily Support zones
1. 16,745 - 16,335
2. 16,565 - 16,410
3. 16,300 - 16,170


BTC Weekly Resistance zones
1. 17,875 - 18,455
2. 20,570 - 21,690
3. 22,730 - 24,150

BTC Weekly Support zones
1. 16,845 - 16,430
2. 16,185 - 15,200
3. 14,650 - 13,730

Further Reading
[The crypto market forecast 2023] | Bitcoin‘s halving history shows some signs of recovery in 2023.

[DCG Sells off Tokens Crazily, Is Grayscale Crash Coming Soon?] | The tokens such as FIL, ZEN, ETC, NEAR were sold off on a large scale, and the selling pressure may come from DCG. Genesis has been trying to raise funds in the past few days, but so far, it has not been able to do so.

[Market Trend]｜**Crypto Market Revealed a Mixed Bag, SBF Arrested In The Bahamas, ETH Gas Fees Has a Moderate Increase

[Gate US Obtained Licenses for Digital Asset Trading, Bringing World-Leading Crypto Exchange Services to the US] | Gate US will prioritize security and transparency to bolster America's trust and confidence in cryptocurrency.

[Gate Group Exchanged Viewpoints With Hong Kong Government Representatives On Digital Asset Industry Development] | The meeting aimed to address the questions and concerns of industry leaders about the policy and regulations, as well as encourage virtual exchanges to look into license requirements.

Notable headlines

🔹 Sen. Pat Toomey introduced a stablecoin bill that aims to guide Congress toward future crypto regulation after he retires in less than two weeks. Toomey’s bill would create a new federal license for payment stablecoin issuers and would require the stablecoins to be backed by “high-quality liquid assets.”

🔹 Bitcoin miner Core Scientific said that it might sell some of the mining facilities still under development. The miner filed for Chapter 11 bankruptcy protection earlier today with a prearranged deal and is planning to turn most of its debt into equity.

🔹 The $1 billion merger between Swyftx and Superhero has collapsed. Regulatory hostility towards crypto in Australia was cited as the reason for the collapse of the merger.

🔹 Crypto market making firm Auros has missed a scheduled repayment for a $7.5 million stablecoin loan on Maple Finance. Previously, Auros also missed repayments after it borrowed 8,400 wrapped ether (WETH) worth $10.8 million.

🔹 Ankr says ex-employee caused $5M exploit, vows to improve security. The team has alerted relevant authorities and is seeking to prosecute the attacker while also shoring up its security practices.

🔹 Yuga Lab’s Meebits dropped an album in collaboration with the generative AI music platform WarpSound. Meebit NFT holders can claim ERC-1155 tokens of the tracks for free, only paying a gas fee.



Author: Gate.io Researcher Peter L.
This article represents only the researcher's views and does not constitute any investment advice.
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