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2023-02-27 15:43:44
Market situation
US stocks continued to decline yesterday in both the S&P 500 and Nasdaq, while the Dow Jones was flat. Stock futures show a downtrend. Gold and oil prices are around 1797 USD/ounce and 72 USD/barrel.
According to the CEOs of two of the largest US banks, Bank of America and Wells Fargo, US consumers are holding back spending as the Fed raises interest rates impacting the entire economy. Both banks said that the economy is showing many signs of slowing down. Bank of America shows that double-digit growth in its card numbers has slowed and customer spending increased by just 5 percent in November. Wells Fargo is similar, with growth shrinking in card spending. Credit and debit card transaction volumes are almost flat.
The banks also say that airlines, travel providers and other entertainment or experience-based industries are performing better than those related to durable goods. That is, people with limited finances actually cut back on spending. Those with good income still pay for restaurant services, tourism,… But this group of spending is not sustainable.
With unemployment also steadily rising, the Fed has a difficult balance to make: raising interest rates enough to slow the economy, while also hoping to avoid a severe recession. Many market forecasters expect the Fed’s benchmark rate to hit around 5% next year, though some say higher rates are needed.
Old cars used to have a fever, but now they have cooled down. Wholesale prices for used cars hit their lowest level in more than a year last month, as retail sales fell amid rising interest rates, rising new car sales and recession fears. The Manheim Used Vehicle Value Index, which tracks the prices of used vehicles sold at wholesale auctions in the US, is down about 16% from a record level in January 2022. .
The decline is good news for potential car buyers, but it’s not good for companies like Carvana, which have bought cars at record highs and are now trying to sell them for a profit. Carvana Company is also being predicted by many analysts that it is more likely to go bankrupt and downgrade its stock to underperformer from neutral and reduce his price target to $1 from at $9 per share. The company’s stock has fallen 98% since the start of the year. Currently, this company has a huge amount of debt due to its strategy of buying used cars at high prices and lax management.
Institutions interested in crypto
And BTC decreased slightly compared to the previous day to around $ 16,800. Altcoins are also trending down.
This Friday (December 9th) there is a big Bitcoin option expiration. The maximum pain price of this expiry is 17,000 USD, the price that makes most traders lose the most. If BTC price:
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From $15,500 to $16,500: 200 call options versus 2,100 put options. This result will be more favorable to the put option, they will profit 30 million USD.
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From $16,500 to $17,000: 1,700 call options versus 1,500 put options. The end result is a balance between the bears and the bulls.
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From $17,000 to $18,000: 5,500 options versus 100 options. If the price is around this level, the call option will have a profit of $100 million.
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From $18,000 to $18,500: 7,300 call options vs 0 put options. The bulls (calls) completely prevail and they will have a profit of 130 million USD.
Using the option expiration max pain price as a signal will not be accurate. Because there have been many major maturities in the past, the price of BTC does not revolve around this price.
After the crash of FTX made the market more negative. A CNBC survey showed this. The survey found that 43% of participants had a negative view of cryptocurrencies, up from 25% in March. The percentage with positive views plummeted to just 8% from 19% and neutrals nearly halved to 18% from 31%.
Even so, many large institutional investors are still very interested in crypto. Bitstamp exchange reports positive numbers, institutions registered in their digital asset trading platform grew by 57% in November. Plus, they saw a 45% increase in total revenue. during the same period, with revenue coming from institutions up 34% and from retail traders up 72%.
Not only that, financial services firm Goldman Sachs expressed its intention to buy or invest in crypto companies at this time. Or SEBA bank will partner with HashKey to accelerate the adoption of digital assets in institutions in Hong Kong and Switzerland.
Fidelity Digital Assets also said that they want to have their own crypto exchange and promote pension funds to invest in BTC. The company that also released the study mentioned that there is an increase in institutional holdings of crypto, while 78% of respondents are planning to go crypto in the future.
Coinbase’s earnings report indicates that their income comes largely from retail investors. Institutional investors have a large volume of transactions, but transaction fees are much lower than individual investors. Coinbase’s earnings have also dropped because retail investors have reduced trading. The bear market combined with events like the crash of FTX really caused a lot of investors to leave the market. Believers continue to stand firm in the crypto market.
Update on FTX and Sam
Many questions that FTX’s more than $8 billion sent to Alameda Research have now been answered. According to court documents, about $5.3 billion was used by Alameda to invest in more than 470 companies and projects. Among them, the 5 most invested companies are Bitcoin mining company Genesis Digital Assets, Anthropic, Digital Assets DA AG, K5 and IEX.
The remaining amount according to recent information, Alameda Research has loaned Sam Bankman-Fried, and other companies under his control $3.3 billion, according to documents filed with the FTX bankruptcy proceedings. The filing said the $1 billion loan went directly to Bankman-Fried, while $2.3 billion went to Paper Bird, in which Sam owns a majority stake. Other employees at FTX also received loans from Alameda, including $543 million for head of engineering Nishad Singh and $55 million for FTX head of digital markets Ryan Salame.
Sam was invited by House Financial Services Committee chairwoman Maxine Waters to attend the December 13 hearing. However, Sam declined to attend due to personal reasons. Ms. Waters said she wanted committee staff to try to convince Bankman-Fried to testify voluntarily. At the same time, she will not coercively subpoena Sam to participate in the hearing. This made many people dissatisfied, they thought that she used to take close photos and may have an intimate relationship, favoring Sam.
On January 3, Ms. Waters will step down as House Finance Speaker, with a potential replacement being Rep. Patrick McHenry, a Republican. So, she said, the decision to subpoena Bankman-Fried will be up to the new president.
Sam seems to have realized the danger he would face in the FTX crash. So he hired Mark Cohen, a former federal prosecutor, as his defense attorney. This is the third attorney he has hired, as previous attorneys have all left because Sam did not cooperate on their recommendations.
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