This week.
1. Bitcoin and Ether price action following CPI and FOMC. (We called ETH 🎯)
2. Binance FUD. Fact or fiction? (Prison laws apply 👊🏽)
3. USDT v USDC. (Regulation baby 👼)
4. I just read the criminal indictment of SBF. (Feather duster edition 🪶)
5. You will adopt E-naira and you will be happy. (Meffynomics 101 👨🏾🦲)
6. Goldman Sachs goes crypto shopping. ( Everything is on sale 🛒)
7. Crypto has survived worse than FTX. (More cope 😑)
8. Music NFTs aren’t listening. (Bunch of Punks 🎸)
Majors v Dollar.
BTC
Bitcoin failed to retest $19,000 as we predicted in the last issue, hitting a high of $18,400. On the 4H timeframe, Bitcoin has established a level around $17,000-$16,500 which will be pivotal for the next move. A break of this level to the downside means we might see price trading in the mid 15k -the blue line- range again.
If 16.5k acts as support, then we expect Bitcoin to retest the $19,000 level again and maybe $22,500 depending on how strong the historical holiday rally becomes.
ETH
Ether’s price action played out precisely as we predicted in our last issue (We called ETH 😂). The blue line held as support and the red resistance line above it acted as resistance. Like BTC, ETH has established lower timeframe support at $1,200 and how price reacts against this price level will be telling on if we expect price to break resistance or we expect a full retracement to the $1,100 level.
Macro
Inflation undershooting expectations sparked hopes that the Federal Reserve won't have to tighten interest rates as much. The news on Tuesday led to a rally in risk assets, including the S&P 500 and Bitcoin, as well as a rally in the 2-year Treasury note.
The Fed raised interest rates by only 50bps in December compared to 75bps in prior months, but the real question is whether they will moderate and only hike by 25 basis points at the next meeting in February. The slowing has raised hopes that this will be the case.
This has led to a significant fall in forward interest rates and speculation about what the Fed will do at its next meeting in February.
The initial rally was doused Wednesday as Jerome Powell, the Fed chairman announced the fed will raise its terminal rate from 4.8% to 5.25%. This means they’ll raise interest rates a lot more in 2023 which might trigger a recession.
A recession historically is the best time to build wealth as most assets will be sold at fire sale prices. Those who manage to survive it and position early into fundamentally solid assets are primed to make great gains as recessions are usually followed by periods of rapid economic rally.
What does this mean for Bitcoin?
$10,000 next year is on the table, so if you think the bottom is in. Think again. Risk-on assets like Bitcoin will be disproportionally affected by the impact of recession than most other assets.
Don’t go buying for long-term hold now.
Binance FUD. Fact or fiction?
By prison constitution, if you want to be feared and respected. You have to go after the biggest guy.
Binance is by far the biggest player in the crypto-centralised exchange sector. So, it’s only natural that it gets attacked by those looking to make a name for themselves.
But are there any facts to the fud?
Binance has seen $5bn worth of crypto removed from the exchange over the past days according to blockchain analytics platform Nansen. The platform suggested that the large withdrawals show that users are "skittish" and could be "troubling" for the exchange.
Binance has said that its user assets are "all backed 1:1" and that it maintains hot wallet balances to ensure it has enough funds to fulfil withdrawal requests.
The exchange has recently released a proof-of-reserves report, which has been criticized by Kraken CEO Jesse Powell and former chief of the SEC Office of Internet Enforcement John Reed Stark.
The report found a 3% "gap" between the number of Bitcoin and wrapped Bitcoin held by Binance and the liabilities it has to its users. Binance has said that the difference is due to bitcoin loans provided to customers through its margin or loan programs, and that if these are accounted for, the exchange is 101% collateralized.
It’s important to note that what killed FTX wasn’t the fact that its users withdrew funds. It was that the funds weren’t there to be withdrawn as they had all been gambled away in overleveraged positions and reckless market-making activities.
So as long as users are able to withdraw, chances are the fud will blow over and the exchange will regain trust.
USDT v USDC (4 mins read)
The biggest selling point of the CirclexCoinbase-issued stablecoin is that it’s regulated and as such users can be assured that it’s fully backed 1:1 to the USD.
Brian Armstrong, the CEO of Coinbase -who is far from being the most popular Armstrong- has asked its users to dump USDT for USDC.
The move is an attempt by Coinbase to increase adoption of the USDC currency by waiving fees for customers who want to convert USDT into USDC.
Tether's USDT continues to be the dominant stablecoin within the crypto industry, with 47% of the market share.
Tether has always faced questions about its legitimacy. Recently, it announced it has eliminated all commercial paper from its reserves and replaced them with short-term US T-Bills in an attempt to increase its own legitimacy.
I just read the criminal indictment of SBF.
One day, you’re the cock of the walk, the next day, you’re the feather duster.
The court of public opinion finds you guilty. You have been sentenced to eternal trolling.
Personally, I have mixed feelings about the man called SBF.
He gave me a career in Web3 podcasting by agreeing to attend a little-known Twitter Spaces session we call CryptoRoundUpAfrica and spoke to us for about an hour on different topics in the space including how much he spends to maintain his beautiful head of hair.
Groovy and I also lost money on FTX, including the money we had saved on Blockfolio for CRA Foundation.
For others caught in the crash, we wish everyone peace. We have made peace with the duality of human beings. That a man who made a gesture that helped put us -two guys he didn’t know and didn’t have to help- on the map is also capable of actions that have caused billions of dollars in losses and put so many people in a dire financial situation even as the global world economy is faced with economic hardship.
It’ll end in praise. 🕊️
You will adopt E-naira and you will be happy_ CBN.
Godwin Ememfiele, the governor of the Nigerian Central Bank wants to ensure we are all spending less cash and more CBDC and E-Fiat.
This is evident in the latest CBN move to limit cash withdrawals.
The Central Bank of Nigeria issued the directive to banks in a Dec. 6 circular, noting that individuals and businesses would now be limited to withdrawing $45 (20,000 Nigerian naira) per day and $225 (100,000 naira) per week from ATMs.
Individuals and businesses will also be limited to withdrawing $225 (100,000 naira) and $1,125 (500,000 naira), respectively, at banks per week, with individuals hit with a 5% fee and businesses with a 10% fee for amounts above those limits.
“Customers should be encouraged to use alternative channels (Internet banking, mobile banking apps, USSD, cards/POS, eNaira, etc.) to conduct their banking transactions.”
Its spokesperson announced.
This is a push it claims will tame inflation and bring the money supply under more direct control of the CBN.
Goldman Sachs goes crypto shopping. (2 mins read)
The more things change, the more they stay the same. - unknown.
The dream Satoshi Nakamoto had was that of a peer-to-peer payment system without middlemen.
Arguably the biggest middlemen in the world are now buying crypto companies to run them I imagined how they are used to running things.
Following the collapse of FTX, several crypto companies’ valuations have been adversely affected giving Goldman Sachs the perfect opportunity to invest and buy at a discount.
On one hand, it’s good for global adoption, on the other. Bye-bye decentralisation.
Click the topic to read more.
Crypto has survived worse than FTX. (2 mins read)
Blockchain analysis firm, Chainanalysis has compared the collapse of FTX and Mt Gox to see how FTX's bankruptcy will affect the crypto space.
Mt Gox averaged almost 50% of all exchange inflows when it crashed in 2014 compared to FTX 13%.
MtGox can be compared to Binance failing. A lot of people will write a crypto post-mortem if that were to happen now.
But similar happened in the past and the space survived and has gotten stronger.
So maybe WAGMI after all.
Music NFTs aren’t listening to market conditions. (5 mins read)
Warner Music Group (WMG) has announced a multi-year partnership with LGND.io, a start-up, to launch an NFT (non-fungible token) marketplace for music on Polygon, a proof-of-stake sidechain that is compatible with Ethereum. As part of the agreement, WMG artists and creators will be able to release songs as digital collectables starting in January 2023.
The platform, called LGND Music, will also support NFTs or "Virtual Vinyl" from other blockchains. The first artists to be featured on LGND Music will be those represented by Spinnin' Records, an electronic music label owned by WMG.
To read more, click on the topic.
Thank you for reading.
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Groovy and Oloye for CryptoRoundUpAfrica ®️
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