Discover more from Learning Crypto
Israel Attacks - If Iran Get Involved Will This Be A Financial Problem?
It's been a slow week, but it might well warm up.
Verasity Shatters Records with Massive Token Burn, Catapulting Prices
Verasity, a digital content management platform, recently executed its largest-ever token burn, marking one of the most significant token reduction events in the history of cryptocurrency. This strategic move has ignited a substantial surge in the value of VRA, the platform's native token, with an impressive 90% increase from its September lows and a remarkable 50% surge following the burn.
Verasity operates as a protocol and product layer blockchain, primarily focusing on safeguarding advertisers from fraudulent activity on major video platforms. Its core mission revolves around ensuring genuine engagement from real users while providing security, trust, and transparency. Verasity relies on its patented blockchain-based Proof of View (PoV) technology to verify advertisements effectively.
The token burn, conducted on October 2, 2023, involved the deliberate removal of 10 billion VRA tokens, a decision it reached in consultation with the platform's community and token holders, aligning with their decentralised principles. The Verasity community strongly supported this token burn initiative through a majority vote.
Additionally, Verasity has revealed plans to migrate the remaining 90 billion VRA tokens to a new blockchain, usually used for data circulation. This move could further enhance token value. It's essential to recognise that while such news events often trigger asset price surges, they can just as easily lead to significant retracements, a common occurrence in the cryptocurrency space.
Burnt Unveils Cutting-Edge Layer 1 Blockchain: Introducing Xion
Burnt, a trailblazing decentralised infrastructure provider, has launched its flagship product, Xion, a public, permissionless layer 1 blockchain testnet. This development heralds a monumental shift in the blockchain landscape. Xion's standout feature is its exceptional scalability, designed to effortlessly handle a substantial number of transactions per second. Moreover, its inherent interoperability with diverse blockchain networks opens up a realm of possibilities.
Xion's adaptability spans across a wide array of applications, products, and services, simplifying the process for enterprises to construct and deploy decentralised applications (dApps) on its robust network. Currently in development is a cutting-edge wallet tailored for Xion token storage and management. Furthermore, Xion is poised to facilitate seamless asset bridging between its platform and other blockchain ecosystems while equipping developers with a swift and efficient toolkit for dApp creation.
The innovation doesn't stop there. Xion's far-reaching influence extends to play-to-earn gaming, data storage, social media, decentralised finance (DeFi), and non-fungible token (NFT) platforms. In a groundbreaking move, Xion will adopt USDC as its primary token, fully backed by reserves, ensuring financial stability.
Burnt's strategic partnership with Circle Ventures, the capital arm of Circle, underscores its commitment to innovation. With Xion, Burnt is revolutionising the blockchain landscape, paving the way for a dynamic and inclusive decentralised future.
SEC Suffers Yet Another Defeat in Stunning Legal Battle!
The Securities Exchange Commission (SEC) experienced a significant setback on Tuesday when Judge Analisa Torres upheld the July court ruling, which absolved Ripple Labs of federal law violations in connection with the sale of their native token, XRP, to the public. This latest development poses a formidable challenge to the SEC's cryptocurrency regulatory efforts, highlighting the necessity of engaging in protracted legal battles rather than swiftly imposing unilateral bans on cryptocurrencies. Judge Torres emphasised that the SEC lacked sufficient grounds to overturn the initial decision. This outcome marks a significant victory for the broader cryptocurrency industry, underscoring the SEC's inability to convince the court, through due legal process, that a major cryptocurrency such as Ripple’s native token XRP, constitutes a security.
While the Judge's decision deals a substantial blow to the SEC, it does not entirely preclude the possibility that the SEC may still have valid arguments to present in a future trial, scheduled for April 23, 2024. Only after this trial concludes can the SEC potentially pursue a full appeal. This ongoing legal saga highlights the complexities surrounding cryptocurrency regulation and the need for a thorough and deliberate legal process in shaping the industry's future.
In Other News
Sam Bankman-Fried Trial Begins
Polygon PoS Network adds Google Cloud as Validator
Chainlink Unveils 'Data Streams' to Reduce Latency
Chainlink Introduces 'Data Streams' for Improved Efficiency in Decentralised Computing
Bitcoin's recent price performance has exhibited positive momentum compared to our observations from the previous week, with a notable rebound occurring at the 50% resistance level within the July to September weekly swing at $28,352, as visually depicted in the chart on the right. While the 0.5 level doesn't strictly adhere to the Fibonacci sequence, its significance lies in its role as the midpoint of a weekly swing, effectively representing the nexus or equilibrium point between buyers and sellers. This point gains further importance due to the evident strong resistance at $28,000, as highlighted by the two blue arrows on the daily chart featured on the left. Presently, the price maintains solid support levels above the 100-day and 50-day exponential moving averages (EMA), a reassuring signal for bullish traders. Furthermore, the Relative Strength Index (RSI) has been generating higher highs. Nonetheless, it is crucial for the price to decisively breach this level with substantial trading volume and robust bullish candle patterns to bolster confidence in this upward movement.
Regarding potential downside risks, the weekly support, indicated by the black arrows at approximately $24,900 on both charts, holds immense significance. Any breach and close below this critical level could potentially pose challenges to the overall Bitcoin chart's outlook. I'd like to emphasise a crucial observation: the 100-day exponential moving average has repeatedly acted as a strong support level over the last few months, as demonstrated in the third chart below. Our vigilant monitoring of the chart will continue.
Bitcoin Dominance (BTC.D)
The Bitcoin dominance versus altcoins ratio has surpassed the daily resistance level, as illustrated in the chart below. This suggests that if Bitcoin can maintain its position above this threshold, it is likely to outperform altcoins. This breakout increases the likelihood of a move towards the rectangular resistance level, approximately at the 50% mark, and potentially even reaching the highs observed on June 28th. Despite the relative strength index (RSI) being in overbought territory, there is no recent indication of bearish divergence. Furthermore, the price is comfortably trading above the 10-day exponential moving average (EMA).
For a broader perspective, let's shift our attention to the monthly chart on the right to identify potential upward targets. It's noteworthy that back in June, the price respected the 0.382 Fibonacci level, standing at 52.13%. There is a strong possibility that, with the current upward momentum, the price may revisit this level. Beyond that, there are no significant resistance levels until reaching the 0.618 Fibonacci level at 60.34%. It's important to be aware that a rejection at the 0.382 Fibonacci level could potentially form a monthly double top pattern. We will closely monitor this chart in the coming weeks.
I have opted to analyse the Cardano chart due to its current position at a critical support level, and its future trajectory remains uncertain. On one hand, we've witnessed the $0.2560 range being tested at least four times since December 2022. According to W.D. Gann's Rule of 4, repeated tests of support after the fourth attempt are more likely to result in a breakdown in that specific direction, potentially to the downside. However, it's essential to note that we also observe an oversold RSI Stochastic indicator that is showing signs of gaining upward momentum and is positioned above the 20-line. Furthermore, a traditionally bearish Descending Triangle pattern recently broke to the upside on a strong weekly candle from the previous week.
Taking a closer look at the chart, it becomes evident that we are currently testing daily support. This analysis suggests that if we manage to hold this support level and subsequently break and close above the next resistance, roughly around $0.2660, we would establish a pattern of successive higher highs, indicating a robust uptrend. Such a breakout would also coincide with a breach of the flattening 50-day exponential moving average. The RSI presently finds itself in a neutral mid-range, implying the potential for price fluctuations in either direction. To sum it up, my current sentiment leans cautiously toward a bullish outlook. However, a breach and daily closure below the support line at $0.2566 would trigger a significant shift in my stance, making me decidedly bearish and increasing the likelihood of a retest of the previous lows
Equities Drop; Gold, USD Rise on Israel News
Initial market reactions to Hamas attacks on Israel are defensive and to be expected. Stocks markets and currencies dropped during Asia trading whilst the US dollar strengthened, alongside gold, silver and oil. Market analysts however don’t expect this to be a sustained flight to safety and major increase in oil prices, provided Israel doesn’t move on Iran. We can expect volatility this week however, as the news is digested and the situation develops.
Blowout US Jobs Data
Last week’s Stocks section of the Blocks & Stocks newsletter had a short term bullish tone, following a US government shutdown being postponed, if not totally avoided. What I wasn’t expecting though, was for markets to make new local lows on the news. Then Friday happens.
Last Friday saw jobs data that surprised everyone. September’s US nonfarm payrolls (NFP) printed a colossal 336,000 new jobs created, versus expected 170,000. Markets’ initial response was risk off, with equities selling off and Treasury yields rising to levels not seen since 2007.
Th at was short lived though, with an initial -1% S&P 500 decline being wiped out with an intraday move nearly 2.75% higher for a strong daily close, and to break the run of 4 consecutive weekly losses in the benchmark index.
But this must be put into perspective, given Middle Eastern developments over the weekend. Following markets’ initial risk off reaction, what happens next is anyone’s guess. One thing is certain though: volatility will be increased across all asset classes.
Earnings Season Picks Up Pace, Banks in Focus
After a quiet start to the week, Thursday sees some retail and tech names whilst Friday will likely get most of the attention with big banks earnings and forward guidance setting the tone for Q4.
With US interest rates at 5.5%, banks’ net interest margin (how much they make – or lose - on loans) will be under pressure. Banks borrow in overnight markets at floating rates, to fund loans which are usually made at fixed rates for a number of years. Overnight rates are governed by the central bank’s funding rate (commonly known as a country’s interest rate) and have increased to a level that in many cases is higher than banks’ existing loans on fixed rates (eg. mortgages, business loans).
This has, to some extent, been offset over recent weeks with longer duration yields rising. However, a bond’s price is inversely correlated to its yield, giving bonds the name fixed income, Fixed income refers to that fact that, if a bond is held to maturity, the bond holder will receive their full investment back plus the coupon, or yield. As interest rates fluctuate, a bond’s price will rise and fall to compensate for the difference in yield earned.
Price fluctuation isn’t a problem, IF a bond is held to maturity. If however, a bond holder (eg. a commercial bank) faces a liquidity squeeze and is forced to liquidate some of its fixed income assets, they will need to be sold at today’s market prices. The problem facing banks now is that, because rates have risen so much since their bond holdings were purchased, today’s price of those bonds is significantly underwater.
Forced selling is what caused the UK gilt crisis in September last year, the US (and Credit Suisse) banking failures in March of this year, and will be the focus of much attention this earnings season. Following the US banking mini-crisis in March, the Fed setup the Bank Term Funding Program (BTFP) where US banks can use underwater bonds as collateral for loans at par (face value).
What isn’t covered by the BTFP though is banks outside of the US.
Russia Diesel Export Bans Lifted
Last month Russia banned exports on petrol and diesel, following domestic supply problems caused a combination of factors including railway bottlenecks, maintenance at oil refineries and weakness in the rouble. Diesel exports have largely resumed as the export curbs were effective in restoring domestic Russian supplies. European futures spreads and diesel refinery margins, which had risen sharply, have since fallen. Russia is the biggest exporter of diesel, just ahead of the US.
Things I’m Watching
LNG workers plan to resume strike at Chevron’s Australia facilities, sending gas prices higher in anticipation of disrupted supply.
Republicans search for new House Speaker after McCarthy’s ousting. His replacement looks likely to be a more right-leaning representative, potentially leading to a government shutdown if a budget can’t be agreed quickly.
US initial jobless claims, CPI data (Thursday); UMich consumer sentiment (Friday) will be key, following week’s blowout nonfarm payroll print.
China money supply, new loans (Wednesday), CPI, PPI & trade data (Thursday) will give some indication on China’s economic situation, following disappointing Golden Week tourism revenue.
US corporates & consumers continue debt binge, despite persistent messaging from Jerome Powell on keeping rates high for longer.
US corporate bankruptcies & consumer credit delinquencies continue to rise even as debt levels increase.
Germany CPI, France CPI; Eurozone industrial production all released this week to give further insight into Europe’s struggling economic positions.