Market situation and CPI
Good CPI index helped US stocks have a rally yesterday in both Dow Jones, S&P 500 and Nasdaq. In contrast, stock futures fell slightly. Oil price fell slightly to 78 USD/barrel. And gold rose to 1909 USD/ounce.
Bitcoin also continued to rise above $19,100 although it later corrected around $18,700. Altcoins are mostly up slightly.
The market received the same CPI announcement as the estimate given earlier. The U.S. Department of Labor reported inflation closed 2022 modestly, with consumer prices in December recording their biggest monthly decline since the start of the pandemic.
The consumer price index CPI fell 0.1% to 6.5% for the month, in line with Dow Jones estimates. This decrease equates to the largest monthly decline since April 2020. Excluding food and energy prices, the Core CPI also increased by 0.3%, as expected. Core CPI has increased by 5.7% compared to a year ago and is an indicator of more interest because it more accurately reflects inflation of items.
Specifically, food still increased by 0.3% but the rate of price increase has decreased. Inflation in energy fell the most with a total decrease of 4.5%. In particular, the sharp decrease in gasoline is the reason why most items decrease in price. Prices at the pump have fallen 9.4% for the month and are now down 1.5% from a year ago after rising more than $5 a gallon in mid-2022. Fuel oil is down 16.6% for the month.
In December, clothing was the item with the highest price increase. Housing costs still increased by 0.8%, but this index has a delay of 6 months to 1 year. In fact, rent rates have slowed.
In general, December CPI did not see price increases in all commodities as in previous months. There has been a divergence in inflation in different items, which will make it easier to adjust.
The Fed will also base on CPI to make decisions on interest rates in the next meetings. Fedwatch futures show that most investors expect the Fed to raise rates by 0.25% at its February meeting. The market expects the Fed will soon turn around to cut interest rates, but this will depend on the economy as well as the Fed’s intentions.
A very influential person in financial markets, JPMorgan Chase CEO Jamie Dimon once warned of an upcoming economic storm that everyone should prepare. However, in an interview with Fox Business this past Tuesday, he corrected himself that the word “storm” should never be used when warning about the US economy. However, he stressed that there are “storm clouds” that have the potential to “could be a hurricane.”
Some people think that Mr. Jamie Dimon made a mistake and corrected him. But there are also people who think that before that, he intentionally said it to profit because his statements or predictions were very influential for investors. His initial words can also influence investors to sell their assets, crypto and securities. In the past, he also spoke badly about BTC but then it was his bank who took advantage of the down price of BTC to buy BTC at a good price.
In the current market time, more companies are announcing staff cuts. Unlike the big layoffs of the 2008 crisis, companies laid off employees as a way to prepare for a potentially worse market situation. BlackRock, the world’s largest asset manager, is cutting around 500 jobs after a period of rapid hiring. A BlackRock spokesperson said that layoffs represent less than 3% of the company’s workforce.
Is the new Congress in favor of crypto?
Bitcoin and the crypto market have been more prosperous and optimistic in the early days of 2023. The year 2022 was full of troubles and ended with the demise of FTX and its related companies. These things caused the market’s confidence to be shaken at times and the trading volume on exchanges dropped sharply in December. Woo Blockchain shared a statistic that shows that most of the centralized exchanges have dropped a lot. large volume of both spot and derivatives trading.
Entering 2023, the market also prospered. The US government also ends midterm elections at the end of December and has a new structure in government. Crypto investors will be more interested in the House Finance Committee. This is the body that makes policies related to finance and including cryptocurrencies.
One of the two finance-related departments is the Committee on Cryptocurrencies, Technology and Finance, which will be led by MP French Hill. He is a very sympathetic person with the crypto market. In 2021, he once shared a tweet expressing support for this market. Hope he can bring positivity to the crypto market.
The second agency of interest is the Financial Services Regulatory and Investigations Commission, headed by Bill Huizenga. According to research, Thuan found that he is quite neutral to the crypto market. He is also the person who asked FTX to return to the US to clearly discuss what happened. He also leans towards technology protection and wants a clear understanding to protect investors and the development of technology as the FTX crash unfolds.
Overall, the new US Congress continues to have pro-crypto congressmen in positions of influence over the market.
The congressmen or people who don’t like crypto often give a reason that BTC is used by criminals to commit crimes. Recently, Chainalysis, a company that normally works for the US government, published crypto-related figures showing the opposite. This company released statistics showing that only 0.24% of BTC transactions were related to illegality in 2022. This number is lower than the statistics of previous years, except for 2021.
This evidence further shows that BTC is not a vehicle for crime. The majority of illegal transactions still favor fiat money because BTC transactions located on the blockchain are always there and can be tracked and traced back. So far, there has not been any agency that can provide evidence that BTC is mainly used for illegal purposes.
While the market is down, especially affected by major events like FTX, BTC mining speed has not decreased. On the contrary, it has made a new high in the past week.
In addition, miners also show signs of re-accumulating BTC after a long time. According to wallet statistics, miners have an increased amount of BTC. It is possible that the mining companies that failed to survive have left, leaving only the strong ones who continue to mine and accumulate BTC.
SEC sues Gemini and Genesis
Recently, Genesis has had financial problems after a series of collapses of companies such as Three Arrow Capital and FTX. Therefore, Gemini’s Earn product, behind Genesis, has been discontinued, affecting hundreds of thousands of Gemini people. These two companies have exchanges back and forth on social networks.
Incidentally, yesterday the SEC announced on social media that it is officially suing both Genesis and Gemini companies for alleged violations of securities laws. The SEC said that the two companies had illegally issued equity products. On the notice, the user deposits the Earn product, then Genesis company will use the customer’s money to lend for interest. However, it is possible that behind that Genesis used customer money to mix with his own money and invest. This form is not the usual form of deposit for interest but is similar to the issue of shares. Therefore, the SEC sued this product for illegal and unregistered activity.
Faced with this information, Gemini’s head, Tyler Winklevoss, said he was disappointed with the SEC because of the agency’s allegations. Tyler said that the Earn product was discussed with the New York Department of Finance and the SEC 17 months ago and during this time the SEC has never said that their product is not legal. But at this point when many events happened, the SEC sued for profit. If the SEC wants to be for investors but does not notify the company to stop this product sooner to avoid the current situation.
Later, many congressmen spoke out about the chairman of the SEC, Gary Gensler, that he cared and wanted attention and power. Congressman Tom Emmer also said that the SEC wanted to protect investors, but a series of major events happened in the crypto market they could not detect and prevent. Meanwhile, they pinch and attack other crypto projects but important events are always delayed.
Update on FTX
In the early days of bankruptcy, FTX’s new chief executive officer, John J. Ray, previously attested to at least $8 billion in client assets. However, recently there is some unclear information about their money back. During the bankruptcy hearing of FTX on Wednesday, the company said that it has recall more than $5 billion worth of liquid assets, including cash and digital assets. FTX attorney Adam Landis told the court that the $5 billion figure does not include any illiquid crypto assets. In addition, the Bahamas government says it also holds $3 billion in FTX assets.
Meanwhile, FTX has also planned to sell its units in Japan and Europe, along with derivatives exchange LedgerX and securities trading settlement company Embed. According to these numbers, adding up these incoming assets of FTX is at least $8 billion. But FTX also still has a hole of $8 billion. We can see that there is something wrong with the articles.
If the above information is correct, it is possible that the 5 billion FTX recovered by the attorney mentioned may already include the 3 billion that the Bahamas government is holding. Or another possibility is that FTX’s financial hole is much larger than the initial announced $ 8 billion. Let’s wait for more clear information to be updated.
In Hong Kong, Bitcoin Samsung Asset Management Hong Kong (SAMHK), a subsidiary of Samsung’s investment arm, Samsung Asset Management, will list the “Samsung Bitcoin Futures Active ETF” on the stock exchange. Hong Kong Stock Exchange on Jan. 13. Currently, Hong Kong is the only market in Asia where Bitcoin futures ETFs can be traded. Samsung Bitcoin Futures ETF joins Hong Kong Crypto Futures ETF, to begin trading at $70 million in 2022.
Avalanche (AVAX) recently announced that it is partnering with Amazon. Thanks to a new partnership between Amazon and development studio Avalanche Ava Labs, Amazon Web Services (AWS) will now support the network. This partnership is geared towards businesses and organizations looking to work with blockchains, allowing developers to launch Avalanche nodes directly within AWS to support their dapps.
Ethereum scaling project Polygon has announced a proposed hard fork for its proof-of-stake (PoS) blockchain. If approved, the software upgrade will take place on January 17th and will address gas spikes and reorgs.
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