The News From Planet Ruby—Friday, June 23, 2023
Shenanigans abound on Earth, where the ape factions are engaged in a long-running battle for the soul of money.
The 1993 Earth documentary Jurassic Park shows how a species of ancient lizard known as velociraptors would hunt in packs. One would present an obvious threat, drawing its prey's attention. Meanwhile, two others would creep up on the left and right and attack while it was looking the wrong way.
In similar fashion, the evil lizard known as Gary has distracted the crypto world, while its TradFi mates sneak around the sides for a tasty snack. Clever girl.
Inflation. Deflation. Stagflation. No Elation.
After a big week of economic news in the US, things were quieter—at least in the TradFi world. In other major economies, though, things are not improving.
In the UK, inflation came in above expectations at 8.7%, against the forecast fall to 8.4%. More worryingly, core inflation is not so much sticky as upwardly mobile, actually rising to 7.1% vs 6.8% forecast. The UK now faces a stagflation crisis in which high inflation and stagnant economic growth put consumers, and the Bank of England, in a very difficult position. On Thursday, the BoE increased rates by 0.5% to 5% (more than the market expected), with more hikes expected this year.
China's problem is different, with no shortage of warning signs that optimism around the country's post-Covid reopening was misplaced. Lackluster growth has led the PBoC to cut interest rates. Rather than struggling with inflation, as western economies are, China is on the brink of deflation.
Bitcoin started the week strong, breaking out of its descending channel and pushing above the immediate resistance around $26,500. It's now trading above the 200-week moving average, 50-week MA, 200-day MA, and 21-week EMA, all key lines. From there BTC took another leg higher into the $28-30k zone, which has proven strong resistance in the past. The bullish scenario would be to flip this to support. It's currently trading around $30,000, having topped at $30,800 on Wednesday.
The wave of filings and news from BlackRock and other major institutions has given the market a new narrative. Notably, the moves this week were primarily spot-driven, rather than liquidations: Organic buy pressure from traders who have just been given a fresh injection of hope.
This is not a short squeeze, but someone(s) is just buying $BTC a lot.— Ki Young Ju (@ki_young_ju) June 21, 2023
This is not a short squeeze, but someone(s) is just buying $BTC a lot.https://t.co/gkt9JiizM3 https://t.co/46KZRb0AMS pic.twitter.com/mPZzN317A8
There is no immediate danger now of crashing through that $25,000 support and opening the path to deeper falls, back down towards $20,000. At the same time, there's a some way to go before BTC takes out the April highs of $31,000, which would indicate the beginning of a new bull run in earnest.
Institutional Players Make Their Moves Into Crypto
As is so often the way, right when things seemed as bearish as they could, the picture refocused.
Following the market-moving news that investment giant BlackRock is seeking to launch a Bitcoin ETF, Fidelity immediately filed their own application, closely followed by WisdomTree, Invesco, and Valkyrie. The first mover in the ETF space historically has a strong advantage, and other big asset managers won't want to be left behind. One welcome side effect of this is that the SEC is about to be deluged with paperwork, a strategy they have sought to use against Coinbase.
Speaking of which, Coinbase has fired its next shot in its battle with the SEC to force the regulator to provide clear rules for the crypto industry. The response drew the judge's attention to the idea that it's strange for the SEC to suggest that the order the Court gave them is optional, and that its answer "pushes the limits of cognitive dissonance". The Court has given the SEC 120 days to respond with its final recommendation.
In addition to the Bitcoin ETFs, multiple institutions have made announcements about their entry into the crypto space:
- Digital asset exchange EDX launched in the US. The platform is backed by Citadel, Fidelity, Charles Schwab, and Sequoia Capital. Regulators reportedly liked the model of separating exchange and broker-dealer functionality.
- Germany's largest bank, Deutsche Bank, has applied for a digital asset custody license.
- MasterCard has filed a new trademark application to develop software that facilitates seamless crypto transactions.
After months of SEC enforcement and Operation Choke Point 2.0 beating down the crypto industry, we have some of the largest financial institutions in the world suddenly entering the space. Usually we wouldn't indulge in conspiracy theories, but sometimes it's hard not to see what's right in front of you.
I'm sorry, but after watching, Blackrock, Fidelity, Citadel, Schwab and now Deutsche Bank, all apply for #Bitcoin ETFs, spot exchanges, etc. only a few days after the SEC drops a TRO on Binance and sues Coinbase... how can't you think this entire past year was a giant inside job…— Preston Pysh (@PrestonPysh) June 20, 2023
Bitcoin Dominance is rising slightly as the narrative for BTC grows stronger, briefly topping 50% earlier in the week as bitcoin enjoys the tailwinds of regulatory clarity and the BlackRock Effect, at a time when alts are still firmly in the SEC's sights.
In other news, Ethereum’s core developers are considering a proposal that would raise the maximum effective validator balance cap from its current 32 ETH to 2,048 ETH, with the aim of streamlining network growth and validator management. The minimum stake would remain 32 ETH.
Terra founder Do Kwon has been sentenced to four months in jail in Montenegro for trying to leave the country with a forged passport (rather than anything to do with LUNA).
And finally, Romanian authorities have seized Andrew Tate's assets, which according to Sky News include "more than 21 million bitcoins, worth over $400 million".
What's New In The SKALEVERSE?
To celebrate Ruby.Exchange's listing on DappRadar, the industry-leading DeFi analytics site, Ruby is distributing dual rewards on major pools! A total of 50,000 USDP for ETH-USDP and WBTC-USDP, and 1 million SKL for SKL-USDP and RUBY-USDP, will be paid out to yield farmers over the next month.
That's all for this week!