Daily News | BoE To Initiate Quantitative Tightening As Yields Spiked, Cryptos Move Inversely As Traders Await FOMC Statement And CPI Data

The momentum of decline in U.S. equity markets appears to have slowed a little as the DJIA (+0.12%) halted a three-day losing streak, although the S&P 500 (-0.65%) and Nasdaq (-1.14%) were still down on Tuesday. The yields on a 10-year Treasury, which travels inversely from crypto prices, rose to 3.94%, near its 2022 high.

Elsewhere in the world, the Bank of England widened its intervention in the debt markets to include inflation-linked bonds following a sharp surge in yields on Monday which was driven by index-linked gilts, with yields on 10-year inflation-linked securities soaring 64 basis points to 4.40%.

The BoE move has little immediate impact for investors outside of the nation, but the global markets are sending a signal that there will be adverse consequences as central banks try quantitative tightening.

The BoE is also grappling with tight labor conditions after a record number of people stopped looking for jobs, driving the unemployment rate down to 3.5% in the three months to August, the lowest in 48 years.

Traditionally, gold (XAU) is considered a safe haven amid the declines in risker assets, but even gold is currently on a six-day losing streak (-3.7%). The International Monetary Fund (IMF) also cut its growth forecast, warning that "the worst is yet to come.”

Market participants are currently waiting for the Federal Open Market Committee (FOMC) minutes on Wednesday and the latest Consumer Price Index on Thursday. The U.S. CPI is widely expected to fall slightly to 8.1% annually, which won’t be enough to reverse current central bank monetary hawkishness and its commitment to bring down inflation to 2.0%.

As of this writing, Bitcoin (BTC) was trading at $19,063 and Ether (ETH) was changing hands at $1,283, or up 0.04% and 0.28% in a 24hr period, respectively. Notably, Terra Luna Classic (LUNC) was up 4.01%, Hedera Hashgraph (HBAR) +7.73%, and Huobi Token (HT) +20.78%.

🟠 BTC Weekly Timeframe

As of Oct. 12 Asian session, although Bitcoin (BTC) was still trading below the monthly level of 19,528, the bulls were able to pull the price back into a resistance zone formed between 23.6% and 38.2% (19,144 - 19,792) Fibonacci levels measured from Sep. 12- 19.

However, the current price action setup still largely favors the bears but circumstances may change if the bulls are able to close BTC above the 23.6% (19,144) Fibonacci level by the week’s end.

Looking ahead in the coming weeks, key resistance and support zones have been measured from various Fibonacci extension levels.

BTC Weekly Support zones

1. 19,057 - 18,807
2. 18,807 - 18,143

BTC Weekly Resistance zones

1. 19,144 - 19,792
2. 19,858 - 20,331

BTC Daily Timeframe

As of this writing on Oct. 12 02:43 UTC, BTC was trading at $19,043 (-0.06%) in a 24hr period.

BTC Daily Resistance zones

1. 19,109 - 19,267

BTC Daily Support Zones

1. 19,012 - 18,939
2. 18,939 - 18,851

🔵 ETH Weekly Timeframe

As of Oct. 12, Ether (ETH) was trading below the monthly support level of 1,313 and extended beyond the weekly supporting trendline. Notably, ETH had been floating around the 61.8% (1,346) Fibonacci retracement level measured from Jul. 4 - Aug. 8 for the past three weeks.

ETH Weekly Support zones

1. 1,264 - 1,241
2. 1,241 - 1,192
3. 1,180 - 1,125

ETH Weekly Resistance zones

1. 1,345 - 1,379
2. 1,379 - 1,428

ETH Daily Timeframe

As of this writing on Oct. 12 03:00 UTC, ETH was trading at $1,284 (+0.43%) in a 24hr period.

Monday’s decline had been incremental to the bears as the latest price action indicates an overwhelming preference for the downside. Notably, ETH had broken below the weekly supporting trendline on Monday, further giving strength to the bears.

On Tuesday, ETH followed suit as broader markets continued their descent. ETH found bottom on Tuesday at the edge of the support zone (1,274 - 1,267) and bounced back slightly.

ETH Daily Resistance zones

1. 1,294 - 1,302
2. 1,303 - 1,310

ETH Daily Support zones

1. 1,274 - 1,267
2. 1,265 - 1,256
3. 1,248 - 1,238

📌 The topic of the Day: Sushiswap Head Chef’s Alleged Horseplay: Rekt Report

Yesterday, a self-styled “ETH and DeFi enthusiast” called YannickCrypto accused Jared Grey, the newly appointed head chef of Sushiswap, of being involved with multiple crypto scams. Then Twitter lit up with bizarre allegations that Grey had engaged in bestiality with a horse.

The earliest complaint against Grey comes from 2012, before his crypto days, when claims of copyright infringement were made regarding advertising materials for Multiplex PC. The blog post goes on to detail shady marketing techniques used by the firm as well as Grey’s response that “the email account associated with it had been hijacked some time ago”.

Years later, in 2019, he became the CEO of ALQO, shortly before ALQO’s Liberio wallet was released. The wallet was used to drain various users’ funds via the private keys, which a team member had access to. Investigations were published at the time on Bitcointalk.org and include Jared Grey’s responses downplaying the issue.

SushiSwap, in response, appeared to make light of the bestiality accusation by posting an emoji of a horse on social media. And Grey summarily rejected ****all of YannickCrypto’s allegations as false.

The hiring of Jared Grey was supposed to bring back some focus to the “community fork” of Uniswap. This year SushiSwap’s TVL has slid 87%, to $495M, compared to a 39% drop at its archrival, Uniswap. The DEX’s native SUSHI token was down 10% in the past 24 hours.

The Sushi community appears to be sleepwalking through due diligence, perhaps in a state of apathy brought on by the relentless drama they have suffered over the last twelve months. With Sushi rumored to be soon launching new pools for stablecoin swaps, these accusations have not come at a good time.

🗒 Happenings of The Week (Oct. 08 - 12):

• SEC rejects WisdomTree's latest spot Bitcoin ETF proposal, citing insufficient protection from fraud and manipulation. WisdomTree received another rejection from the regulator in December of last year for a previous iteration of the product.

• EU’s MiCA Bill Passes Committee Vote in European Parliament. Final approval of the legislation alongside an anti-money laundering bill that obliges transfers made in crypto to include data on the payer and payee are expected to be passed by parliament later in October. The final implementation of new laws around stablecoins and crypto exchanges is expected in 2024.

• The Organisation for Economic Co-operation and Development (OECD) releases a final plan to crack down on international tax evasion using crypto. The guidelines aim to increase regular information sharing between 38 countries in order to cut down on tax evasion using digital assets. The framework will be formally unveiled during a G20 meeting later this week.

• The European Commission released a bid to monitor Ethereum network. According to the document, the study will focus on “automated supervisory data gathering directly from the blockchain to test the technological capabilities for supervisory monitoring of real-time DeFi activity.” In simple terms, the commission seeks to automate DeFi data collection for regulators and is currently looking for willing participants.

• Portugal’s 2023 budget proposal includes a 28% income tax on cryptocurrencies held for less than a year. Free crypto transactions would also be taxed, and a 4% rate would apply to commissions charged by intermediaries. The budget is still subject to discussions and approval within the Parliament in the coming weeks.

• India’s Central Bank Is Preparing to Launch Digital Rupee Pilot Soon. On Friday, a 50-page concept note has been released to discuss key features of India’s CBDC prototype. Notably, the report points out a wholesale CBDC would be account-based and issued by the central bank, while the CBDC for consumers would be token-based and managed by an intermediary.

• US Department of Commerce Agency NIST released an initial public draft addressing the top five stablecoins that retained their peg: USDT, USDC, BUSD, DAI, and FRAX. The report also claims that while DeFi is more vulnerable to security issues due to increasing code complexity, CeFi architectures are more vulnerable to trust issues due to a greater reliance on human trustworthiness.

• Bitcoin mining difficulty jumps to all-time high levels with the difficulty spiking by 13% to reach 35.61 trillion hashes. Bitcoin network’s hash rate, another important metric, is at an all-time high of 257 exahashes per second (EH/s) according to data from The Block. The spike in block difficulty can potentially impact the miner's profitability.

• Lightning Network nodes fell out of sync with the Bitcoin network due to a large multi-sig transaction made by a developer. The Lightning network did not go down, but merely a lot of nodes fell out of sync with it — an issue that only affected node runners from adding liquidity. The issue was due to a bug in the parsing library of the implementation of Bitcoin called btcd.

• Meta, the parent company of Facebook, debuted its new virtual-reality headset Tuesday. Meta also announced strategic partnerships with Microsoft, Accenture, and Zoom. The Meta Quest Pro VR device will cost $1,499 and is available for pre-order.

• Bank of New York Mellon (BNY Mellon), the oldest bank in America, won approval from New York’s financial regulator and will custody customers’ digital assets alongside traditional investments on the same platform using software developed by Fireblocks.

• Yuga Labs, creators of Bored Ape Yacht Club NFTs, accusation136es SEC probe. The regulator is looking into whether certain assets could be treated more like stocks and therefore should follow the same rules. In a 24hr period, ApeCoin (APE) has declined by 6.5% as of Wednesday's Asian session.

• Popular Solana NFT project DeGods removes NFT royalties, and predicts all marketplaces will move to 0% model. Founder Frank added that the current royalty model was “already broken” as it is bringing in decreasing revenues even as the project’s popularity grows.

• Brazillian Police Raid ‘Bitcoin Sheikh’ for Defrauding Victims of $766M (4 billion reals). The operation allegedly deceived "thousands of victims" by offering services that promised monthly returns of up to 20% of the amount they invested. Police reportedly raided 20 addresses linked to the crypto fraud network controlled by Francisco Valdevino da Silva, aka “Sheikh dos Bitcoins.”

• Luna Foundation Guard: Distribution of Assets Is 'Not Possible at This Time.’ LFG cited “ongoing and threatened litigation” for its inability to distribute its remaining assets to UST users starting with the smallest HODL-ers. Prior to the market decline in May, the fund's reserves included more than $4 billion in assets; at the time of publication, this sum had fallen to about $105 million.

• Mt. Gox Creditors Need to Register with Exchanges By Next Year To Receive Lost Crypto, wrote Trustee Nobuaki Kobayashi. A majority of creditors approved a draft rehabilitation plan last November, and in a public letter dated Oct. 4, Kobayashi announced court approval of amendments to the rehabilitation plan, although it’s not clear when exactly the disbursements will happen next year. ****

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

  • Banking platform Step, which caters to a teenaged and young adult clientele, has secured $300 million in new debt funding led by Triplepoint Capital and Evolve Bank & Trust. The firm said it will expand into crypto investment services, and launched a financial literacy program to improve consumer education on banking and crypto.
  • Bitcoin miner TeraWulf raised $9.5 million in equity and drew an extra $7.5 million from an existing loan. The company recently energized the first 50-megawatt building in New York, reaching 1.6 EH/s in total operational capacity.
  • Led by Digital Currency Group and SoftBank spinoff Upload Ventures, Defi Startup Arch Raises $5 Million To Become The 'Blackrock of Web3’. The startup aims to make investing in DeFi accessible to the everyday investor by using the fund to tokenize a wider suite of decentralized finance indices.

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

  • Solana Lending Platform Mango Markets suffered a $100 million hack.
  • Quantum-resistant Layer 1 blockchain QANplatform has suffered a $2 million hack, token slumps 94%.
  • Staking Protocol TempleDAO suffered an exploit for $2.3 million worth of crypto tokens.