Daily News | BoE Raised Rates to 3.00%, Investors Await NFP data

Good morning, today is Friday, Nov. 04, 2022.

TL;DR

• Bitcoin and Ether down following uncertainty with the release and projection of US Fed Fund Rate currently set to a range of 3.75% - 4.00% (+0.75%).
• Correlations with S&P 500 and the Dollar remain high relative to a week ago.
• Inverse correlations with volatility topping -0.90% implies big movements ahead.
• US Dollar Index up 0.85% at 112.65. US trade deficit increased with the EU but narrowed with China.
• BoE raised rates by 75 bps (3.00%). Markets awaiting NFP & jobs data.
• Going into next week: China Oct. Balance of Trade, CN Oct. Inflation Rate (CPI), US Oct. CPI, UK Q3 GDP

Have a good Friday and Weekend.

Bitcoin (BTC) 24-Hour Change: 20,267 (+0.13%)

On Thursday, the correlations started reversing since Fed’s rate hike announcement.

• Correlation with S&P 500 remained flat at Current: 0.78; 24HR: 0.78; 1W: 0.57, but remain high relative to a week ago.
• Correlation with Nasdaq dropped to Current: 0.54; 24HR: 0.58; 1W: 0.47, implying a reverse of investment flow in tech equities.
• Correlation with US Dollar Index remained flat ****at Current: -0.77; 24HR: -0.76; 1W: -0.72, implying a stronger dollar will hurt Bitcoin as assets are moved to TradFi and government bonds as they offer more attractive return.
• Correlation with Volatility Index slightly rose to Current: -0.89; 24HR: -0.89; 1W: -0.71, implying moves will have a larger range going into the release of the NFP report.

Ether (ETH) 24-Hour Change: 1,538 (-0.06%)

Likewise to BTC, Ether begun to see a deceleration around the current correlation ratios.

• Correlation with S&P 500 rose slightly to Current: 0.81; 24HR: 0.8; 1W: 0.62, and remained at week’s high.
• Correlation with Nasdaq dropped slightly ****at Current: 0.48; 24HR: 0.5; 1W: 0.43, implying investors are moving away from tech equities as volatility in the markets remain at week’s high.
• Correlation with US Dollar rose more than ****yesterday at Current: -0.75; 24HR: -0.69; 1W: -0.72, implying a stronger dollar will hurt Ether as assets are moved to TradFi and government bonds instead of tech equities.
• Correlation with Volatility Index slightly rose to Current**: -0.94; 24HR: -0.93; 1W: -**0.77. Remaining near the -100 mark implies Ether is prone to extreme price action as the NFP report draws near.

Friday

12:30 UTC

October Non-Farm Payroll: NFP is the measure of the number of workers in the U.S. excluding farm workers.

During September, Payrolls came in higher than expected, rising 263K beating expectations for 250K but remained starkly lower than September’s 315K.

Consensus: 200K-240K; Previous: 263K

• Awaiting Actual:

October US Unemployment Rate: During September, the unemployment rate dropped to 3.5% from 3.7%.

Beating the estimate implies the job markets are in high demand and seemed healthy but raises concerns that the demand would drive up living costs, probing a continuation of rate hikes.

Consensus: 3.6**%; Previous:** 3.5**%**

• Awaiting Actual:

Thursday

12:00 UTC

Bank of England Interest Rate Decision

Actual: 3% (+0.75%); Consensus: 3%; Previous: 2.25%

• The Bank of England on Thursday was expected to deliver its biggest interest-rate increase in 33 years at at 12:00 p.m. London time. A 75 basis-point increase in the key rate is almost fully priced in by money markets and widely expected by economists.
• The BOE was the first major central bank to start a QE program while simultaneously hiking interest rates. It sold £750 million ($860 million) worth of UK government bonds from its quantitative-easing portfolio for the first time on Tuesday
• The dollar gained as investors looked toward US jobs data, which may help to determine the pace of upcoming rate hikes. The pound fell more than 1% as concern mounted that a smaller-than-expected BOE hike could compound sterling’s drop.
• The Monetary Policy Committee voted 7-2 to lift rates by 75 basis points to 3%, the highest level in 14 years. But in an usually blunt comment on investors’ outlook for future hikes, it stressed the peak in rates will be “lower than priced into financial markets.”
• Under the BOE’s central outlook using the market rate path, hundreds of thousands of jobs are lost as unemployment rises from 3.5% to 6.4%. Inflation falls to 1.4% in two years, well below the 2% target.
• The outlook sees inflation peaking at 10.9% in the coming months and falling to zero by 2025.

12:30 UTC

United States Balance of Trade

Actual: $-73.3B; Consensus: -72.2B; Previous: -67.4B

• The US trade gap widened to a three-month high of $73.3 billion in September of 2022, worst than estimate.
• On the other hand, imports fell for fuel, crude and other petroleum products.
• Meanwhile, exports went down 1.1% to $258 billion, led by lower sales of crude oil, nonmonetary gold, and soybeans while shipments went up for telecommunications equipment, semiconductors and services, including travel and financial.
• The deficit increased with the EU and Mexico but narrowed with China.

14:00 UTC

ISM Non Manufacturing PMI

Actual: 54.4; Consensus: 55.5; Previous: 56.7

• PMI came in at 54.4 in September, pointing to slower growth relative to historical average of 55. A reading above 50 percent indicates the services sector economy is generally expanding; below 50 percent indicates it is generally contracting.
• Business Activity Index at 55.7%; New Orders Index at 56.5%; Employment Index at 49.1%; Supplier Deliveries Index at 56.2%.
• Employment activity in the services sector contracted in October. Comments from respondents include: "Unable to fill vacant positions with qualified applicants" and "Our company has tightened its hiring of new employees month over month due to uncertainty around the strength of the economy.”
• Services businesses still continue to struggle to replenish their stocks.
• Prices increased in October with the index registering 70.7%. The Prices Index continues to indicate movement toward equilibrium.

Wednesday

12:15 UTC

ADP Employment report

Actual: 239K; Consensus: 195K; Previous: 192K

• Came in nicely ahead of expectations with 239,000 private jobs versus expectations for 185,000.
• Unemployment at 3.5% is matching five-decade lows. Job openings, which Powell watches closely, unexpectedly rebounded in September, with the ratio of available positions for every unemployed person now at 1.9.

18:00 UTC

FOMC Statement

Actual: 4.00% (+0.75%); Consensus: 4.00% (+0.75%); Previous: 3.25% (+0.75%)

• Equities futures were mixed ahead of the Federal Reserve’s policy meeting Wednesday. A gauge of the dollar (DXY) fell and gold (XAU) rose.
• Two-year US yields -- which are more sensitive to imminent Fed moves -- topped 4.5% after sliding as much as eight basis points earlier in the day.
• The ADP Employment Report for October. This report is for private payrolls only (no government). The consensus is for 200,000 jobs added, down from 208,000 in September.
• FOMC Meeting Announcement. The FOMC is expected to raise rates 75bp at this meeting.
• Fed Chair Jerome Powell holds a press briefing following the FOMC announcement. Focus will be on his comments following the decision as traders seek clues about where policy is headed.
• The Fed’s benchmark was lifted to a 3.75%-4% range, from nearly zero in March. Even so, the US economy has shown remarkable resilience: Rising borrowing costs have slowed the housing market, but the inflation rate is stubbornly stuck near 40-year highs.
• US equities reversed initial gains, with the S&P 500 suffering its worst rout on a Fed decision day since January 2021 as investors digested the message. Bitcoin (BTC) and Ether (ETH) followed the general sentiment and gave back some of the gains.

Today's Markets

BTC up 0.28% at $20,265; Ether up 0.55% at $1,539.

Asia: Japan -0.06%; Hong Kong -3.08%; China -0.19%; India -0.11%.

Europe: London -0.15%; Paris -0.54%; Frankfurt -0.95%.

Futures at 01:00, Dow -0.11%. S&P -0.05%; Nasdaq +0.07%;

US Ten-year Treasury Yield remained flat at 4.15%

UK Ten-year Government Bonds up 11 bps at 3.49%

US Dollar Index down -0.05% at 112.51

Gold up 0.11% to $1,631; Brent Crude down 1.55% to $94.67.

Catalyst remaining this week:

• Friday: US nonfarm payrolls (NFP) & unemployment, ECB President Statement

Going into next week, here are some major events happening globally.

Catalysts between Nov. 07 - Nov. 11:

• Monday: China Balance of Trade
• Tuesday: 2022 US Midterm Elections
• Wednesday: China Inflation Rate (CPI)
• Thursday: US Inflation Rate (CPI)
• Friday: UK Q3 GDP, November Michigan Consumer Sentiment

🟠 BTC

BTC Weekly timeframe:

• Major Level: 20,516 (61.8% Monthly Fibonacci Retracement Level)
• Closest support zone: 20,516 - 20,331
• Key resistance level: 20,516 - 20,885

As of Nov. 04 Asian session,

• Bitcoin (BTC) was trading below the 61.8% (20,516) monthly Fibonacci Retracement level
  • but still within a support zone (19,792 - 20,885) derived from Sep. 12 - 19
  • an anchor point has been established at 20,331

After reaching the 12-Day EMA (20,600) resistance level that drove Tuesday’s decline to the 50% (20,331) Fibonacci level, BTC has now found an anchor point.

BTC Weekly Resistance zones

1. 20,516 - 20,885
2. 21,002 - 21,690
3. 21,737 - 22,577

BTC Weekly Support zones

1. 20,516 - 20,331
2. 20,113 - 19,858
3. 19,792 - 19,540

BTC Daily Timeframe:

• Closest support zone: 20,125 - 19,977
• Closest resistance zone: 20,262 - 20,388
• Key Level: 61.8% (20,588) monthly Fibonacci Retracement level

Nov. 04 00:51 UTC Update:

Bitcoin (BTC) was trading at $20,285, or up 0.41% in a 24hr period.

BTC Daily Resistance zones

1. 20,262 - 20,388
2. 20,388 - 20,491
3. 20,499 - 20,625

BTC Daily Support zones

1. 20,125 - 19,977
2. 19,899 - 19,858
3. 19,824 - 19,700

🔵 ETH

Weekly Timeframe

• Major Level - 1,760 (Weekly High of Feb. 01, 2021)
• Closest support zone: 1,595 - 1,552
• Key resistance zone: 1,552 - 1,639

As of Nov. 04,

Ether (ETH) was trading below the 61.8% (1,554) Weekly Fibonacci retracement level

• and below a support zone (1,552 - 1,639) derived from Aug. 29 - Sep. 05
• but below the 38.2% (1,575) level measured from Jul. 04 - Aug. 08

ETH Weekly Resistance zones

1. 1,552 - 1,639
2. 1,651 - 1,694
3. 1,735 - 1,760

ETH Weekly Support zones

1. 1,595 - 1,552
2. 1,494 - 1,458
3. 1,456 - 1,402

ETH Daily Timeframe

• Closest support zone: 1,517 - 1,494
• Closest resistance zone: 1,546 - 1,560
• Key Level: 1,554 (Daily Close of Oct 28. 2021)

Nov. 04 01:11 UTC Update:

ETH was trading at $1,542, or down 0.22% in a 24hr period.

ETH Daily Resistance zones

1. 1,546 - 1,560
2. 1,571 - 1,586

ETH Daily Support zones

1. 1,517 - 1,494
2. 1,488 - 1,464

📌 The topic of the Day: Do Kwon's Market Manipulation

On November 4, Edaily reported that Korean prosecutors have obtained evidence that Terra founder Do Kwon manipulated the price of the cryptocurrency Terra, arguing that Do Kwon's previous claim that "Terra and Luna have overcome the volatility of cryptocurrencies" was a false claim.

The Joint Investigation Unit for Financial and Securities Crimes of the Seoul South District Prosecutor's Office said it has stopped the statute of limitations on Do Kwon's prosecution, which can be stopped if the suspect stays abroad to avoid criminal punishment under South Korea's criminal procedure law. Reports say Do Kwon reportedly moved to Europe via Dubai in September.

Early this morning, Do Kwon tweeted, "I will be holding a meeting to address this issue, police officers from around the world are welcome to attend and for those who have been spreading lies with taxpayers' money, we will invite you as VIPs and will even pay for your airfare."

In previous news, South Korean prosecutors issued arrest warrants for Terra founder Do Kwon and five others, and Interpol has issued a Red Notice for Terra founder Do Kwon. Do Kwon's passport expired on Oct. 19.

🗒 Happenings of The Week (Oct. 28 - Nov. 04):

Notables:

• 📣 European Commission proposes real-time euro payments in draft law. The proposal aims to increase public trust in real-time payments and make sanctions screening more efficient. A digital euro prototype expected to pilot in Mar. 2023 is in the works under the supervision of the European Central Bank.

• 📣 Hong Kong plans to green-light crypto ETFs and review rules barring retail investors from trading digital assets. The Securities and Futures Commission plans to allow crypto ETFs linked to Bitcoin and ether futures traded on the CME. The regulator will launch a public consultation on giving retail investors access to virtual assets.

• 📣 The Reserve Bank of India, the country's central bank, to test if digital rupee can cut fees when trading government securities. The pilot will focus on the settlement of secondary market transactions in the trading of government securities. RBI says “going forward, other wholesale transactions, and cross-border payments will be the focus of future pilots, based on the learnings from this pilot.”

• 📣 Singapore pilots tokenized fiat with smart contract capabilities. Singapore-based financial services group DBS will issue digital Singapore dollars, while Open Government Products, a tech team within the Singapore government, will enable smart contract capabilities.

• 📣 The first batch of digital assets and DeFi industry pilots launched by the Monetary Authority of Singapore. In the first batch of industry pilots, DBS Bank, JPMorgan Chase and SBI Digital Asset Holdings conducted foreign exchange and government bond transactions for the liquidity pool consisting of token Singapore government bonds, Japanese government bonds, Japanese yen (JPY) and Singapore dollar (SGD).

• 📣 JPMorgan Chase executed a DeFi transaction on the public chain for the first time. According to Bloomberg, JPMorgan Chase previously issued tokenized S $100,000 on Polygon and traded with SBI Digital Asset Holdings in Japan as tokenized Japanese yen, which is part of the pilot plan of the Central Bank of Singapore to explore the use of DeFi in the banking industry. Although this transaction is not a cryptocurrency transaction, it is the first time for JPMorgan Chase to execute the transaction on the public chain. In addition, this transaction also involves the use of the "modified version" of Aave.

• 📣 Japan will establish a Web3.0 research society DAO to study whether to grant DAO legal personality. At the 5th Web3.0 Research Conference, the Japan Digital Agency (JDA) decided to create a DAO (Decentralized Autonomous Organization) for the research conference. Since the legal status of DAOs in Japan is currently unclear, the JDA will implement a survey and analysis of issues and potential regarding DAOs through actual participation in DAOs, and plans to study whether to grant DAOs legal personality.

Nov. 04

• 📣 The Monetary Authority of Singapore (MAS) said that sanctions against Russia apply to all financial institutions, including cryptocurrency trading platforms. Digital payment token service providers (DPTSPs) licensed to operate in Singapore must also comply with the sanctions.

Nov. 03

• 📣 Andre Cronje tweets about his comeback after revising his role on Linklaters. Andre Cronje's Twitter account also has a picture that says "Here we go again."

• 📣 Monetary Authority of Singapore: Singapore wants to be a hub for financial blockchain. Ravi Menon, managing director of the Monetary Authority of Singapore, said at the Singapore Fintech Festival that Singapore wants to be a hub for digital assets, not for trading and speculating in cryptocurrencies.

• 📣 Instagram will support creators to mint and sell NFT directly in their applications.

• 📣 OpenSea introduces two new NFT anti-theft functions.

• 📣 Musk plans to lay off half of Twitter's employees to reduce operating costs.

Nov. 02

• 📣 CryptoPunk # 5822 is recognized as the most expensive NFT collection by Guinness World Records.

• 📣 Gary Gensler, chairman of the US Securities and Exchange Commission

Nov. 01

• 📣 Open Metaverse Alliance (OMA3) opens up membership to web3 builders.

• 📣 DeFi yield platform PieDAO proposes token buyback after ending liquidity mining program.

• 📣 NFL Rivals releases footage of “arcade-style” gameplay ahead of upcoming NFT drop.

Oct. 31

• 📣 Aptos-based DeFi project Arco Protocol is facing criticism after a error-struck token sale and a sudden loss of key partnerships.

• 📣 HUSD stablecoin sharply loses peg even further, drops to just $0.30.

• 📣 GameStop's NFT marketplace is live on Immutable X, a Layer 2 Ethereum scaling protocol, rivalling crypto-native gaming NFT platforms like Fractal, founded by Twitch’s Justin Kan.

• 📣 Art Gobblers, an NFT project co-created by Rick and Morty’s Justin Roiland, nabbed more than $13 million just two hours after launch.

Oct. 29 - 30

• 📣 Dogecoin rallies after Elon Musk’s Twitter takeover.

Oct. 28

• 📣 Magic Eden, Rarible join Twitter pilot to embed NFTs in tweets.

• 📣 Metaverse platforms to fall under scope of controversial UK Online Safety Bill.

• 📣 WisdomTree meets estimates, reveals declining crypto holdings in Q3 earnings.

• 📣 Matter Labs has released the baby alpha release of zkSync 2.0, the first Ethereum compatible ZK-Rollup to hit production.
  
  

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

  • 🔹 CoinFund, a New York-based web3 investment firm, is looking to raise $250 million to invest in seed-stage startups. Previously, CoinFund has backed the Layer 1 blockchain Solana, web3 indexing protocol The Graph and blockchain infrastructure company Blockdaemon, among other startups.
  • 
    
  • 🔹 Lingfeng Innovation Fund (LIF), a new venture capital fund led by former Binance Labs executive Nicole Zhang, raised $20 million to invest in web3 startups. The web3-dedicated LIF is a sister fund to Beijing-based Lingfeng Capital, the fintech investment firm with more than $400 million in assets under management.
  • 
    
  • 🔹 Orderly Network, a DeFi infrastructure protocol built on the Near blockchain, raised $20 million with a $200 million valuation in a seed round with participation from Laser Digital and Sequoia China, Pantera Capital, Dragonfly and Jump Crypto via a simple agreement for future tokens (SAFT).
  • 
    
  • 🔹 RakkaR Digital has raised $10 million in a seed funding round led by SCB 10X, a unit within Thailand's oldest bank, Siam Commercial Bank (SCB). RakkaR says its platform is powered by Fireblocks and aims to serve institutions in Southeast Asia.
  • 
    
  • 🔹 Braavos has raised $10 million led by Pantera Capital to launch a self-custodial wallet on Ethereum scaling solution Starknet. The team will roll out features such as a “forgot my password” mechanism and multi-factor authentication, to make the experience more familiar to a web2 audience.
  • 
    
  • 🔹 State-chartered digital asset bank Custodia, formerly known as Avanti, has raised $7 million. Custodia is designed to provide real-time settlement finality for U.S.-dollar payments in digital asset transactions.
  • 
    
  • 🔹 On November 4, The Block reported that a document it obtained showed that Pudgy Penguins (a NFT project) was negotiating with investors for $10 million in a seed funding round. If the financing was completed, its valuation would reach $50 million. Luca Netz, CEO of Pudgy Penguins, strongly denied the funding news.
    

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

  • 🔹 The pNetwork Bridge was hacked. A BNB Chain address on the BNB Chain minted more than $1 billion of pGALA tokens out of thin air, and made profits by selling them on PancakeSwap, leading to the short-term decline of GALA of more than 20%.
  • 
    
  • 🔹 A series of protocol exploits and hacks across October saw malicious actors make off with at least $652.2 million in illicit gains. October proved to be nothing if not spooky for an ecosystem that saw as many as 44 exploits affect at least 53 protocols accounting for $657.2 million in total losses.
  • 
    
  • 🔹 Deribit, a crypto derivatives trading platform, announced that its hot wallet had been stolen, resulting in a capital loss of $28 million, but the customer's capital was safe, and the loss was made up by the company's reserves. Deribit stated that it was conducting security checks and suspended withdrawals including third-party custodian agencies Copper Clearoop and Cobo.
  • 
    
  • 🔹 FriesDAO hacked for $2.3 million in latest Profanity exploit. The DAO’s deployer wallet was generated with an insecure tool called Profanity, a wallet-generator tool that’s known to contain a critical vulnerability.