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Weekly Commentary September 8th

Summarising weekly developments: Macro, TradFi, Crypto and Regulation...

Crypto terminology. The ultimate 2024 guide
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Published in: One Trading · 5 min read
Summarising weekly developments: 1T, Macro, TradFi, Crypto and much more...

ONE TRADING NEWS

Happy Friday One Traders,

It’s been another busy week and we’re extremely excited to share the launch of our new product, Instant Trade, with you! If you’ve not yet had a chance to test it, this information may be quite helpful. 

So, what is it? Instant Trade is a product that will enable all of our customers to instantly trade 100+ pairs between crypto-assets and fiat seamlessly, trade up to €10M at the click of a button, and commission-free.

We have expanded the number of assets that can be traded with the most popular crypto-assets and pairs available, as well as many more alternative popular altcoins. Crypto-assets that will be offered include ARB, PEPE, ALGO, FIL, FTM, HBAR, MATIC, NEAR, QNT, XLM. You can see the full list when accessing Instant Trade within the One Trading portal. 

Summary:

  • Comprehensive - Trade 100+ pairs between crypto-assets and fiat seamlessly  
  • Trade in size - trade up to €10M in one click
  • 0% commission - no commission charged on the price quoted
  • Safe - Regulated in the EU, we uphold high regulatory standards 
  • Regulated - when the rules change we adapt. We are leading the way in the regulatory and compliance area
  • Convenient - trade anywhere, anytime on desktop or mobile 

Read more about Instant Trade on our blog here and you can listen to our latest Twitter/X Spaces AMA with our CEO, Josh Barraclough, here. We will also be doing another AMA next Tuesday so please test out Instant Trade in the meantime and share your thoughts and questions via a Typeform here or via our socials and community channels here.

GENERAL MACRO NEWS

Beat from the Street (Tech/Business/Finance/Economy)

Robots being developed in China look incredibly advanced. See video here of the robots mimicking humans reactions. Having a robot friend or companion is set to be a big business in the not too distant future.


PayPal is in the news (again). This time it’s in light of Coinbase listing PayPal’s USD $PYUSD stablecoin. The upcoming listing will be labelled as an “experimental asset,” denoting tokens that are either newcomers to the exchange or have relatively lower trading volumes when compared to the broader cryptocurrency market.


According to Coinbase’s announcement, it is set to enable compatibility with PayPal USD (PYUSD) as an ERC-20 token on the Ethereum network. PYUSD transfers are accessible via Coinbase and Coinbase Exchange in the regions that support trading. The listing confirmation came after the exchange’s first mention last Friday.

“Once sufficient supply of this asset is established trading on our PYUSD-USD trading pairs will launch in phases. Support for PYUSD may be restricted in some supported jurisdictions,” Coinbase noted on its official account.


It will be fascinating to see how this develops. Before PayPal, Meta (formerly Facebook) had introduced the Libra stablecoin in 2019. However, these aspirations were met with substantial resistance from financial regulators and policymakers who expressed concerns about the potential disruption it could bring to global financial stability.


Binance has also struggled with BUSD amidst the recent turbulence in the U.S. with the ongoing legal actions. Binance will stop supporting BUSD in 2024. Paxos will stop supporting BUSD in February of 2024 (Binance.com).


While there is still a long way to go for stablecoins and crypto (in the bigger picture) all of these events are helping to pave the way in broadening awareness and helping with incremental adoption of the underlying technology, which is encouraging (Blockonomi). 

Average monthly payment for a new car in the U.S. hits a fresh all time high of $733. This is up 33% from the average of $550 in 2019 and on track to cross $750 by the end of 2023. Meanwhile, the average interest rate on a new car loan just hit a record 9.5%. Owning a car has become a luxury (The Kobeissi Letter via X).

There are also concerns that the US housing market may also be heading for trouble. 

Certain have pointed out a correlation between mortgage defaults and unemployment. The Fed has suggested that they want to see higher unemployment to bring down inflation. As such, it could be the case that the Fed will wait for higher unemployment, before lowering interest rates, which could mean a rise in mortgage defaults. Higher unemployment would mean reduced purchasing power, which in turn could tame inflation. In August, unemployment rates climbed from 3.5% to 3.8% - if they rise above 4%, we could see more mortgage defaults occurring and the likelihood of a housing crisis increases (The Kobeissi Letter). 

Crude oil prices rise above $87.00 for the first time since November 2022. Saudi Arabia just announced they will be extending production cuts of 1 million barrels per day until January 2024. In less than 3 months, oil prices have gained a massive ~31%. The last time oil neared $90, the US Strategic Petroleum Reserve (SPR) had 250 million more barrels of crude oil. What happened to refilling the SPR? (The Kobeissi Letter)

In the UK, housing prices fell by 0.8% in August, with a significant annual decline of -5.3%. This is the sharpest yearly drop since July 2009. Additionally, data from the Bank of England showed a 10% drop in approved but uncompleted home loans in July.

Germany experienced a slowdown in consumer price inflation (CPI), which reached 6.1% year-over-year in August, matching a 14-month low. Retail sales also fell by 0.8% in July, worse than the expected 0.5% decline. These indicators suggest economic challenges ahead for Germany, which could affect consumer confidence.

Chinese stocks saw an increase after the government introduced various stimulus measures to boost the economy. China's central bank also reduced the amount of foreign currency deposits that domestic banks are required to hold as reserves. These actions aim to support economic growth in China (Simplicity Group Alpha).

TradFi Pulse:

The Bank of England needs a bailout to the tune of £150 billion 15 years after it bailed out commercial banks following the 2008 collapse.

As interest rates have increased more than anticipated, losses at the Bank of England are up £23 billion from a forecast just this March, coming at £48.7 billion for this fiscal year and £38.1 billion for 2024.

"Not only is inflation running higher than expected, the indemnity cost of the BoE’s balance sheet operations will almost certainly be higher than what was expected only five months ago,” said Sanjay Raja, a senior economist at Deutsche Bank.

The vast Quantitative Easing following the commercial banks bailout, which increased the central bank's government bond holdings to £895 billion, allowed the Bank of England to make money initially when interest rates were low.

"Up to July 2022, a cumulative total of nearly £124 billion was passed to the Treasury," said the Office for Budget Responsibility (OBR), an independent body set up to scrutinise government finances.

All that is being wiped out, and more, as a sudden pickup in inflation has caused the bank to aggressively raise interest rates, crashing bonds in the process, and their own vast holdings (TrustNodes).

MARKET NEWS (CRYPTO SPECIFIC)

France’s Data Watchdog Conducts Checks at the Worldcoin Office in Paris.

The French body overseeing the protection of personal data has carried out “checks” at the Paris office of Worldcoin. The news of the French inspections comes amid heightened regulatory pressure on the crypto-asset project co-founded by the current chief executive of ChatGPT developer OpenAI. 

Worldcoin has been developed by a U.S.-German company called Tools for Humanity and founded in 2019 by Sam Altman, the CEO of OpenAI, the Microsoft-backed artificial intelligence (AI) research laboratory behind the AI-based chatbot ChatGPT.

The project has stirred controversy as it requires users to have their eyes scanned in exchange for a digital ‘World ID’ and, in some jurisdictions, crypto-assets as well. It claims this is done to authenticate people online and counter AI-facilitated virtual identities.

CNIL is France’s independent watchdog tasked to ensure that the French data privacy law is applied to the collection, storage, and use of personal data. In July, it said it was investigating Worldcoin for what it describes as the “questionable” legality of its biometric data (Bitcoin.com).

  • China declaring digital assets a legal property protected by its law is an “earthquake that could hit the Bitcoin price.” (Forbes).
  • FUD: UK Virtual Asset Service Providers (VASPs) need to comply with #FATF’s Travel Rule from September 1. Which mandates that to collect, verify, and share information for all #crypto transfers. (Forbes India)
  • Coinbase Partnered with X (Twitter), to launch a job postings feature (Coinbase via X
  • Hong Kong bank SEBA gains approval to offer Bitcoin & crypto services (Bloomberg)
  • EOS Network Foundation Receives Regulatory Approval in Japan (EOS Network)
  • 52% Of Turkish Adults Are Now Investing In Crypto. (KuCoin Report)
  • US State Colorado Department of Motor Vehicles now accepts cryptocurrency for online services (Colorado Politics
  • Stake.com exploited for 6000 ETH  (x/@peckshield
  • The National Payments Corporation Of India (NPCI) — an initiative led by the Reserve Bank of India (RBI) and 247 Indian banking companies — is on the lookout for a seasoned blockchain technologist to head and investigate opportunities for blockchain in current-day payment systems. (Cointelegraph)

Digital asset investment product flows cooled off, with relatively minor outflows totalling $11.2m. This run of negative sentiment over the last 7 weeks now totals $342m (Coinshares)

Prices (at the time of writing)

  • BTC: $25,687 ⬇️ from $27,482 last week (-6.53%)
  • ETH: $1,629 ⬇️ from $1,720 last week (-5.59%)

Dominance:

  • BTC: 46.33%
  • ETH: 18.15%
  • Stables: 10.09%

Market Cap:

  • Total: 1.08T ⬇️ from 1.14T last week (-5.56%)

Fear and Greed Index

(Alternative)

We’ve seen a move from 39 to 40 since last week. This clearly doesn’t reflect much change in market sentiment. We could be approaching quite an interesting juncture at some point over the coming months if we see increased turbulence in the macro market while crypto continues to progress. Awareness and adoption is clearly growing but only time will tell how things play out on a global scale. It is as always worth keeping an eye on recent private fundraising amount blockchain startups as you can see below. 

(ICO Analytics)

TRADING HIGHLIGHTS

Top 3 Gainers (out of the top 100 by market cap only) - as always, this is not financial advice, and past performance is not a reliable indicator of future results.

BITCOIN UPDATES

Last week we were awaiting an update on a handful of spot ETF’s. This week, it seems many are disappointed with the announcement that the ETF decisions have all been delayed. There is however a firm feeling that this is a when, not if, scenario as many believe there will be an approval before the end of the year, which could cause a significant bull case for bitcoin and mass adoption in general. Former SEC Chair Jay Clayton is one such person stating: “A Bitcoin ETF is inevitable”. 

SEC has delayed the spot Bitcoin ETFs of the following companies:

  • BlackRock
  • Fidelity
  • Galaxy
  • Invesco
  • WisdomTree
  • VanEck
  • Valkyrie
  • Bitwise

(SEC.gov)

Bitcoin withdrawals from exchanges are outpacing deposits at highest rates since the FTX collapse. There are currently 58,000 BTC being withdrawn for every 45,000 BTC deposited (Glassnode)

“Percentage of Bitcoin supply held by entities with less than 10 BTC continues to reach new highs. This has been up only for the entirety of its existence. Plebs keep stacking, improving supply distribution over time. Very positive structural trend." (Will Clemente via X)

BlackRock is a majority shareholder in 4 out of the 5 largest Bitcoin miners (Finbold)

The number of Bitcoin addresses (potentially holders) with a non-zero balance has exceeded 48.5 million—more than the entire population of Spain! 

No matter what level of understanding you have of Bitcoin, Dylan LeClair shares some great alpha in this recent video (Dylan LeClair via X).

All in all, these may be positive we feel that these are some strong signals for Bitcoin and while there are some bearish signals in the macro market (as noted above), the awareness and progress for Bitcoin is undeniable. It is also becoming increasingly less volatile. So far 2023 has been the least volatile year for Bitcoin over the last ten years (see below). 

MEME OF THE WEEK...

Thanks for reading. Have a great weekend 😃

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All the best,

The One Trading team