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In This Issue:
NFT Capitulation?
Bitcoin Thoughts And Analysis
Legacy Markets
Gemini Issues An Ultimatum To DCG
Hong Kong Is Taking Crypto Very Seriously
Justin Bieber’s Ape Is Down Bad
NFT Capitulation?
The current situation within the NFT community is indeed tumultuous, and it seems like a storm is brewing. Following last week's Azuki debacle, the community has shifted their gaze, and not kindly, onto Azuki, effectively branding it as public enemy number one. With the sentiment dropping to record lows, we find ourselves navigating through rough waters in the world of NFTs.
A brief recap for those unfamiliar with the Azuki incident: Azuki, once a highly sought-after NFT collection, saw its reputation come crashing down after its founders decided to release a new series, Elementals. This move, which was initially expected to generate buzz and excitement, instead resulted in an unexpected and detrimental surge in the Azuki supply by 200%. The fallout was immediate and drastic, with the floor price plunging from a robust 17 ETH to a mere 7.15 ETH, and a shocking $40 million in wealth being transferred from the community straight into the pockets of the founders.
Azuki apologized, but the damage has been done.
If you want to learn more about what happened with Azuki, you can click HERE or HERE, but let’s move on to the broader NFT market. Following the incident, Bored Ape Yacht Club NFTs dropped by 16% and the floor fell below 30 ETH, Mutant Ape Yacht Club dropped 20% and fell below 5 ETH, and the entire NFT market dropped by 12% and fell by over 300,000 ETH.
Azuki appears to be the straw that broke the camel's back.
While we don't have a quantifiable NFT Fear & Greed Index, my educated guess suggests that the current sentiment is hovering between 'Fear' and 'Extreme Fear', leaning more towards the 'Extreme' end of the scale. An indicative instance of this was a recent Twitter Spaces discussion titled, "NFTs are over. We failed." Nevertheless, despite the prevailing pessimism, the consensus suggested a potential comeback despite the harsh market conditions.
Yes, the current landscape can be disheartening, but that's the nature of the crypto world. There are no shortcuts, and certainly no assurances that certain NFT collections, such as Azuki or Bored Ape Yacht Club (BAYC), will bounce back from their lows. BAYC itself is grappling with severe challenges at present. While I sense that some collections may be close to hitting bottom, a comprehensive market bottom for NFTs might still be a few months down the line.
To spark a genuine NFT bull market, capital must cycle from Bitcoin to major altcoins, then to NFTs, a process which could take a significant amount of time. What's more, even if the high-tier NFTs manage to recover, NFT holders will have to confront the FOMO of watching Bitcoin climb while their capital is tied up elsewhere, which is a distressing reality.
While I don't have all the solutions, I am confident that NFTs have the potential to recover, though their journey might be more arduous than any other facet of the crypto space. The risk-reward ratio will be extreme, and many won't survive, but one thing I can say without resorting to a crystal ball is that the greatest opportunities often emerge when it appears things can't worsen.
I do think that 99% of the collections trend to zero - the same with altcoins. But there will likely be a few winners that survive.
To all the NFT enthusiasts out there, I wish you the best. Your moment will arrive.
As always, please remember that this is NOT FINANCIAL ADVICE.
Bitcoin Thoughts And Analysis
Proceed with caution. While I have remained generally very bullish, Bitcoin rose to $31,000 resistance based on ETF hype in an otherwise very negative news cycle. As the ETF hype slows and we wait, we will need another major catalyst to continue the push.
The chart is showing bearish divergence with overbought RSI on the daily chart, which is usually a reliable local top signal. I don’t see price dropping back to $25,000, since we were just there. That would give me some major concerns. But I could definitely see a meaningful retracement here.
Bitcoin can violate all technical analysis in a true bull market, but I don’t view the current area as a place to be getting long with any sort of leverage on a trade.
Legacy Markets
European stocks and US equity futures have seen a decline following Asian shares, after fresh data showed continued economic weakness in China, the world's second-largest economy. The Stoxx Europe 600 Index fell approximately 0.4%, with all sectors seeing losses, led by real estate. Futures for the S&P 500 and Nasdaq 100 indicate a similar dip for US stocks.
China's faltering services industry is causing global concern for economic growth, just as many major central banks continue tightening their monetary policy. With further interest rate hikes expected from the Federal Reserve and European Central Bank this month, an aggregate gauge of borrowing costs shows an increase to 6.25% for this quarter, up from the 6% predicted three months ago.
Increasing fears of a potential US recession have impacted demand for equities following a strong rally in the first half of the year, largely driven by mega-cap tech stocks. The minutes from the Fed's latest policy meeting, which saw officials pause their rate-hike cycle after 10 consecutive increases, will be closely monitored.
Initial losses in Chinese equities deepened after the Caixin China services purchasing managers’ index fell short of expectations. These results have redirected attention to the slowing growth and recent increase in geopolitical tension.
Waning optimism about China's economic outlook has also led investors to revise down their expectations for Asian equities this year. Elsewhere, oil prices fell after a rally prompted by production cuts from Saudi Arabia and Russia. The dollar's strength was relatively stable, while gold prices saw little change.
Key events this week:
OPEC International Seminar, speakers including OPEC+ oil ministers, kicks off in Vienna, Wednesday
FOMC issues minutes on June policy meeting, Wednesday
New York Fed President John Williams in “fireside chat” at meeting of the Central Bank Research Association at the New York Fed, Wednesday
US initial jobless claims, trade, ISM services, job openings, Thursday
Dallas Fed President Lorie Logan speaks on a panel about the policy challenges for central banks at CEBRA meeting, Thursday
US unemployment rate, nonfarm payrolls, Friday
ECB’s Christine Lagarde addresses an event in France, Friday
Some of the main moves in markets today:
Stocks
The Stoxx Europe 600 fell 0.4% as of 8:14 a.m. London time
S&P 500 futures fell 0.2%
Nasdaq 100 futures fell 0.4%
Futures on the Dow Jones Industrial Average fell 0.2%
The MSCI Asia Pacific Index fell 0.5%
The MSCI Emerging Markets Index fell 0.6%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro rose 0.2% to $1.0903
The Japanese yen was little changed at 144.61 per dollar
The offshore yuan fell 0.3% to 7.2482 per dollar
The British pound was little changed at $1.2720
Cryptocurrencies
Bitcoin was little changed at $30,813.75
Ether fell 0.2% to $1,937.58
Bonds
The yield on 10-year Treasuries was little changed at 3.86%
Germany’s 10-year yield was little changed at 2.46%
Britain’s 10-year yield advanced two basis points to 4.44%
Commodities
Brent crude fell 0.6% to $75.82 a barrel
Spot gold fell 0.1% to $1,923.55 an ounce
Gemini Issues An Ultimatum To DCG
Earn Update: An Open Letter to @BarrySilbert
The image displayed above is a letter written by Cameron Winklevoss, representing 232,000 Earn users, and addressed to Barry Silbert, the Founder and CEO of Digital Currency Group. The content of the letter unfolds much like a plot from a television drama, culminating in an ultimatum towards the end, which I will share with you shortly.
Attached is a best and final offer. The proposal is fair and reasonable for everyone and represents the floor that creditors, who are required to support a deal, will accept. If you don't agree to this deal by 4pm ET on July 6th, we will proceed with the following next steps:
File a lawsuit against DCG and you personally - this lawsuit will be filed on July 7th…
File a Turnover Motion - demands immediate payment of $630 million.
Advance a Non-Consensual Plan - advance a plan that adheres to a strict timeline
UCC litigation - we will demand that the Unsecured Creditor Committee (UCC) fulfill its fiduciary duties
I’ve seen a lot of bad behavior from you and your colleagues over the last 9 months, but perhaps the most disturbing part is something you said to me this Fall - that you're a victim in all of this. It takes a special kind of person to owe $3.3 billion to hundreds of thousands of people and believe or at least pretend to believe that they are some kind of victim.
Time is running out for Barry Silbert to either provide a response or face legal action. Given the extended duration of this dispute, it doesn't appear that Silbert is leaning towards a compromise. I suspect this situation could drag on for years, which would undoubtedly be a significant disappointment for Earn's creditors. Personally, I eagerly await the day when such crypto-related lawsuits start to abate.
Hong Kong Is Taking Crypto Very Seriously
The official document on which this news is predicated states that "the Hong Kong Special Administrative Region government is actively promoting the development of digital assets and the digital economy." Essentially, the Hong Kong government is being urged to issue its own stablecoin, HKDG, which will be backed by foreign exchange reserves, and is aimed to compete with established players like USDT and USDC.
At first glance, this news may not seem momentous, given the dominance of existing stablecoins such as USDT or USDC. However, it's important to note that Hong Kong's foreign exchange reserves stood at a staggering $430 billion as of March, surpassing the market capitalization of both USDT and USDC. The pace of change in the crypto sphere is rapid, suggesting we might soon witness a new contender in the stablecoin market.
Justin Bieber’s Ape Is Down Bad
All right, I might be engaging in a bit of hyperbole here. Justin Bieber is hardly facing bankruptcy over an NFT investment, but it is indeed a significant occurrence to see celebrities recording a more than 95% loss on their NFT investments. At the height of the NFT boom, Bieber purchased his Bored Ape for 500 ETH, which was valued at $1.3 million back then. Its current value? A measly 29.95 Wrapped Ether (WETH)... quite a harsh reality check. Being honest, that is the floor price, and not necessarily the price of his particular ape.
This kind of setback might discourage many celebrities from reentering the crypto space anytime soon, but rest assured, another wave of late-arriving promoters will inevitably emerge, signaling an opportune moment for the rest of us to realize profits. I don't intend to cast shade on Bieber, but it begs the question - did he have any unique insights about NFTs that we didn't possess?
The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.