Understanding THESE latest macro metrics will help you conquer the current market.

Read full article at The Capital.

DAILY CONQUEST #72

Everything you need to know of today’s fast-moving crypto markets

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Overview

  • Macro-drivers of the crypto prices.
  • Market: The bears are back!
  • FBI issues DeFi recommendations.
  • Proof mentions its next Moonbirds NFT project.
  • A small lesson in Fear and Greed.

Good morning Fam,

By now, I’m sure we all realized that macro has ruled markets over the past few months, so focusing on this market aspect might grant insights into future direction. Or, at minimum, provide a clearer picture of what to expect.

Jerome’s Hawkish Hammer.

On Friday, Jerome Powell’s hawkish comments drove markets downward after the Federal Reserve Chair reemphasized his aggressive fight against inflation, effectively ending the slightest of bullish sentiment from the previous two weeks. Unfortunately, the market got a little ahead of itself, and Jerome wielded the hammer.

According to the CME, the market is now pricing in a 75 basis-point interest rate hike for September.

But let’s not forget about quantitative tightening (QT). The Fed plans to double its tightening beginning next month, effectively removing millions of USD from the market EVERY DAY! So what can spark a change of stance by the Fed, and axe wielder, Jerome Powell?

Oddly, hope lies in the early signs of a recession.

While economic numbers look healthy, the Fed will fight inflation aggressively with interest rate hikes and quantitative tightening. In addition, the Fed will give the economy everything it can handle until signs of a weakening economy appear.

Thursday and Friday might provide those weakening signals. On Thursday, the ISM Manufacturing PMI is set to release. On Friday, The Unemployment and Non-Farm Employment Change. If the metrics come in higher than expected, then watch out, the markets could react positively.

Market update 🌍

The US stock market continued its sell-off after pausing bearish action on Monday, with the S&P 500 (SPX) and Nasdaq (NDAQ) falling 1.10% and 0.16%, respectively. Moreover, the sell-off extended into crypto, a sector that remains highly correlated to equities during these turbulent times.

BTC/USDT 1D

BTC fell below $20k yesterday, for the fourth time this year, after a modest Monday rally failed to resist equities’ sell pressure. The next major support sits at $19.3k, an area BTC appears very likely to test sometime this week. As a result, my bias remains bearish for BTC, but important macroeconomic data set to release on Thursday and Friday could help BTC stay above the significant support level.

High-resolution chart

DXY/USD 1D

The Dollar Index (DXY) continues to post bullish upticks after investors seriously acknowledged Jerome Powell’s hawkish attitude at the Jackson Hole symposium. Investors tend to enter the dollar versus equities when they expect further downside. The DXY is currently testing a strong resistance level at 108.40. I’d expect a retracement, but if the price breaks past this level, it could point towards a stronger bearish stance from market participants. Again, macro data from Thursday and Friday mentioned above will play a significant role in the future.

High-resolution chart

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Newswatch 📰

FBI issues recommendations for DeFi users. The Federal Bureau of Investigation (FBI) has released a public announcement urging users of DeFi protocols to use due diligence before interacting with protocols. The FBI recommends ensuring the protocol has conducted audits and that users realize the risk before initiating any smart contracts. The warnings come after $1.3 billion in crypto was stolen in DeFi platforms between January and March 2022.

NEXO token buyback. The crypto lender and exchange looks to allocate $50m in NEXO tokens for a token buyback initiative that will take the tokens out of supply for a vesting period of 12 months, after which the company could use the funds for future investments or interest payouts for lenders.

Compound upgrade freezes ETH. Compound Finance initiated a governance proposal to upgrade Chainlink price feeds that contained a code error that freezes the cETH asset in the borrowing and lending market side of Compound. However, according to CEO Robert Leshner, the funds are not at risk, and users can still repay debt to avoid liquidation.

News tidbits:

  • Sam Bankman-Fried and the FTX regulatory team met with a White House policy advisor.
  • LooksRare will back the Ethereum Merge and stop services on any Ethereum fork.

NFT & metaverse update 🐵

NFT collective Proof raises $50M in a series A funding round led by a16z. The funds will help Proof launch another NFT collection in early 2023. Proof, famous for its Moonbirds NFT collection, also shared progress on its Proof social platform, allowing users to share insights and showcase NFTs.

My five cents…

A small lesson in Fear and Greed.

Do you know what the primary drivers of markets are?

Human emotions, specifically FEAR and GREED.

Greed drives the overvaluation of prices, and if you were in crypto in 2021, you know what I’m talking about. Bitcoin reached a high of 65k, and the bells of world adoption began ringing across social media. This led to further greed into altcoins, NFTs, and other creative methods to remove retail investors from their hard-earned money.

But the party had to end, and reality began to set in.

Enter FEAR. The sell-off has continued for months, and user metrics across crypto have plummeted. Questions are beginning to arise if the past promises of crypto will even transpire.

Amidst the most significant structural change to supply issuance in crypto history (Ethereum Merge), nobody seems interested. PEAK FEAR. The constant stream of Fear, Uncertainty, and Doubt (FUD) comes along with peak fear. Or, if you look at it through a more pragmatic lens, OPPORTUNITY.

The truth lies somewhere between the emotions of peak fear and peak greed. Crypto is a growing technology that still has a long way before world acceptance, but it’s more than just a nefarious tool of greedy developers. It’s up to investors to find that middle ground and hold firm to their convictions.

Thanks for reading.

Gabri

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Understanding THESE latest macro metrics will help you conquer the current market. was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

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