Fed Prepares to Raise Interest Rates +1%

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2022-10-05 16:53:44

Market situation

The US stock market in general fell slightly yesterday. The Dow Jones Industrial Average fell 0.46%, the S&P 500 fell 0.3% and the Nasdaq was flat. Stock futures rose slightly. Oil price was at 96 USD/barrel, while gold fell to 1706 USD/ounce.

Bitcoin continues to hold at $20,000 to $21,000 despite the market being hit by a lot of bad news.

Although the amount of crypto leveraged orders has decreased, the leverage ratio used is very high. Therefore, when the price fluctuates greatly, the amount of leveraged orders being liquidated is also high.

JPMorgan’s earnings fell short of analysts’ expectations as the bank added $428 million in bad loans. This leaves the bank’s second-quarter revenue expected to drop 28%. JPMorgan has also announced a halt to their share buybacks. The news sent JPMorgan shares down nearly 5% in Thursday trading, hitting a 52-week low.

In the face of high inflation, Fed Governor Christopher Waller said he expected to raise the central bank’s benchmark interest rate by 0.75% this month but he was open to a bigger move depending on incoming data. Many investors think that the Fed may increase by 1% in the July meeting.

CPI inflation is at 9.1% but people think that the actual inflation figure is higher than this. The website truflation.com performs statistics from many sources to give the most accurate inflation figure that inflation in the US is at 10.3%. At the same time, inflation is said to have peaked at 11.56% in March and is showing signs of slowing down.

Inflation in Europe is at a high level that the European Central Bank has not raised interest rates any time. The Euro is also depreciating a lot against the USD. There was a time when the value of the Euro fell to a lower level than the USD.

Update on Celsius

The Celsius filing for bankruptcy saw the company lose $1.2 billion on its balance sheet. Records show the company owes customers and creditors $5.5 billion. But its assets, even after paying off three large loans from DeFi Maker, Aave, and Compound protocols last week, allow it to reclaim about $1 billion worth of collateral, totaling just shy of $1 billion. $4.3 billion. That means Celsius is $1.2 billion short and insolvent.

According to the filing, the Celsius company has more than 100,000 creditors, which can include both customers and lending partners. Symbolic Capital Partners is the largest secured creditor, saying it has 2,000 ETH (worth around $23 million at the time of bankruptcy). In addition, the company’s largest unsecured loans were $81 million from the Caymans Island-based Pharos Fund. Billionaire FTX CEO Sam Bankman-Fried of trading firm Alameda Research is a creditor with a $12 million unsecured loan.

The reason why Celsius lost $1.2 million is partly unsecured lending and partly this company is also involved in swing trading. Because it could not make up for the gap, Celsius stopped letting users withdraw money for the past time.

Fear of a sharp drop in BTC price as Mt. Gox pays crypto

Years after the hack, the Mt. Gox will return the remaining crypto multipliers. Currently, this exchange only holds about 141,686 BTC; 142,846 bitcoin cash (BCH) and 69,776,002,441 yen ($3.2 billion). Many people fear that this BTC will be sold and cause the price of BTC to plummet. Victims of the Mt. Gox currently has two options to receive in crypto or cash. For cash recipients, Mt. Gox will need to sell the crypto, usually via OTC, so it won’t affect the price.

There was a group of victims who sold compensation papers to debt collection companies who would receive BTC and crypto. So the chances of the crypto being paid off all at once to the victims are low and a full sale is also very unlikely. In addition, the amount of BTC sold by the exchange will be sold via OTC for a good price, which will not affect the price.

Other information:

  • NFT Marketplace OpenSea has cut staff by 20% to reduce costs in the face of a prolonged slump in the digital asset market. The company’s CEO Devin Finzer also warned of a prolonged downturn amid a sharp drop in cryptocurrency prices and broader economic uncertainty.

  • A platform similar to Youtube Library, the company that owns the LBRY token has been sued by the SEC as a security. After four years from the date of the lawsuit, the court will announce whether the LBRY token is a security on July 20.

  • The Celo blockchain was shut down when the production of new blocks on the network came to a sudden halt. The network stopped at block #14,035.19 at 06:20 pm ET on Wednesday. Meanwhile, all the different apps on the chain remain unusable. Celo’s most recent update indicates that the network’s validators are working on a fix to bring the network online. The team has yet to provide a reason for the shutdown.

  • Bahamas Prime Minister Philip Davis has announced plans to shift focus to developing the crypto space to innovate technology and seek to offset the loss in GDP due to the damage his country is suffering from Climate Change. He also said that this development can help them offset 20% of GDP.

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