The Market Holds Its Breath Waiting for the Fed

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2022-07-22 18:38:41

Market situation

Bitcoin price continues to move sideways around $38,000. Altcoins are also mostly flat or volatile.

In yesterday’s trading session, the Nasdaq index price fluctuated a lot and ended the session slightly higher. Nasdaq ended April with its worst monthly performance since 2008 driven by inflation and Fed rate hikes.

The two indexes Dow Jones and S&P 500 are similar. U.S. stock futures rose slightly in all three indexes. Oil also held at $104/barrel. And gold fell to 1862 USD/ounce.

The Fed’s May meeting is underway and the whole market is waiting for information from this meeting. Fed Chairman Powell, who idolizes former Fed Chairman Volcker, who once raised interest rates sharply to more than 22% leading to the economic crisis in 1981-1982. Within two years of the Fed’s peak, inflation had fallen from more than 14% to below 3% and ended what many call the “Great Inflation”. This is what investors fear that the Fed will raise interest rates fast and high. Currently, the market is prepared for the Fed to raise interest rates by 0.5% after this May meeting.

Not only are investors concerned about rate hikes, investors are worried about how the more than 8.96 trillion bonds the Fed holds will be handled. Since the outbreak of the disease in March 2020, the Fed has increased its purchases of corporate bonds. So, in addition to raising interest rates, many predict the Fed will sell $95 million in bonds per month.

A prominent factor in the tough year for tech stocks was the FAANG group (composed of Meta Platforms (Facebook), Apple, Amazon, Netflix, Google, plus Microsoft, which lost $1.404 trillion in market capitalization in April) .

However, Berkshire Hathaway billionaire Warren Buffett says the company bought $600 million worth of Apple stock following a three-day drop in shares last quarter. Apple was Berkshire Hathaway’s largest stock holder at $159.1 billion at the end of March, representing about 40% of the fund’s equity portfolio.

Yields on the benchmark US 10-year Treasury note rose less than a basis point to 3% for the first time since 2018. Rising interest rates also hit home loan rates. The average 30-year home interest rate has increased starting this year to 3.29% and has since reached 5.55%. Increasingly, it is becoming more and more difficult for the people of the United States to reach the majority of the population.

Not only the US, but also European countries are more affected by war and abuse is still at high level. The DXY index compares the value of the USD against other currencies such as EUR (57.60%), JPY (13.60%), GBP (11.90%), CAD (9.10%), SEK (4.20%) and CHF (3.60). %). This index has recently continued to increase, showing that despite inflation, the dollar is still higher in value compared to other currencies. As can be seen, other currencies are depreciating faster than the USD.

Update on ETH

The second largest coin ETH continues to be withdrawn from the exchange more than deposited. The amount of ETH on exchanges is at its lowest level since 2018.

Cryptocurrency intelligence firm Jarvis Labs posted the following chart looking at the percentage change in whale wallet holdings relative to the ETH price.

The color of the dots is related to the price of Ether, with the chart showing that whale wallets begin to reduce their holdings once the price is above $4,000 and they won’t start accumulating again until the price drops below $2,300 . To date, the number of whales accumulating ETH continues to grow.

The decrease in the amount of ETH is also partly because ETH is burned more and more according to the mechanism of the EIP-1559 update. During May, the number of ETH burned suddenly increased sharply due to NFT-related activity “Otherdeed”.

During the most recent ETH developer meeting, it was decided not to delay the difficulty bomb further. As the difficulty bomb is implemented, ETH will become more and more difficult to mine. They will then proceed to merge the PoS and PoW networks through The Merge update.

Cardano Fud

Recently, Cardano holders with over 10 million ADA have suddenly noticed a sudden spike. These holders used to control almost 48% of the supply in 2019 and despite the decline since then, their holdings started growing again in January of last year and today they dominate almost 47% of all ADAs.

With the increase in the number of ADA whale wallets, some people think that these are investors who believe and accumulate ADA for the long term. However, with 15.86 billion ADA held by these 478 investors alone, fears of a devaluation are raised. Although Cardano has a circulating supply of 33.75 billion ADA, a dumping above 10 million ADA will certainly trigger a massive halving that causes the price of ADA to plummet.

Looking back, the current price of ADA is still high compared to the beginning of 2020 but it is also more than 75% away from the peak. Recent developments on Cardano’s smart contract implementation that are the foundation for stablecoins, DEX decentralized applications, to begin development and operation on this network. More in favor of this whale wallet increase is not intended to push and sell off ADA.

Some other information:

  • Equinox is known for its luxury gyms and clubs worldwide. Currently, there are 40 health clubs throughout New York City. The club has announced that it is set to start accepting crypto payments in partnership with crypto payment service provider BitPay.

  • Delubac & Cie became the first bank in France to offer Bitcoin and Ethereum custody and trading services.

  • Square Enix has been one of the biggest voices in favor of blockchain and NFT-based games in the gaming industry. Square Enix recently sold assets such as Tomb Raider, Deus Ex, Legacy of Kain and Thief, as well as game studios Crystal Dynamics, Eidos-Montréal and Square Enix Montréal for $300 million to Embracer Corporation. With the proceeds, the company continues its plan to bring its classic Dungeon Siege property into the game world The Sandbox, allowing players to own virtual plots of land that are sold via NFT.

  • The application has had a change in the direction of reducing the benefits (refunds, stake rewards, …) of CRO card holders. So, users who own tokens sold CRO and pushed the price of this coin down more than 9% in the past day.

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