TL;DR

🔹 Tuesday, US inflation data offered the strongest evidence yet that price pressures have peaked, with the core inflation rate that excludes food and energy coming in at 6% YoY as opposed to 6.3% consensus. As a result, US equities and bonds rallied after the report as investors boosted bets that the Fed will pause its tightening cycle early next year.

🔹 Before the report, BTC and ETH’s correlation coefficients with the S&P 500 index stood at 0.03 and 0.12, from -0.64 and -0.52 a week ago. Now, they’re at 0.07 and 0.15, meaning today’s FOMC interest rate hikes at 19:00 UTC will be a crucial deciding factor in the short-term outlook for the largest cryptos in space.

🔹 The topic of the Day: EU to Apple: Open up or Get Out

🔹 Happenings of the Week: SBF indicted with committing or conspiring to commit fraud on FTX’s customers and lenders, as well as money laundering; Binance has resumed processing withdrawal requests of the USDC stablecoin; Tether announced that it's assisting Binance with a “chain swap” that involves converting 3 billion USDT; Brazil Central Bank Plans to Launch a CBDC in 2024…

As of Dec. 14 00:22 UTC,

⚡️ Bitcoin (BTC) 24-Hour Change: 17,761 (+3.47%)

⚡️ Ether (ETH) 24-Hour Change: 1,317 (+3.62%)

CPI Arrived at Soft Landing, Global Markets Cheered, Rate Hikes Follow at 19:00 UTC Wednesday

Tuesday, US inflation data offered the strongest evidence yet that price pressures have peaked, cheering financial markets and putting a pause on the Federal Reserve’s interest-rate hikes in view.

As a result, US equities and bonds rallied after the report as investors boosted bets that the Fed will pause its tightening cycle early next year. Before the report, BTC and ETH’s correlation coefficients with the S&P 500 index stood at 0.03 and 0.12, from -0.64 and -0.52 a week ago. Now, they’re at 0.07 and 0.15, meaning today’s FOMC interest rate hikes will be a crucial deciding factor in the short-term outlook for the largest cryptos in space.

According to Bloomberg economists Anna Wong and Eliza Winger, “The surprisingly soft November CPI print adds to the case that disinflation is building...By the late-January FOMC meeting, some Fed officials may conclude there’s enough ‘compelling’ evidence to start talking about pausing rate hikes.”

The overall CPI increased 0.1% from the prior month and was up 7.1% from a year earlier (vs. consensus of 7.7%), as lower energy prices helped offset rising food costs. Excluding food and energy, the core consumer price index rose 0.2% in November and was up 6% from a year earlier (vs. consensus of 6.3%).

With annual headline inflation still running above 7%, it’s far too soon for the Fed to let off the gas on its rapid ascent in interest rates. Policymakers are widely expected to downshift to a 50-basis point hike Wednesday, but Chair Jerome Powell will likely communicate that rates will need to remain restrictive well into next year to further cool prices and get inflation back to target.

Some traders are now leaning toward an even smaller 25-basis point increase for February’s Fed meeting. They also see a lower peak in the fed funds rate. However, the main consensus is still a 50-basis point hike Wednesday, down from 75bps from the last FOMC decision.

Following the Fed, the European Central Bank will announce its rate decision Thursday. Markets will also contend with decisions from the Bank of England.

P.S. If you’d like us to cover any specific macro data, or to expand upon technical analysis on your favorite coin, feel free to drop a message in our Reddit community. - Peter L.

💡 Today's Markets at Dec. 14 00:15 UTC

BTC +3.47%; Ether +3.73%.

Asia: Japan +0.31%; Hong Kong +0.68%; China -0.09%; India +0.60%.

Europe: London -0.06%; Paris +1.42%; Frankfurt +1.34%.

US Spot Indices: Dow +0.30%; S&P +0.73%; Nasdaq +1.01%.

US Index Futures: Dow -0.01%; S&P -0.01%; Nasdaq +0.01%.

US Two-year Treasury down 16bps at 4.226%.

US Ten-year Treasury down 12bps at 3.505%.

UK Ten-year Government up 10bps at 3.304%.

US Dollar Index -0.94% at 103.60.

FX in 24hrs: GBP: +0.74%; EUR: +1.00%; JPY: +0.81%; CNY: 0.00%.

Gold +1.65% at 1,809; Brent Crude +6.02% at 80.68.

🧠 Catalysts this week

• Monday: UK GDP, Australia Westpac Consumer Confidence Index
• Tuesday: Australia NAB Business Confidence, UK Unemployment Claimant Count, Germany ZEW Economic Sentiment Index, US Inflation Rate, Japan Tankan Large Manufacturers Index
• Wednesday: UK Inflation Rate, UK PPI, US Fed Interest Rate Decision, US FOMC Projections, US Fed Press Conference, Japan Balance of Trade
• Thursday: China Industrial Production, US Retail Sales, US Jobless Claims, ECB Press Conference
• Friday: UK GfK Consumer Confidence, UK Retail Sales

🏦 BTC

BTC Weekly timeframe:

• Major Level: 13,965 (Monthly High of Jun. 2019)
• Closest support zone: 17,640 - 17,175
• Key resistance zone: 17,815 - 18,025

Analysis as of Dec. 14 - Dec. 18 Session.

Note: As anticipated, the volatility following the release of the CPI data became the much-needed catalyst to drive Bitcoin out of its rangebound period that began on Dec. 02 — effectively shifting its short-term outlook to the bullish side.

BTC Weekly Resistance zones

1. 17,815 - 18,025
2. 18,245 - 18,455
3. 18,755 - 18,990

BTC Weekly Support zones

1. 17,640 - 17,175
2. 17,090 - 16,875
3. 16,690 - 16,430

BTC Daily Timeframe:

• Closest support zone: 17,640 - 17,545
• Closest resistance zone: 17,805 - 17,875
• Key Level: 18,432 (Weekly Close Between Nov. 16 - 23, 2020)

Dec. 13 19:22 UTC Update:

Bitcoin (BTC) was trading at $17,711, or +3.99% in a 24hr period.

Note: The entire daily outlook has changed as S&R zones moved higher with the price of BTC. But there’s still Wednesday’s FOMC statement, which may incite more volatility. At this point, one can only guess which direction BTC will go after the interest rate hikes announcement — there’s also the possibility that the current price of BTC has already been priced in the wide consensus of 50bp rate increase.

BTC Daily Resistance zones

1. 17,805 - 17,875
2. 17,955 - 18,025
3. 18,090 - 18,215

BTC Daily Support zones

1. 17,640 - 17,545
2. 17,450 - 17,370
3. 17,205 - 17,090

🌐 ETH

Weekly Timeframe

• Major Level - 757 (Monthly High of Dec. 2020)
• Closest support zone: 1,315 - 1,280
• Key resistance zone: 1,315 - 1,330

Analysis as of Dec. 14 - Dec. 18 Session.

Note: Like Bitcoin, Ether’s outlook has changed completely: as the price moved up, so did the S&R zones.

ETH Weekly Resistance zones

1. 1,315 - 1,330
2. 1,345 - 1,380
3. 1,390 - 1,415

ETH Weekly Support zones

1. 1,315 - 1,280
2. 1,265 - 1,240
3. 1,220 - 1,180

ETH Daily Timeframe

• Closest support zone: 1,265 - 1,255
• Closest resistance zone: 1,280 - 1,300
• Key Level: 1,347 (Weekly high from Jan. 04, 2021 - Jan. 11, 2021)

Dec. 14 00:02 UTC Update:

ETH was trading at $1,319, or +3.77% in a 24hr period.

Note: The apparent rise in the price of Ether accompanied a slightly higher volume, implying Tuesday’s performance was dominated by buyers, though it would appear the weekly resistance level of $1,347 from January 2021 became a key level that ETH bounced off from.

Since we’re only in the middle of the week and there are still FOMC interest rate hikes to contend with, it’s best to stay alert just in case.

ETH Daily Resistance zones

1. 1,325 - 1,330
2. 1,345 - 1,370
3. 1,380 - 1,390

ETH Daily Support zones

1. 1,315 - 1,310
2. 1,300 - 1,280
3. 1,265 - 1,245

📌 Today's topic: EU to Apple: Open up or Get Out

What’s happening: Apple is known for taking up to a 30% cut of iOS app and service sales, to the frustration of users and creators alike. But a new report suggests that Apple is planning to open up its ecosystem—a move that may benefit apps built around NFTs and possibly expand the ability to make mobile crypto payments.

But why: Apple plans to enable the installation of apps from external sources outside of its own App Store on iPhones and iPads. The changes are being made in response to the European Union’s Digital Markets Act, which requires tech companies to fully comply with restrictions by 2024.

Zoom in: The rollout of support for external apps from third-party sources and marketplaces will initially begin only in Europe to comply with the new law. However, the functionality could be expanded to other territories depending on whether those countries adopt similar regulations.

When though: Apple is reportedly aiming to launch the feature in its iOS 17 software update, which is expected to launch next fall based on the typical annual release schedule.

Why it matters: The reported changes come amid growing pushback to Apple’s closed ecosystem, which not only philosophically clashes with Web3’s decentralized ethos but also has led to restrictions around the ways that apps can utilize NFT assets. In October, Apple updated its developer guidelines to state that NFTs cannot be used to gate access to features or content within apps.

What else: The move could also benefit the growing Web3 metaverse, as Apple is widely reported to be developing a mixed-reality headset that may debut sometime in 2023. Many Web3 developers are building towards a metaverse defined by interoperability between platforms, using NFTs to represent ownership of assets that can be freely used across spaces.

The takeaway: Apple’s reported upcoming plans to open up its ecosystem could benefit NFT and crypto apps that are currently limited or hobbled by App Store requirements. Such apps could then be installed via external sources and not be reliant on Apple’s strict policies, although Bloomberg reports that Apple may institute additional “security requirements” for outside apps.

👁 Happenings of The Week (Dec. 10 - Dec. 13):

📣 Notables

🔹 Congressional committee confirms SBF as FTX hearing witness on Tuesday, Dec. 13.

🔸 12.10: U.S. prosecutors are reportedly laying the groundwork for a potential fraud case against SBF. In other news, the former Alameda Research head Caroline Ellison hired a former crypto regulator at the SEC to represent her in an ongoing federal probe.

🔸 12.12: Bankman-Fried 'unwilling' to accept subpoena, escalating Senate standoff.

🔸 12.13: SBF was arrested in the Bahamas. New FTX CEO John Ray III told lawmakers that there were no distinctions between FTX, Alameda Research, and other entities which filed for bankruptcy protection last month.

🔹 Chinese authorities have arrested 63 people in association with a massive money laundering scheme that allegedly laundered 12 billion yuan ($1.7 billion).

🔹 The European Parliament’s crypto ally Eva Kaili was arrested following corruption allegations. She has played a major role in shaping policy on crypto assets and blockchain since 2018.

🔸 The Parliament voted to terminate crypto-friendly vice-president Eva Kaili’s term of office by a double majority.

🔹 The UK’s economic chief wants more investment in crypto businesses in the country and endorses work on a digital pound. The 30-point “Edinburgh Reforms” released on Friday morning is looking to vamp up the UK’s financial sector.

🔸 The Bank of England is seeking a proof of concept for a sample wallet for a CBDC and will take applications through Dec. 23. The budget range for the initial five-month contract is 200,000 pounds ($245,200).

🔹 Financial regulators such as the Korea Financial Services Commission and the Financial Intelligence Unit (FIU) are reviewing a proposal to include "direct approval by the regulator for tokens to go live on domestic crypto exchanges" in the Basic Act on Virtual Assets.

🔹 Argentina has established a National Blockchain Committee to implement a national blockchain adoption strategy. The Commission will be responsible for "acting as an interlocutor in the local blockchain ecosystem, improving the interoperability of blockchain technology", improving transparency in the investment of Argentine public funds, avoiding the forgery of identity documents, identifying other documents issued by institutions, etc.

🔹 Canada’s financial watchdog is enforcing stricter requirements for crypto firms following the collapse of FTX crypto exchange last month. Measures include separating client and proprietary business assets, ensuring client assets are held with an “appropriate custodian,” and prohibiting offering margin or leverage for Canadian users.

🔹 The Financial Stability Board reportedly has an operational plan for rolling out steps to regulate the crypto sector early next year. The collapse of FTX adds urgency to address crypto supervision, including decentralized finance.

🔹 Brazil Central Bank Plans to Launch a CBDC in 2024. In March the country selected nine partners to help it develop a digital currency. When the CBDC is issued, Brazil will join the Bahamas, Nigeria, Eastern Caribbean and Jamaica as nations that have already issued their own CBDCs.

📣 Dec. 13

🔹 Ex-FTX CEO Sam Bankman-Fried Arrested in the Bahamas. Soon after a U.S. grand jury charged SBF with committing or conspiring to commit fraud on FTX’s customers and lenders, as well as money laundering. The indictments also allege Bankman-Fried and other FTX executives conspired to violate campaign finance laws.

🔹 Binance has resumed processing withdrawal requests of the USD Coin (USDC) stablecoin after temporarily stopping processing USDC withdrawals due to inadequate USDC reserves on the platform, according to Binance CEO Changpeng Zhao, citing “any token swaps into USDC required routing funds through a New York bank”, which was not yet open at the time of his published tweet.

🔹 Tether announced that it's assisting crypto exchange Binance with a “chain swap,” which involves converting 3 billion USDT to the Ethereum network from the Tron network. The swap comes at a time when users have been withdrawing large amounts of assets from Binance. Since yesterday, Binance has seen a net outflow of over $2 billion in various crypto assets

🔹 Tether vows to remove secured loans amid rush to show solvency. The company told the WSJ that its loans reached $6.1 billion, or 9% of Tether's total assets, as of Sept. 30.

🔹 Do Kwon, the founder of Terra, is currently stranded in Serbia, and the South Korean Ministry of Justice is cooperating with the Serbian government in an investigation to see if there is a special facilitator within Serbia. In previous news, the South Korean prosecution issued an arrest warrant for Do Kwon and Interpol has issued a Red Notice for Do Kwon.

🔹 A new report from JPMorgan Chase & Co. concludes that the U.S. crypto market exhibits characteristics of “herd-like behavior.” It also finds that men participate more broadly and deeply in the crypto market, as well as Asian individuals and younger individuals with higher incomes.

🔹 A federal judge ordered the Commodities Future Trading Commission (CFTC) to serve the decentralized trading platform bZeroX's founders Tom Bean and Kyle Kistner as part of an ongoing lawsuit against Ooki DAO.

🔹 MakerDAO is set to execute a bundle of eight governance actions for the protocol. This bundle includes pay for delegates, raising the DAI interest rate and offboarding renBTC as collateral for DAI.

🔹 Cobo, MetaMask Institutional and Gnosis DAO teamed up to create “Evolution,” a Soulbound tokens (SBTs) project, which is a tool to help users define themselves in digital reality and stay up to date on industry trends.

📣 Dec. 12

🔹 Twitter Blue sub_script_ion service will be relaunched on Monday at a higher cost for Apple users. The service is priced at $8/month on the web and $11/month through the iOS app.

🔹 Glassnode data shows that the number of addresses holding more than 1 Bitcoin is at a record high, and the percentage of Bitcoin supply that has not been active for more than 5 years is at a record high of 26.349%.

🔹 China Taiping Insurance launched the first national digital currency account fund loss insurance product.

🔹 Arthur Hayes: Abuse of leverage was the cause of the liquidation, and the FTX collapse may have caused the cryptocurrency to hit a cyclical bottom. 🔹 Decentralized automotive insight network DIMO launches mainnet.

🔹 Illuvium releases Overworld as it attempts to bring AAA quality to web3 gaming.

🔹 Bitcoin Group agrees to buy centuries-old German bank for over 14 million EUR.

🔹 The ENS DAO is voting to choose stewards for three working groups.

🔹 Tron-backed USDD loses dollar parity as stablecoin dips below $0.97.

🔹 According to a Reuters report, U.S. prosecutors looking into crypto exchange Binance are split on how to move forward with the case. Binance and some of its executives are under scrutiny for possible money laundering and criminal sanctions violations.

📣 Dec. 11

🔹 According to accounting and financial specialists consulted by The Wall Street Journal, Binance's efforts to improve the transparency of its reserves also exposed red flags in the crypto exchange's finances, citing the report released by the audit firm Mazars lacks information related to the quality of internal controls and how Binance's systems liquidate assets to cover margin loans.

📣 Dec. 10

🔹 Grayscale Investments said the SEC has filed its first legal brief over the rejection of its application for a spot Bitcoin exchange-traded fund. ****In the 73-page response brief, the SEC argued its rejection was “reasonable, reasonably explained, supported by substantial evidence.” The SEC added futures and spot-based Bitcoin funds are "fundamentally different products.

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

🔹 Blockchain-free decentralization platform Nillion raises $20 million led by Distributed Global.

🔹 Crypto insurance firm Evertas raises $14 million in a Series A round led by Polychain Capital.

🔹 Digital collectibles company Forum3 raised $10 million in seed funding led by Decasonic.

🔹 Web3 game Dogami raised a $7 million seed extension with investment from XAnge and Bpifrance. Dogami enables individuals to buy non-fungible tokens of 3D dogs, which they can adopt and raise. Dogami did an initial drop of 12,000 dog NFTs in the first quarter of this year.

🔹 Crypto startup Outdefine has raised $2.5 million in a seed round co-led by Jump Crypto and TCG Crypto.

🔹 One-stop shop for NFT trading has raised $1.65 million in a seed round co-led by Infinity Ventures Crypto and Spartan Group.

📣 This week’s on-chain criminal activities include but are not limited to:

🔹 Lending platform on Arbitrum — Lodestar Finance was exploited for about $6.5 million.

🔹 Polkadot Oracle OptionRoom was hacked and all assets in the deployer's wallet were stolen. Over the past few days, OptionRoom has been tracking the ongoing transactions of the hacked wallet and found that the hacker also attacked multiple crypto projects at the same time, and they appear to have transferred the stolen funds to Binance and other exchanges.