Daily Flash | Disappointing Friday US Jobs Report Caused Markets Meltdown, CPI Data Will Be Crucial This Week

Fundamental and Technical Outlook

Global markets are on edge about the possibility of an emerging-markets crisis resulting from higher interest rates and a U.S. dollar at a 20-year high. A surging dollar makes it more difficult for borrowers in those countries to repay dollar loans as 80% of emerging markets’ overall external debt liabilities are denominated in foreign currency, mostly U.S. dollars.

The British pound (GBPUSD) fell last week to an all-time low as the U.K. became engulfed in a fiscal crisis.

The Euro (EURUSD) has dropped below parity versus the dollar, with the eurozone expected to suffer a brutal winter downturn as a result of the energy shock created by the Russo-Ukrainian war.

The Japanese yen recently traded at its lowest since 1998, prompting a rare round of intervention by the Bank of Japan.

Meanwhile, fears that the Fed could cause something in the global economy or financial system to “break” have inspired some to question whether the Fed can successfully whip inflation by hiking interest rates at the most aggressive pace in decades without causing collateral damage.

Looking ahead this week, U.S. inflation data will be front and center for markets, with the September CPI due on Thursday. On Friday investors will receive an update from the University of Michigan’s on consumer sentiment survey and its inflation expectations survey.

Last Friday, the September jobs report showed the U.S. economy gained 263,000 jobs last month, with the unemployment rate falling to 3.7%, but job growth slowed from 537,000 in July, and 315,000 in August. The inflation data on Thursday will be scrutinized closely as investors grapple with signs that the U.S. labor market may indeed be starting to weaken.

The DJIA (-2.11%), S&P 500 (-2.80%), and Nasdaq (-3.80%) all traded lower Friday following the weaker-than-expected jobs report.

As of this writing, Bitcoin (BTC) was trading at $19,468 and Ether (ETH) was changing hands at $1,324, or down 2.5% and 2.14%, respectively, since Friday. In a 24hr period, notably, Ripple (XRP) was up 4.05%, Elrond (EGLD) +4.46%, and MakerDAO (MKR) +4.19%.

🟠 BTC Weekly Timeframe

As of Oct. 10 Asian session, Bitcoin (BTC) was trading below the monthly level of 19,858. For two weeks, BTC struggled to stay afloat at the same level.

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

BTC Weekly Support zones

1. 17,974 - 17,167
2. 16,880 - 16,221

BTC Weekly Resistance zones

1. 19,792 - 20,885
2. 20,907 - 21,569
3. 22,490 - 23,290

BTC Daily Timeframe

As of this writing on Oct. 10 01:45 UTC, BTC was trading at $19,508 (+0.58%) in a 24hr period.

After seeing spectacular gains last Monday-Tuesday, BTC saw a 4-day decline that brought it below the 61.8% (19,523) Fibonacci retracement level measured from Oct. 03 - 04.

BTC Daily Resistance zones

1. 19,619 - 19,700
2. 19,792 - 19,858

BTC Daily Support Zones

1. 19,276 - 19,144
2. 19,939 - 18,780

🔵 ETH Weekly Timeframe

As of Oct. 10, Ether (ETH) was trading above the monthly support level of 1,313 but still within the two supporting weekly trendlines. Last week, ETH failed to sustain above the 23.6% (1,361) Fibonacci retracement level measured from Sep. 12 - 26.

ETH Weekly Support zones

1. 1,264 - 1,180
2. 1,180 - 1,108
3. 1,108 - 1,060

ETH Weekly Resistance zones

1. 1,361 - 1,391
2. 1,416 - 1,458
3. 1,458 - 1,494

ETH Daily Timeframe

As of this writing on Oct. 10 02:16 UTC, ETH was trading at $1,326 (+1.33%) in a 24hr period.

Similar to the movement of Bitcoin last week, ETH saw a 4-day plunge after having made significant gains on Monday-Tuesday. Notably, ETH found support yesterday on the 50% (1,315) Fibonacci retracement level measured from Oct. 03 - 04.

ETH Daily Resistance zones

1. 1,326 - 1,333
2. 1,334 - 1,342
3. 1,343 - 1,351

ETH Daily Support zones

1. 1,315 - 1,303
2. 1,303 - 1,285
3. 1,285 - 1,278

📌 The topic of the Day: BNB Bridge Hack: Rekt Briefing

BSC Token Hub, the BNB bridge between the old Binance Beacon Chain and BSC, now BNB Chain was exploited into minting two lots of 1M BNB directly to the hacker’s address.

With a BNB price of $293 at the time of the hack, the stolen 2M BNB amounts to $586M, which is ranked 3rd in the history of hacks in crypto; 1st being the Ronin bridge exploit a few months ago at a whopping $626 million.

Likely anticipating that Binance would halt the chain, the exploiter raced to find liquidity to bridge and move as much of the loot as possible to other chains. The hacker managed to escape to other chains with only $127M before losing access to the rest of the funds.

According to a samczsun, a researcher from Paradigm,

“There was a bug in the way that the Binance Bridge verified proofs which could have allowed attackers to forge arbitrary messages. Fortunately, the attacker here only forged two messages, but the damage could have been far worse.”

As the 3rd largest L1 in DeFi, a dangerous precedent has been set by pressing pause on such a heavily-used network. The question remains, will BNB’s involvement in “DeFi” retain any credibility after the incident?

🗒 Happenings of The Week (Oct. 08 - 10):

• 🔹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.

• 🔹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. ****