Weekly Market Update: Whales Selling Drives Down Prices

At a Macro level, Asia and the US are showing more signs that they have gotten control of their inflation. Europe, and particularly the UK, continues to lag.

The net case for crypto appears to be edging bullish on balance, especially with the successful Ethereum upgrade increasing institutional interest.

🌎 Macro news TLDR: Inflation turning.  

This week saw a broad based sell off potentially driven by the SEC Chairman Genslers lack of guidance on ETH as a security and BTC whales taking profit.

Starting off with global news 

Global oil prices are down 2% driven by recessionary fears. Markets are now thinking that the softening markets and talk of recessions will lead to less demand.

Supporting this, global diesel margins are down about 50%, Reuters saying this is due to cheap Russian products still flowing. 

U.S. economic news

The US data continues to point to a softening and potential recession.This week it looks like  more people are falling behind on their credit card and loan repayments.

On top of this, jobless claims are also starting to edge up. Not surprisingly, sentiment, as measured by the Philadelphia Fed, is “subdued”.

Meanwhile, in Europe

European Consumer sentiment and employment expectations edged up this month.

The UK is now the only nation in Western Europe with double digit inflation. The March CPI print came in at 10.1%, and markets are predicting another rate rise is now on the cards. 

German producer pricing was up on a year ago, but down from February on the back of energy price movements.  The trend is good for now. 

The spillover of the Ukraine situation continues with the G7 Nations threatening more sanctions due to Russia’s nuclear expansion plans into Belarus.

However, the power of sanctions is questionable with Pakistan, whose economy is quite distressed, agreeing to buy some cheap Russian oil. The European block has also reaffirmed its support for overland grain flows from Ukraine. 

And now to Asia…

China’s post Covid recovery continues, their Q1 GDP surprised markets, coming in at 4.5% annualised. The People’s Bank of China held their lending rates at 3.65%, indicating that any monetary stimulus is on hold. Indonesia’s central bank also left its rate unchanged.

Meanwhile, Taiwan’s exports are down 25% year on year. South Korean GDP for Q1 grew 0.3%, in what is politely called ‘modest’ growth.

Things are looking up in Japan, their inflation data came out at a modest 3.2%, while PMI is improving. And, in Singapore, core inflation fell markedly in March to 5%. 

The Australian Reserve Bank minutes show they are prepared to raise rates again if drivers of inflation continue.

The Westpac Leading growth indicator, which picks growth 6-9 months into the future, came in at 0.75%, suggesting lacklustre growth ahead for the lucky country. Queue the Australian manufacturing PMI which continues to fall in April. The Servic sectors is growing though. 

New Zealand finally had some good news with this week’s CPI print coming in way below expectations at 6.7%. The quarterly inflation of 1.7% points to an annualised inflation rate of 4.8%.

However, most of the bad news relates to domestic price pressures (non-tradeable), so we may still have more pain to come at the OCR level.  

Highlights from the Crypto Space

The total Market Cap of the crypto industry has recovered to a 10 month high.

With the Ethereum Shanghai upgrade behind us, Institutional interest in ETH has picked up with Open Interest on the CME futures market up by 39%.

Speaking of institutions, someone modelled what would happen if you added a 2.5% allocation of Bitcoin to an equally weighted portfolio of Berkshire Hathaway, Microsoft, JP Morgan and BlackRock…the results are interesting…

The SEC is still at it, alleging Bittrex ran an unregistered exchange in the US. Meanwhile, Europe’s lawmakers approved their MiCA (crypto) legislation potentially putting them in a world leading position on regulation. Similarly, Abu Dhabi is open for business.

Coinbase then went on the front foot, suing the SEC for a rule specific to digital assets. 

Stablecoin adoption in Latin America is growing rapidly as locals deal with their inflation using crypto. Hard to blame them…

USDT’s market dominance continues and now sits at 65%. Meanwhile, the Bank of England governor can see the efficiency benefits of stablecoins, but thinks they may need limits to protect the establishment.

Bitcoin Miners who’ve been battling through the crypto winter are benefiting from the higher prices.

Whack-a-mole! Coinbase won’t rule out relocating from the US. To prove their intent, they have expanded to Bermuda so they can offer derivatives. Gemini, another US based exchange, seems to be following suit.  

The New York regulator has said that crypto withdrawals didn’t cause the Signature Bank collapse.

Binance US has pulled out of its attempt to purchase the assets of Voyager citing the regulatory environment. 

There is an ongoing hack targeting OG crypto holders’ wallets. There are numerous rumours floating around about the attack vector including a MetaMask exploit, which they have denied.  Whatever the cause, be safe out there.

MyElisting, a commercial real estate marketplace in the US, will accept crypto as payment now.

Kaiko has analysed the recent pull back in prices and found some large Sell orders, suggesting this was whale driven and possibly profit taking. 

Bitcoin’s 60 day correlations with TradFi show it is more closely aligned with Gold than stocks. Meanwhile, Bitcoin’s network activity is at its highest point in 2 years. 

Uniswap’s long awaited iOS app has been launched. 

Rumours of a FTX reboot continue to swirl. Apparently they too are benefiting from the increased asset prices.

The sentiment in the crypto market has continued its pull back and we are now in neutral territory due the falls of the last week.

This week we have seen a sector wide pull back in pricing, possibly due to the continued regulatory uncertainty in the US and whale activity on the majors. 

At the time of writing, BTC closed the week down 6%, ETH was down 11%, while BNB had a relatively solid week, down only 1%.

Our biggest gainer this week was Render (RNDR) up 22%. PancakeSwap (CAKE) was this week’s biggest loser, down 24%.

View all top gainers: Visit the top gainers page.

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