All Red Market

All Red Market


2023-05-10 16:05:42

Market situation

US stocks traded on Friday last week down all three indexes Dow Jones, S&P 500 and Nasdaq. Gold futures contract fell to 1818 USD/ounce. And oil rose slightly to 76 USD/barrel.

Bitcoin had a bearish correction towards $23,100. Most altcoins fell and the entire crypto market cap fell to $1.1 trillion.

January CPE rises

Friday, the personal consumption price index (CPE) January 2023 was announced. The index is up 0.6% month-on-month and up 5.4% year-on-year while it is estimated at only 5%. Not only that, but the Core CPE index also beat estimates, up 0.6 percent month-on-month and 4.7 percent year-over-year. Analysts’ estimates for Core CPE are only 0.5% and 4.4%, respectively.

The news about CPE continues to worry investors with it tended to increase slightly compared to the previous month. It does not cool down similar to the recently released CPI. More investors thought the Fed would likely raise another 0.5% in addition to 0.25% in the March meeting.

Another thing that worries investors even more is the newly released inflation and interest rate research. Former Fed governor Frederic Mishkin is among the authors of a study that examines the history of central bank efforts leading to deflation. The study says the Fed will probably have to raise rates higher and keep rates high for longer than many expect.

DXY index in the past day tended to increase. Recently, DXY has shown signs of cooling down but it is not long before it rises again. This index usually has a negative correlation with the financial market as a whole.

Historically, over the past 25 years, the CPE index has had continuous declines. But watch out there will be months of rebounds before falling further. Therefore, Thuan also thinks that the current CPE may be like that. At the same time, as Fed Chairman Powell once said, when the CPE index has been falling for three consecutive months, it is still not enough and more documents are needed to see the downtrend more clearly or to make a decision on interest rates. Similarly, Thuan also found that only a slight increase in CPE in January is not enough to say that inflation has turned up. It is possible that at the next meeting in March, the Fed will continue to raise interest rates in favor of 0.25% and have not discussed stopping raising interest rates.

On-chain of Bitcoin and crypto

Despite the price correction, the amount of leverage liquidated in the crypto market is not high. And the majority of Long orders were liquidated.

The amount of leveraged orders on exchanges is also at a low level in the past year. And the leverage ratio used by traders is also not high.

Recently, BTC shows no sign of being pushed to exchanges. The withdrawal from the floor is still higher than the deposit.

The rate of BTC profit yesterday was around 71.5%.

Update on Coinbase Base

The launch of Coinbase’s new layer 2 blockchain, Base, favors the launch of the test network on Thursday. However, it has since received many complaints and criticisms from users on Twitter.

Just hours after Base launched, the network crashed and users flooded social media with complaints about the network’s functionality. Another issue occurred with Coinbase’s wallet, which incorrectly estimated the amount of gas fees needed to execute user transactions, causing many transactions to fail.

According to Coinbase engineer, Bayardo explained that the reason for the crash was that the sudden increase in users could have overloaded the protocol and also caused problems on the day of the testnet launch. After that, Coinbase reverted all transactions to their original state.

Another point that caused the community to complain about the Base team downplaying its website commitment to donate 20% of the sequencer’s revenue to doing good for society. They later replaced it with a commitment to give “a part of the money” to charity without giving a specific number or percentage as before.

Base is the second layer network of ETH and uses the ETH token itself to pay gas fees. So where will Coinbase profit from? According to the goal, Coinbase wants Base to be the leading platform of ETH’s 2nd tier network. Once there, Base users can connect Coinbase to directly use cash to buy crypto, and they collect a portion of the fee. This is something that no Ethereum second-tier network can do at the moment. So the reason Coinbase created Base was to get more profit.

Optimism also publicly states that it also receives a portion of the fee to continue to grow its network. Maybe this is the reason for Optimism to partner with Coinbase because it is also the second layer network of ETH.

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