Daily News | Crypto Crash, Binance to acquire FTX, And TradFi Investors eye China’s Inflation Rate to Gauge Global Supply Chains

Fundamental & Technical Outlook:

Macro
Good morning, today is Wednesday, Nov. 09, 2022.

TL;DR
🔹 Both Bitcoin and Ether crash more than 10%, continuing a 4-day losing streak. BTC Key Level: 19,606 (23.6% Monthly Fibonacci Retracement Level). ETH Key Level: 1,225 (23.6% Monthly Fibonacci Level from 2022 April - June).

🔹Cryptocurrencies tumbled hard on Tuesday, driven by questions surrounding the balance sheet of Alameda Research and FTX. SBF, in a tweet yesterday, said Binance will acquire FTX and investors should not worry about the liquidity crunch.

🔹 Global investors eye China’s inflation rate to gauge the impact of Covid-zero policies on supply chains and its potential ramifications on a global scale. The most anticipated data, US inflation rate (CPI), is due for release on Thursday.

🔹 The inverse correlations with volatility and the US dollar began to decelerate to -0.70 and -0.90 for both BTC & ETH, implying high movements are still ahead.

🔹 Dow Jones correlations also dropped below 0.90, while Nasdaq continues to drop below 0.20, implying tech sectors are losing steam after the recent earnings rally and traders are looking to non-tech sectors to find catalysts and potential hints at the status of the economies.

🔹 The topic of the Day: FTX Reminds Crypto Companies Not to Use Speculative Tokens as Underlying Assets

🔹 Happenings of the Week: FTX faces liquidity crunch, CZ steps up to acquire FTX, CMHK to start its metaverse initiative in Hong Kong…
💰 . . .

Bitcoin (BTC) 24-Hour Change: 18,293 (-11.46%)

Ether (ETH) 24-Hour Change: 1,617 (-16.35%)

On Wednesday, crypto traders are dealing with uncertainties surrounding FTX’s liquidity and Binance chief’s offer to buyout the former. Meanwhile, global investors eye China’s inflation rate to gauge the impact of Covid-zero policies on supply chains and its potential ramifications on a global scale. The most anticipated data, US inflation rate (CPI), is due for release on Thursday.

The US midterm elections that started on Tuesday are in a heated battle.
Polling and historical precedent suggests voters will turn the House and potentially the Senate over to Republicans, forcing Biden to spend the remaining two years of his term defending achievements such as climate funding and student debt relief from GOP attempts to undo them.

The final outcome may not be known for days or even weeks if races are as close as polls suggest and if losers challenge results.

In the decentralized space, cryptocurrencies tumbled hard on Tuesday, driven by questions surrounding the balance sheet of Alameda Research.
The turbulence, triggered by rival Zhao “CZ” Changpeng’s decision to sell a roughly $530 million holding of FTT coins, brought back memories of the contagion that ripped through crypto markets after the TerraUSD stablecoin collapsed in early May.

FTX (FTT: -80% in 4-days) saw a net outflow of $653 million over a 24-hour period and an unidentified “whale” had pulled $284 million worth of Ether and stablecoins from FTX. In the span of days, it became clear that Bankman-Fried and FTX were in the midst of a liquidity crunch and needed a bailout of their own.

Changpeng Zhao’s Binance swept in to take over, and, while exact terms weren’t disclosed, it’s likely that SBF’s $15.6 billion fortune will be annihilated at the hands of his billionaire rival.

Binance’s acquisition doesn’t involve FTX.US, a separate exchange also majority-owned by Bankman-Fried. FTX.US was valued at $8 billion in a January fundraising round.

Correlations with Dow Jones Index rose slightly and remained high at
BTC Current: 0.81; 24HR: 0.85; 1W: 0.74
ETH Current: 0.86; 24HR: 0.90; 1W: 0.87

Correlations with S&P 500 remained flat at
BTC remained flat at Current: 0.68; 24HR: 0.70; 1W: 0.79
ETH rose slightly to Current: 0.74; 24HR: 0.75; 1W: 0.82

Correlations with Nasdaq continued to drop to
BTC Current: 0.19; 24HR: 0.19; 1W: 0.64
ETH Current: 0.23; 24HR: 0.24; 1W: 0.57

Inverse Correlation with US dollar Index remained high ****at
BTC Current: -0.72; 24HR: -0.80; 1W: -0.77
ETH Current: -0.73; 24HR: -0.79; 1W: -0.71

Inverse Correlation with Volatility Index remained high at ****
BTC Current: -0.90; 24HR: -0.93; 1W: -0.88
ETH Current: -0.94; 24HR: -0.96; 1W: -0.92

Correlation with Gold accelerates at
BTC Current: 0.16; 24HR: 0.16; 1W: 0.03
ETH Current: 0.18; 24HR: 0.08; 1W: -0.24

4️⃣ . . .


Thursday
13:30 UTC

US Inflation Rate (Consumer Price Index)
Actual: ____ ; Consensus: 8.0%; Previous: 8.2%

As of Wednesday before US equity markets opened, the 10-year treasury note remained flat ahead of the release of October inflation data, while the 2-year treasury note which is most sensitive to US economic data was down 1bps.

The dollar moves inversely to bonds, implying the rise in treasury yields may reflect a similar sentiment in cryptocurrencies, particularly Bitcoin and ether.

A rise in inflation that beats consensus would trigger global concerns over the ramifications of the continued hawkishness by the Fed, while a lower CPI would imply the loosening of policies may arrive sooner than the expected March.

The annual inflation rate in the US slowed for the third month to 8.2% in September of 2022, compared to 8.3% in August. The energy index increased 19.8%, below 23.8% in August.

A small slowdown was also seen in the cost of food (11.2% vs 11.4% which was the highest since 1979).

Meanwhile, the core rate which excludes volatile food and energy, rose to 6.6%, the highest since August of 1982, and above market expectations of 6.5% in a sign inflationary pressures remain elevated.

3️⃣ . . .

Wednesday
01:30 UTC

China Inflation Rate
Actual: ____ ; Consensus: 2.4%; Previous: 2.8%

China's annual inflation dropped to 2.8% yoy in October 2022 from 2.8% in the prior month, matching market consensus.

This was the highest rate since April 2020, mainly due to a sharp jump in the cost of food.

Statistic agency's data showed Chinese food inflation climbed to its highest in 25 months (8.8% vs 6.1% in August), with pork prices accelerating further despite efforts from authorities to release national meat reserves into the market.

In the meantime, non-food inflation eased to 1.5% from 1.7%, amid smaller increases in prices of transport & communication (4.5% vs 4.9%), housing (0.3% vs 0.6%), clothing (0.5% vs 0.6%), and education, culture (1.2% vs 1.6%).

China has set a target of CPI at around 3% for 2022, the same as in 2021.
💡 . . .

Today's Markets
BTC -11.11%; Ether -15.99%.
Asia: Japan -0.28%; Hong Kong -0.53**%**; China -0.28%; India +0.47%.
Europe: London +0.05%; Paris +0.39%; Frankfurt +1.15%.
Futures at 02:00, Dow +0.03%; S&P +0.09%; Nasdaq +0.26%.
US Two-year Treasury Yield up 1bps at 4.670%.
US Ten-year Treasury Yield up 2bps flat at 4.150%.
UK Ten-year Government Bonds down 9bps at 3.646%.
US dollar Index +0.06% at 109.32.
FX: GBP: +0.3%; EUR: +0.3%; JPY: -0.16%; CNY: +0.35%.
Gold -0.22%; Brent Crude -2.61%.

Catalysts between Nov. 09 - Nov. 11:
Wednesday: China Inflation Rate (CPI)
Thursday: US Inflation Rate (CPI)
Friday: UK Q3 GDP, November Michigan Consumer Sentiment

🏦 . . .


🟠 BTC
BTC Weekly timeframe:
Major Level: 19,606 (23.6% Monthly Fibonacci Retracement Level)
Closest support zone: 19,085 - 18,430
Key resistance level: 19,720 - 20,335


Analysis as of Nov. 09 - Nov. 11 Session.

BTC Weekly Resistance zones
19,720 - 20,335
21,000 - 21,700

BTC Weekly Support zones
19,085 - 18,430
17,715 - 16,875


BTC Daily Timeframe:
Closest support zone: 17,715 - 16,875
Closest resistance zone: 18,545 - 18,950
Key Level: 18,973 (23.6% Weekly Fibonacci Retracement level)


Nov. 09 01:35 UTC Update:
Bitcoin (BTC) was trading at $18,350, or -10.58% in a 24hr period.

BTC Daily Resistance zones
18,545 - 18,950
19,400 - 20,135

BTC Daily Support zones
17,715 - 16,875
16,970 - 16,005

🌐 . . .


🔵 ETH
Weekly Timeframe
Major Level - 1,225 (23.6% Monthly Fibonacci Level from 2022 April - June)
Closest support zone: 1,420 - 1,470
Key resistance zone: 1,500 - 1,575


Analysis as of Nov. 09 - Nov. 11 Session.

ETH Weekly Resistance zones
1,420 - 1,470
1,500 - 1,575

ETH Weekly Support zones
1,275 - 1,205
1,150 - 1,100


ETH Daily Timeframe
Closest support zone: 1,325 - 1,300
Closest resistance zone: 1,385 - 1,415
Key Level: 1,346 (61.8% Weekly Fibonacci Retracement Level measured from Jul. 04 - Aug. 08)


Nov. 09 01:55 UTC Update:
ETH was trading at $1,320, or -15.97% in a 24hr period.

ETH Daily Resistance zones
1,385 - 1,415
1,430 - 1,470
1,480 - 1,520

ETH Daily Support zones
1,325 - 1,300
1,215 - 1,165
1,150 - 1,100

💡 . . .

📌 The topic of the Day: FTX Reminds Crypto Companies Not to Use Speculative Tokens as Underlying Assets

Circle co-founder and CEO Jeremy Allaire took to social media to offer his thoughts on the FTX incident and the impact on the cryptocurrency industry, stating that “lack of transparency, lack of counterparty visibility, and the use of speculative Token as the underlying asset for vaults and balance sheets are the root causes of problems in a downward market cycle.”

On the other hand, there is a lack of clear regulatory guidelines in the U.S. "The crypto industry must move decisively from the speculative value phase of crypto to the utility value phase, and should build durable, high-utility crypto products in the future. A few days ago, CZ also stated on its social media platform that all cryptocurrency trading platforms should do the Merkle Tree reserve proof. While banks rely on fractional reserves to operate, cryptocurrency trading platforms should not. It also said that it will soon start to do proof of reserves to achieve full transparency of PoR.

Separately, cryptocurrency exchange Gate.io has certified that it holds 108 percent of its users' total BTC assets in reserves, according to third-party auditing firm Armanino LLP. In addition, the report found that users' ETH assets in reserve represent 104% of users' ETH, meaning that **Gate.io's BTC and ETH reserves exceed the total amount of users' assets.**

The audit used a unique proof-of-reserves method called "proof-of-reserves", which allows users to securely and privately verify that they are included in the proof via a cryptographic Merkle tree (one of the core components of Bitcoin).

Armanino LLP is said to be one of the 25 largest independent accounting firms in the United States, a member of the American Institute of Certified Public Accountants and the Center for Audit Quality, and is licensed by the California State Board of Accountancy.

👁️ . . .



Happenings of The Week (Nov. 06 - Nov. 08):

📣 Notables
🔹 Russia's central bank released a report aimed at integrating crypto assets into the financial system.

🔹 South Korea's political committee will discuss the amendment to the Basic Act on Digital Assets on November 15.

🔹 On November 7, European Central Bank President Christine Lagarde said that the European Commission will "soon" present legislative proposals on the digital euro.

🔹 RBI deputy governor: Stablecoin can be completely replaced by central bank digital currency.

🔹China's Hengqin Guangdong-Macao Deep Cooperation Zone jointly issued a notice on ten taxation measures to support the development of metaverse industry.

📣 Nov. 09
🔹Crypto regulation bill pushed by SBF may not pass due to the FTX incident after SBF donated $39.2 million to the U.S. midterm elections.

🔹Prominent trader Arthur Hayes said he has bought puts on Bitcoin at $15,000, expiring in March 2023. In addition, he said that FTX is the "Lehman of crypto" and predicted that the market has not bottomed yet and that Bitcoin's price of $17,500 is still at risk with reference to the S&P hitting 666 points in March 2009.

🔹 Yuga Labs co-founder Wylie Aronow suggested a permission list that would check wallet addresses and known royalty-respecting smart contracts to maintain creator royalties for new NFT contracts. Transactions will only occur if this permission list detects a smart contract transaction request from a royalty-compliant NFT marketplace.

📣 Nov. 08
🔹 Animoca Brands announces a new NFT bike project with 3D printing startup Arevo Inc. where each bike will have NFT verification and a matching NFT image will adorn the carbon fiber body, which will further integrate digital assets with physical objects and is expected to be available in the first quarter of 2023.

🔹 China Mobile Hong Kong launches NFT Free Bazaar. In a press conference at Hong Kong Science Park yesterday, CMHK announced that its all-encompassing smart life mobile application MyLink has surpassed 5 million users, and launched MyLink Metaverse Digital Space and developed NFT Free Bazaar, which supports B2C (Business to User), B2B (Business to Business) and C2C (User to User) marketplace transactions.

🔹 Watchmaker Rolex has recently filed trademark applications with the United States Patent and Trademark Office (USPTO) covering NFTs.

🔹Federal Reserve Bank of New York: Cryptocurrencies are no longer the top 10 most frequently cited potential risks.

📣 Nov. 07
🔹Theirsverse Series NFT Rises to #1 on OpenSea Trend.

🔹Musk releases 'Twitter Rules' with emphasis on privacy, authenticity and 5 other key points.

🔹Twitter co-founder and former CEO Jack Dorsey has unfollowed FTX CEO Sam Bankman-Fried (SBF) on Twitter.

🔹Appliance maker LG Electronics is hiring chief technology officers (CTOs) for two divisions, business development and service design, to lead the company's growing Web3 business.

🔹Circle to issue Euro Coin, a euro-stabilized coin, on Solana in early 2023.

📣 Nov. 06
🔹Biden: Twitter is "an institution that spreads lies to the world."

📣 This week’s fundraising activities include but are not limited to:
🔹Job Protocol, a decentralized recruitment network, has closed a $1.5 million round of funding at a $7.5 million valuation led by Tioga Capital with participation from Portal Ventures and Syndicate One. Job Protocol reportedly allows recruiting companies to offer bounties to fill job openings and will pay bounties to successful referrals in the form of USDC, with the current maximum bounty on the site being $25,000.

🔹South Korean gaming giant NCSoft has invested $15 million in Sui developer Mysten Labs as part of the latter's previous $300 million funding round. The funds will be used to drive Mysten Labs' development of the Sui Layer 1 blockchain as an infrastructure for Web3 games and other projects.

🔹JPMorgan said in a research note that the downward trend began in May after the Terra collapse, and the weak October numbers suggest more than just a seasonal slowdown, with current venture capital investment levels of $500 million to $1 billion per month bringing annual investment closer to $10 billion, which is less than a third of last year's pace, CoinDesk reported. This suggests that venture capital funds are reluctant to deploy capital in the digital asset space, increasing the likelihood that the current weakness in the crypto market may persist for some time. Other indicators, such as depressed Bitcoin and ethereum exchange traded fund flows, also point to continued weakness.

🔹 UAE-based digital payment services platform Pyypl closed a $20 million Series B funding round with undisclosed investor information. Pyypl will use the proceeds to expand its financial inclusion programs in the Middle East and Africa, and will also use the proceeds for product development to enhance the user experience and support growth in current and new markets.

🔹 Blockchain startup Assert AI closes $2 million funding round with participation from Quona Capital and others. The company plans to use the new funding to introduce a public agriculture blockchain ledger and support its vision of artificial intelligence and deep technology for storage, financing and commercial products, while expanding its solutions into agri-tech, food storage, and deeper penetration into warehousing, logistics, supply chain management, manufacturing and retail.

📣 This week’s onchain criminal activities include but are not limited to:
🔹 Monday, U.S. attorneys announced that James Zhong pleaded guilty to wire fraud charges for illegally obtaining bitcoins from the Silk Road darknet in 2012. In November 2021, law enforcement officials seized over 50,676 bitcoins, then valued at more than $3.36 billion, from Zhong's home. The case is set for sentencing on February 22, 2023, and the DOJ says it carries a maximum sentence of 20 years in prison, with the exact length of the sentence set by Congress.



Author: Gate.io Researcher Peter L. & Byron B.
This article represents only the researcher's views and does not constitute any investment advice.
Gate.io reserves all rights to this article. Reposting the article will be permitted provided Gate.io is referenced.
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