Let’s Dive Into It!
Bitcoin and Crypto Market Updates (Oct 2nd)
Market now starting to position for recession?
Interesting week last week as markets found the oversold bounce we were looking for. We gapped up hard on Friday once the PCE data hit and on the surface, this looked like a decent print for the bulls coming in lower than expectations, Algo’s came in hard buying the print then smarter heads prevailed and sold into the print reversing all the gains for the day.
I think this happened due to the actual PCE still coming in HOT, so when you include food and energy (the important things we need every day to live) the print wasn’t good at all and I’m convinced the only reason CORE came in lower is due to the slowdown in consumer spending etc.
So are we starting to see positioning for a recession? Quite possibly
Looking at the action on TLT last week you can quite clearly see we should be coming to the end of this huge downside move as we hammered off our long-term support line while putting in some capitulation-style volumes.
And when we look at Yields (2Y) we’re looking toppy with some RSI divergence.
It’s a tough call and the macro data suggests we need to keep rates at these levels for longer so I do see arguments on both sides. I think we need to see if Yields break below 5 to confirm our outlook on positioning here. In addition, if we start to see unemployment picking up and a further softening to the economy this lends to our thesis.
So what does this mean for markets over the next few weeks/end of the year?
We’ve had a killer few weeks trading stonks + a bit of crypto focusing on trading the extremes. When everyone is too optimistic we’ve taken shorts and when everyone is too bearish we’ve looked for longs and that’s been working well.
Right now I think there’s something for both camps to chew on. When I look at sentiment I see there’s room for some more upside. When I look at the charts indexes look weak and toppy.
Currently, I have 30/50% of the shorts still in play after taking a profit at the lows last week. We smashed an AAVE long last week and quite honestly right now I think the most prudent move is to ONLY take compelling setups with reduced risk.
We can size up big once we feel more comfortable that we’re at one of the extremes.
I also think it makes sense to watch the key macro data this week and if we get some further confirmation on ‘’positioning for recession’’ we can start to take some trades in more defensive / recession-friendly areas.
SEC Continues to Delay Bitcoin ETFs
The SEC has delayed decisions on spot Bitcoin ETF proposals, including BlackRock, Invesco, and Bitwise, due to concerns about an impending government shutdown. Applications from Invesco, Bitwise, and Valkyrie have also been affected. Further delays are expected for Fidelity, VanEck, and WisdomTree. These delays are linked to the potential October 1 government shutdown, which may disrupt regulatory processes. The next deadlines for these ETF proposals are in mid-January, with a final decision required by mid-March. Similarly, there have been more filings for Ethereum ETFs from the likes of VanEck & Valkyrie… although the Bitcoin ETFs will almost certainly be resolved before this.
Circle & Paradigm Defend Binance
Circle, the issuer of USDC stablecoin, and crypto VC firm Paradigm have weighed in on the SEC’s lawsuit against Binance. The SEC claims Binance’s affiliate sold unregistered securities, including BNB and BUSD. Circle argued that stablecoins meant for payments shouldn’t be under SEC jurisdiction, as they lack investment characteristics. Paradigm criticised the SEC for attempting to change the law without proper rulemaking, emphasising that assets like gold and art can appreciate but aren’t necessarily securities. There is unquestionably a crypto witch hunt against Binance, and only time will tell if they can withstand the governmental pressure from across the globe.
Three Arrows Capital Su Zhu Arrested in Singapore
Co-founder of the defunct crypto hedge fund, Three Arrows Capital, Su Zhu, was sentenced to four months in prison after being arrested at a Singapore airport for failing to cooperate with the liquidator’s investigation. A similar order was issued for co-founder Kyle Davies, who remains at large. Both were previously banned by the Monetary Authority from engaging in regulated activities in Singapore. Three Arrows Capital, once a major player in the crypto market, filed for bankruptcy in July 2022, leaving billions in debts to creditors.
Coinbase Opening Perpetual Futures Trading Outside of US
Coinbase has received approval from the Bermuda Monetary Authority to launch perpetual futures trading for retail users outside the U.S. With over $5.5 billion in institutional futures trading volume in Q2, Coinbase aims to tap into the derivatives market, which represents 75% of global crypto trading. This aligns with Coinbase’s international strategy, covering 24 countries, including G20 members and key financial hubs. Coinbase also emphasised its commitment to working with regulators for a global crypto framework. Will we see Coinbase derivatives in European markets soon?
NFT Collection ‘Pudgy Penguins’ Toyline in 2000 Walmart Stores
The most successful NFT & real-world integration to date. Walmart, the world’s largest retailer, is partnering with NFT collection creator Pudgy Penguins to sell Pudgy toys in 2,000 U.S. stores. These toys grant access to Pudgy World, a digital platform for creating unique characters. Walmart will offer 26 different Pudgy toy options, including exclusive figures. Prices range from $2.99 to $11.97. Each toy comes with a birth certificate that allows customisation in Pudgy World. Buyers might also discover a golden ticket for special perks. Pudgy Penguins blends physical toys with NFT technology, benefiting existing NFT holders with royalties from toy sales at Walmart. This collaboration bridges the gap between physical and digital play, offering affordability to customers.
Real-World Asset Tokenization in Crypto
In the rapidly evolving world of cryptocurrencies, a transformative narrative has taken center stage: Real World Asset (RWA) tokenization. This innovative concept acts as a bridge between traditional finance and the digital asset market, promising exciting opportunities for investors.
Let’s delve into this exciting development and uncover its various facets.
Why Is Understanding RWA Tokenization Important?
RWA tokenization is the process of converting real-world assets into digital tokens that can be traded on a blockchain. These assets encompass both tangible and intangible items, ranging from real estate and art to precious metals and stocks. The essence of tokenization lies in its ability to enhance accessibility, liquidity, transparency, and transaction efficiency for these assets.
Tokenization knows no bounds when it comes to the types of assets it can encompass. From traditional investment instruments like stocks to the allure of precious metals, RWA tokenization expands the horizons of what can be represented as digital tokens. This diversity democratizes access to a broad spectrum of assets, offering investors a buffet of choices.
What Are the Diverse Ranges of Tokenized Assets?
The scope of RWA tokenization is not limited to high-value assets alone. It extends to a wide array of assets, including treasuries, currency, stocks, bonds, carbon credits and more. Even tangible assets like art, real estate, vintage cars, and precious metals are now being tokenized. One RWA widely known is the tokenized fiat currency, represented by stablecoins, which simplifies direct settlements between parties, further enhancing accessibility.
This diversity democratizes access to a broad spectrum of assets, offering investors a buffet of choices.
How Is Traditional Finance Embracing RWA?
Major players in traditional finance, such as Franklin Templeton and Bank of America, recognise RWA tokenisation’s enormous potential. According to predictions by the Boston Consulting Group, the market for tokenized assets is poised to reach a staggering $16 trillion by 2030. This acknowledgement underscores the significance of RWA tokenization in reshaping the financial landscape.
Established institutions are seizing the opportunity to leverage blockchain technology and offer investors a more efficient and accessible way to engage with assets. The sheer magnitude of the predicted market size highlights the pivotal role that RWA tokenization is set to play in the financial sector’s evolution.
What Does the Future of RWA Tokenization Look Like?
As the adoption of RWA tokenization continues to grow, the financial landscape is on the verge of a profound transformation. Increasing institutional support, evolving regulatory frameworks, and a broader spectrum of tokenized assets will drive this transformative narrative forward. This evolution will democratize finance by granting smaller investors unprecedented access to assets that were previously beyond their reach.
The future of RWA tokenization is exceptionally promising. With more institutions embracing this concept and regulatory frameworks maturing, the financial world is set for a major overhaul. The narrative of RWA tokenization isn’t just about digital assets; it’s about democratizing access to investments, levelling the playing field, and ushering in a new era where ownership is as straightforward as a few clicks on the blockchain.
As you can see the concept is quite simple, but the use case has some legs on it. RWA tokenisation is not merely a buzzword in the crypto space; it represents a paradigm shift. It is reshaping the way we perceive and engage with real-world assets, offering a future where ownership is as straightforward as a few clicks on the blockchain. With traditional finance giants acknowledging its potential, the RWA narrative could be the turning point for a future where the boundaries between traditional and digital finance blur, ushering in new possibilities for everyone.