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In This Issue:
We Have Gone Stir Crazy
Bitcoin Thoughts And Analysis
US Credit Downgraded! Legacy Markets.
An Update On Curve
Ethereum ETFs Are Next
Michael Saylor Buys More Bitcoin
$52M Curve Hack Explained & Why The Worst May Not Be Over Yet
We Have Gone Stir Crazy
I love crypto, but there are some days that I wake up, read the news and all I can say to myself is, what the f**k are we doing here? Remember when BlackRock jumped aboard? It seemed like clear skies ahead. We were being taken seriously and institutions were coming, offering us much needed credibility. Fast forward to now, and things look… different.
After expressing my concerns about Richard Heart and Hex, the reaction was... well, intense. The present DeFi landscape seems cluttered. Voyager creditors face challenges, misinformation abounds, and there's chatter about an incident with SBF potentially rugging pulling a coin called “Bald” on Coinbase's new protocal. Would that make him the “Ace of Base?” Sorry, bad dad joke.
Recall when BlackRock filed for a Bitcoin ETF? It overshadowed many other significant events. Currently, it seems the market is recalibrating post that announcement. In the near term, I'm on the fence. If the ETF is greenlit or other pivotal updates emerge, the tide might turn. For the long haul? I remain optimistic.
On Richard Heart: I will tread lightly now, for my own peace of mind... and safety! I recommend checking out the attached video, which is the trailer for a new movie about the controversial character. It's perplexing to encounter figures in crypto who utter phrases like, “I think you should trust me, but if you get in the habit of trusting people like me, you'll get the crap scammed out of you.” No one appreciates parting with their funds. The SEC's delayed action on Hex baffles me. In the spirit of fairness, I will be hosting a number of “hexicans” on my YouTube stream tomorrow morning.
There's no shortage of controversy in crypto, with Richard Heart leading the pack. But Michael Egorov, Curve's founder, is certainly grabbing headlines. Amid the Curve debacle, it's come to light that Egorov faces an immense liquidation of $305 million CRV supporting a $63.2 million USDT loan on Aave. This was apparently used to purchase two opulent villas in Melbourne, Australia, valued at roughly $40 million. Using funds that jeopardize DeFi to acquire extravagant estates? Questionable, to say the least.
This certainly calls into the question the validity of DeFi’s core premise - that illiquid coins should be accepted as collateral, even if the loans are massively overcollateralized. ESPECIALLY if those tokens belong to the founder of the protocol. Remember FTT?
As for risk management, if you thought Egorov's situation was dubious, SBF is in a league of his own. Rumors are swirling that either SBF or someone associated with FTX/Alameda orchestrated the BALD rug pull. While I tend to steer clear of conspiracy theories, it's notable that SBF's bail conditions involve limited internet access due to a prior breach. It wouldn't shock me if there were links between his team and BALD, but I'll await definitive evidence. BALD on its own is a blow to the community; if SBF had a hand in it, it'd be a bitter betrayal. I doubt that is the case, but do believe an insider could be involved.
It's hard to overlook the barrage of misinformation these days. Case in point, the Financial Times article that turned out to be false, sparking a cascade of posts that added fuel to the fire without offering much-needed context. Adding to the intrigue, there's buzz that Voyager's customer data might be compromised. Talk about kicking creditors when they're already down. Meanwhile, BlackRock, the entity many are pinning their ETF approval hopes on, is under scrutiny for its dealings in China. However, with the widely held belief that BlackRock wields more influence over the government than vice versa, this might not be a major stumbling block.
If you're thinking that the current state of crypto seems akin to a chaotic carnival with murderous clowns, we're on the same page. Yet, it's often in these tumultuous times that the best opportunities arise, especially when the crowd is on the verge of throwing in the towel. Despite the noise, the market's resilience speaks volumes, hinting at the broader picture. However, it's poised precariously – one severely negative narrative might tip the scales. Predicting the future is beyond my scope, but my conviction remains: the turmoil will subside. The hardest part? Weathering the storm when it hits.
My two cents? Bear markets are not the time to be easily swayed. I'm holding my ground. Chances are, this roller coaster will soon crest another peak, especially if a few dominoes fall in our favor.
Bitcoin Finally Taps $28,600
The low of the entire correction between the 65K and 69K highs was $28,600. I have been discussing this level ad nauseam here, expecting to at least tap that level on this retracement. Yesterday’s price action brought price slightly below, by about $10 before seeing a sizable reaction to the upside. Much like $25,000 was a key level on the last dip, $28,600 was the “obvious play” on this move.
That’s the summary of the weekly. There’s still little to do between $28,600 and the $31,000 area.
The 4-hour chart makes the picture more confusing. As you can price, price put in a beautiful bottom candle, with the long wick down and then pumped on increasing volume off of the key $28,600 level. That’s great. Then after breaking back into the range, we saw even more selling volume and a massive top candle, with the long wick up. Now we need to watch patiently to see if this candle (and the daily) can hold the range. If so, I think the bottom of this move is in. $29,500 is the key local area.
US Credit Downgraded! Legacy Markets.
Global stocks faced a decline after Fitch Ratings downgraded the US sovereign credit grade, prompting a shift away from riskier assets. Europe experienced broad losses, causing its benchmark index to dip significantly. Futures for S&P 500 and Nasdaq 100 dropped over 1%, indicating a potential downturn for Wall Street after five months of positive momentum. Fitch's downgrade was attributed to a growing fiscal deficit and governance issues in the US. Although some analysts believe the market is using this as a reason to secure profits, Alexandre Baradez suspects the primary concern is an impending economic slowdown. While the stock market was in turmoil, Treasuries and the dollar remained relatively stable. Despite the downgrade, experts believe that the US assets will maintain their top-notch status in the long term. Individual stock performances varied, with some companies surpassing estimates and others falling short. Upcoming reports from major companies, including Apple Inc. and Amazon.com Inc., have investors eager for insights into the impact of high interest rates on the economy. Meanwhile, oil prices continue to rise due to decreased US inventories.
Key events this week:
China Caixin Services PMI, Thursday
Eurozone S&P Global Eurozone Services PMI, PPI, Thursday
Bank of England rate decision, Thursday
US initial jobless claims, productivity, factory orders, ISM Services, Thursday
Eurozone retail sales, Friday
US unemployment rate, non-farm payrolls, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 1.7% as of 9:48 a.m. London time
S&P 500 futures fell 1%
Nasdaq 100 futures fell 1.3%
Futures on the Dow Jones Industrial Average fell 0.8%
The MSCI Asia Pacific Index fell 1.7%
The MSCI Emerging Markets Index fell 1.9%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0983
The Japanese yen rose 0.7% to 142.36 per dollar
The offshore yuan was little changed at 7.1915 per dollar
The British pound was little changed at $1.2789
Cryptocurrencies
Bitcoin rose 0.9% to $29,480.75
Ether rose 0.3% to $1,855.42
Bonds
The yield on 10-year Treasuries was little changed at 4.02%
Germany’s 10-year yield declined three basis points to 2.52%
Britain’s 10-year yield advanced two basis points to 4.42%
Commodities
Brent crude rose 0.6% to $85.39 a barrel
Spot gold rose 0.3% to $1,950.69 an ounce
An Update On Curve
The Curve debacle has certainly sent shockwaves through the DeFi landscape. I previously touched on the predicament Curve's founder, Michael Egorov, finds himself in, grappling with a mammoth liquidation anchored by $305 million CRV backing a $63.2 million USDT loan on Aave. Here, however, I'd like to shift focus to Curve's performance on exchanges.
In the wake of the security breach, Curve's value has taken a hit on USD-denominated exchanges. Interestingly, over at South Korea's Bithumb, the CRV/KRW pairing reportedly soared by over 500%. Conversely, Upbit, another major South Korean platform, opted for caution, momentarily halting deposits and withdrawals for the token. Amid this maelstrom, a silver lining emerged. A white hat hacker, harnessing the same vulnerability, altruistically reclaimed $5.2 million, channeling it back to the Curve pool.
It's somewhat disheartening that, prior to this incident, Curve was largely seen as a robust and reliable fixture in the DeFi realm. While I don't claim to have a crystal ball to foretell Curve's trajectory, it underscores a cardinal rule: in the world of finance, and especially in DeFi, there's no iron-clad guarantee of safety. Diversification and risk mitigation aren't just good advice—they're essential. Entrusting substantial sums to a single pool seems reckless, given DeFi's history of costly exploits.
Ethereum ETFs Are Next
After the successful launch of Volatility Shares' leveraged Bitcoin ETF last month, the issuer is making waves yet again, this time venturing into a novel ETF realm. On July 28th, they officially filed for the Ether Strategy ETF with the SEC. This ETF aims to invest in cash-settled ether futures contracts that are traded on the CME.
However, it's crucial to recognize the pace at which financial products evolve. If a spot Bitcoin ETF gets the green light later this year, don't hold your breath for an immediate Ethereum ETF filing or approval. While not impossible, remember that it's taken nearly 2 years for Ethereum to even kick off the futures filing process.
I'm of the firm belief that Ethereum will, in due course, mirror Bitcoin's milestones. Yet, patience is key. Those who bide their time are likely to reap the rewards.
Michael Saylor Buys More Bitcoin
Based on the provided figures, Saylor's average cost for his recent Bitcoin acquisition hovered around $30,835 per coin, eerily close to the recent peak. Predictably, many scoffed at Saylor's seemingly 'ill-timed' investment. However, time may very well prove that Saylor gets the last chuckle, especially if Bitcoin rebounds to $50,000, advances to $75,000, and surges beyond $100,000. When it comes to the Bitcoin realm, Michael Saylor's strategy is unparalleled, period.
$52M Curve Hack Explained & Why The Worst May Not Be Over Yet
Michael Fasanello, Crypto Compliance Officer at AnChain, joins my stream to explain the recent Curve hack: what happened and what are the consequences for the DeFi ecosystem. In the second part of the show trader Charlie Burton shares his thoughts about the market.
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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.