The News From Planet Ruby—Friday, June 16, 2023
We continue to watch the Earth apes from our vantage point on Planet Ruby. Having appeased their enemy, a monstrous and voracious entity known as the "debt ceiling", the apes are casting round for another villain on whom to project their anger and existential angst. Sentiment appears to be coalescing around a hopeful candidate named "Gary".
Stay On Target...
There was plenty of macro news this week, with key economic data being released and the Fed's all-important interest rates decision.
CPI was forecast to drop to 4.1%, and 5.3% for core inflation (which strips out more volatile food and energy components). While that's still high, and double the Fed's 2% target, it's well below the peak of over 9% seen a year ago, and heading in the right direction. In the event, inflation came in at 4%, 0.1% below expectations, with core at the forecast 5.3%. Stonks rose slightly, and the dollar dropped back in response.
The big event this week was the FOMC's latest interest rate decision. Following the CPI print, the market priced in a hold with near certainty (which duly occurred), though still strongly expects one final 25 bps rise next month. Jay Powell commented, "Some further rate increases will be appropriate this year to bring inflation down to 2%.”
In the UK, stronger-than-expected wage growth feeds into the wage-price spiral narrative, and has led to reports that the Bank of England will ultimately raise its base rate to 5.75% (from the current 4.5%) to combat inflation.
Crypto Falls Off Cliff
Bitcoin opened the week just below $26,000, following a $1,200 drop last week that saw it fall beneath the 200 WMA ($26,450), driven lower by the raft of regulatory actions taken by the SEC against Coinbase and Binance.US.
Risk assets, including bitcoin, held steady to begin with following the FOMC decision to hold interest rates. Unfortunately, it didn't last. (It may have been the plural, "rate increases", in Powell's comment that spooked the market.) BTC crashed below $25,000 a couple of hours after the announcement, falling $1,000 in the space of an hour. Alts fared worse still, and BTC has become a "safe haven" within the crypto world thanks to its clear regulatory status. Bitcoin Dominance has ticked up 1% in the last week, and 10% in the last seven months.
There's support around $25,000, but recovering that 200 WMA will be important to avoid further downside, which is currently the path of least resistance. BTC is currently trading around $25,500.
Hinman Emails Detonate
On Monday, Congressman Warren Davidson filed legislation intended to reform the SEC and fire Gary Gensler, who has made it his mission to destroy crypto businesses in the US. Republicans control the House, but bipartisan support would be needed to pass it through the Senate.
On Tuesday, the Hinman emails were released, and did not disappoint. Hinman specifically stated in one email that “We do not need to see a need to regulate Ether, as it is currently offered, as a security."
Stuart Alderoty, Ripple's Chief Legal Officer, summarized part of their significance in a tweet thread. Hinman "ignored multiple warnings that his speech contained made-up analysis with no basis in law, was divorced from the Howey factors, exposed regulatory gaps, and would create not just confusion, but 'greater confusion' in the market." Ripple CEO Brad Garlinghouse followed up by tweeting that the SEC's decision had thrown "an entire industry into chaos."
The real significance of the Hinman emails may go beyond the Ripple case, though. The documents suggest that the SEC has painted itself into a corner in the way it characterizes digital assets.
Next up, the SEC filed a response in Coinbase's petition for rulemaking. Last week, the court demanded that the SEC answer the question of whether they had decided to deny the petition within seven days. Despite the court's explicit order, the SEC refused to commit to any deadline, instead suggesting that they anticipate making a recommendation within 120 days. What the court decides next will be interesting...
The crypto industry is taking note of the US's distaste for digital assets. Hong Kong has invited exchanges, including Coinbase, to set up shop in the crypto-friendly jurisdiction. Meanwhile eToro is banning US Users from purchasing certain tokens the SEC has deemed securities, including MATIC, ALGO, and MANA.
Given all this, it might seem strange that investment giant BlackRock is looking to launch a spot bitcoin ETF. As the largest asset manager in the world, perhaps they have the clout to get it done when others couldn't.
What's New In The SKALEVERSE?
The Europa Hub, on which Ruby is deployed and which the Ruby team first proposed, is a shared SKALE Chain that acts as the gateway to the SKALEVERSE for users and liquidity. By standardizing entry through Europa, SKALE dApps and users avoid the problem of incompatible token versions and resulting liquidity fragmentation.
Take a look at SKALE's in-depth blog on the Europa Hub.
That's all for this week!
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