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NO MORE SAM BANKMAN-FRIED...
Sam Bankman-Fried Found Guilty Of All Fraud Charges
Ex FTX and Alameda boss, Sam Bankman-Fried has been found guilty on all charges of Fraud. In breaking news on Friday, Mark Cohen, Bankman-Fried’s defence attorney said that the former billionaire crypto mogul, known who was infamously labelled as the ‘crypto king’, respects the court’s decision but will fight the charges. U.S attorney Damian Williams standing outside the courthouse after a tumult took the jury just over 4 and a half hours to come to their decision after a tumultuous 5 week trial. Outside the courthouse, U.S attorney, Damian Williams said after the guilty verdict that "Sam Bankman-Fried perpetrated one of the biggest financial frauds in American history,", he went on to say "This kind of fraud, this kind of corruption is as old as time. We have no patience for it."
In what culminated as an emotional conclusion to a turbulent legal roller coaster, former FTX chief, Sam Bankman-Fried, earlier in the week, teetered on the brink of tears as his defence attorney, Mark S. Cohen, delivered his closing remarks. A visibly distraught Bankman-Fried, maintaining an unwavering gaze towards his parents during Cohen's speech, was fervently hoping for an acquittal. However, with the weight of damning evidence accumulated over the past five weeks, this aspiration was proven to be a formidable challenge.
Cohen suggested that Bankman-Fried had made earnest efforts to manage two multi billion-dollar enterprises in an emerging market, acknowledging that some decisions had yielded favourable outcomes while others had gone awry. Judge Lewis Kaplan, overseeing the trial, extended the courtroom drama in New York well past 6 p.m on that evening.
In a passionate address, the defence lawyer continued to assert that Bankman-Fried had operated in "good faith" while overseeing his two firms, FTX and Alameda Research, and should, therefore, not be convicted of fraud. He further contended that it was "real-world miscommunications, mistakes, and delays" that led to the downfall of the two businesses, rather than the fraud charges levelled against his client.
On the opposing side, prosecuting attorney U.S. Attorney Nicholas Roos presented a contrasting narrative, gesticulating towards Bankman-Fried as he addressed the jurors, alleging that Bankman-Fried's actions had resulted in the loss of billions of dollars for thousands of individuals.
While presenting his defence in court, Bankman-Fried asserted that he had done his utmost and made numerous mistakes but firmly believed he had not committed any criminal acts. A date of March 28th 2024 has been put down as a possible day for sentencing and now Bankman-Fried has been found guilty, he could face life imprisonment.
Near Protocol Price Explosion After Game-Changing Partnership with Securities Firm Nym Technologies!
Last Thursday, the Near Foundation made a significant announcement regarding a groundbreaking partnership that has significantly enhanced the security of their layer 1 blockchain. Near Protocol unveiled a strategic collaboration with Nym Technologies, leveraging Nym's cutting-edge innovations to fortify their platform against potential third-party surveillance and online threats. The impact of this announcement was striking, as Near Protocol's native token (Near) witnessed a remarkable 15% surge in price on the very day the news broke.
Nym Technologies employs a revolutionary technology known as the 'mixnet' to safeguard the security of Web3 applications and interactions. This is precisely the innovation that Near Protocol has chosen to embrace. The mixnet essentially takes the data flowing within the Near Ecosystem and encrypts it before routing it through a series of intermediary nodes, commonly referred to as 'mix nodes.' These mix nodes serve as relays in a communication chain, similar to strategically placed postboxes. As the data is repeatedly encrypted and decrypted by these nodes, the final mix node facilitates its delivery, making it an exceedingly challenging task for potential attackers to breach the system.
Furthermore, Nym Technologies employs deceptive data within its mixnet, effectively camouflaging genuine information. This added layer of obfuscation makes it exceptionally challenging for malicious actors to discern what is authentic and what isn’t. Moreover, Near Protocol's blockchain-agnostic nature allows it to seamlessly interact with a variety of other blockchains, further bolstering security. This dynamic ecosystem obscures user IP addresses, creating a robust shield of privacy and safety for participants in the cryptocurrency space. This added safely utilises any components within the Near ecosystem, such as Near's decentralised applications (dApps), wallets, or validators. This comprehensive security framework is a key driver behind the impressive surge in Near's price, attracting a growing community of users seeking a secure and private environment for their digital assets.
OpenSea Announce More Layoffs As NFT Prices Continue To Fall
OpenSea, a renowned digital art marketplace specialising in the trading of digital collectables, recently disclosed a significant reduction in its workforce, potentially impacting a staggering 50% of its personnel. The primary impetus behind this decision is the declining values of Non-Fungible Tokens (NFTs), a market sector in which OpenSea has gained prominence through the sale of iconic NFTs like Bored Apes and Pudgy Penguins.
During August, the floor prices of these digital assets plummeted by as much as 25%, further exacerbating the company's challenges and prompting this substantial round of layoffs. Devin Finzer, the CEO of OpenSea, has expressed their commitment to making transformative changes, including the upcoming launch of OpenSea 2.0, a revised version of the platform. However, the precise nature of these alterations remains undisclosed, leaving uncertainties about the potential impact on the company's future workforce.
Evidently, OpenSea has been grappling with difficulties for some time, as evidenced by previous staff reductions in July 2022. These recent developments highlight the company's determination to navigate the evolving NFT landscape while adapting to market dynamics and shaping its path forward.
Bitcoin is presently in a consolidation phase, holding near its recent peak following last week's surge in value, which saw the world's largest digital asset reaching $35,984 on Thursday, marking its highest point since May 2022. While this consolidation could suggest the potential for further gains, it's important to observe that the price's momentum appears to be slowing down. A subtle bearish divergence is emerging, indicated by the upward-sloping blue line on the candle chart and a downward-sloping blue line on the RSI indicator. This doesn't guarantee an immediate price drop, but it does indicate a need to prepare for a possible pullback, considering the rapid ascent without a significant retracement. One potential support level to watch is the former resistance, now turned into support at $31,454, as indicated by the black support line and the blue arrows on the chart.
Turning to the monthly chart, it becomes evident that the price is currently encountering resistance at the monthly 0.382 Fibonacci level, which stands at $35,922. This level is derived from the all-time high of $69,000 to the November 2022 low of $15,476. Notably, this area represents a convergence of resistance, as indicated by the black arrows on the monthly chart. If the price manages to break above this resistance, it could potentially advance to the 50% Fibonacci level. However, there is relatively little resistance around that area, making a move to the 0.618 Fibonacci level at $48,553 highly plausible. Should there be a weekly close above this level, the odds of Bitcoin reaching new all-time highs will increase. Therefore, we will be closely monitoring Bitcoin's performance on a weekly basis.
I've chosen to focus on the ETH/BTC charts for a specific reason. Historically, during crypto bull markets, Ethereum tends to outperform Bitcoin. However, it's clear that this isn't the case right now. For a full-fledged crypto bull market to emerge, the ETH/BTC pair needs to find a solid bottom. It's not just about Bitcoin dominating the market; if we anticipate a shift of funds from Bitcoin to altcoins, we must identify key support levels on larger timeframes and structural areas on the daily chart. The significance of this chart cannot be overstated. It's important to note that even when Bitcoin is outperforming Ethereum and altcoins are gaining value, it indicates capital inflow into the entire crypto space. Nevertheless, when a rotation occurs from Bitcoin to altcoins, that's when the true potential of altcoins becomes evident.
Examining the daily chart, we observe that the Relative Strength Index (RSI) is in the middle range, and trading volume is notably stronger on down days. While a minor bearish divergence has appeared over the past few weeks, it's not particularly prominent. A strong bullish candle formed on Friday, albeit with average volume. Another noteworthy observation is the rapid overbought condition of the Stochastic RSI, which, in my view, strongly supports a bearish outlook. Structural integrity remains intact, although a potential new structure could be emerging, highlighted by the green shading. To have a bullish impact, breaking above the level around 0.05376 on robust volume is crucial as it represents the first sign of an upward movement.
On the other hand, the monthly chart provides a broader perspective. We are rebounding from the 50% level, tracing back to the lows of September 2019 through to the all-time highs of November 2021 at 0.05226. This level coincides with strong support, denoted by the thick parallel line intersecting the 50% level and highlighted by black and blue arrows. I want to emphasise that I don't typically make price predictions; instead, I prefer to observe and follow market trends. However, I would suggest that, given the current weakness evident on the daily chart, it's probable that we'll encounter further downward movement until we observe an upside break of structure. There's a strong possibility that prices will continue to decline, possibly down to the 0.618 level at 0.04374. We are seeing a decline this week in Bitcoin dominance (BTC.D) and this could be in line with the support we are seeing in ETH/BTC. In my perspective, upon analysing the charts provided below, it becomes clear that in the past week, there has been a shift from Bitcoin to altcoins but this altcoin rally started before this and until I observe a more substantial breakout in ETH/BTC, it's unlikely that we will witness a full-fledged rally in altcoins and Bitcoin could keep outperforming the broader market but I will remain vigilant and look closely for any further developments.
Reserve Rights (RSR)
This week, I aimed to select an altcoin, considering the recent significant surge in cryptocurrency markets. My attention has been drawn to Reserve Rights (RSR), and I wanted to conduct a comprehensive analysis encompassing tokenomics, technical levels of the coin and the fundamental aspects of the altcoin markets to gain a deeper understanding of where we stand at present. Notably, the price of RSR has experienced a rapid increase, marked by substantial daily and weekly gains. It has successfully crossed the 10-day exponential moving average (EMA), and both the 100 and 50-day daily EMAs are turning upwards and narrowing. Additionally, Saturday witnessed robust trading volume on a day of significant upward movement, indicating current momentum. However, it's important to note that we currently find ourselves at a critical resistance level around $0.002566, as indicated on both charts, and our oscillators are in overbought territory. While an overbought RSI doesn't necessarily imply an imminent major pullback and can signify a strong and sustained trend, it is essential to see a breakout above the green accumulation zone marked on the weekly chart to sustain this rally. If we can indeed breach this range, there is a strong possibility of the uptrend continuing. Furthermore, a breakout followed by a retest of the resistance, acting as new support, would signal a healthy bull market.
One significant concern, as is the case with most altcoins, is the presence of substantial resistance levels, extending all the way to the previous all-time highs. In RSR's case, the next significant point of interest to the upside is around the $0.004 mark. If we are truly entering an altcoin bull rally, each resistance point must be overcome gradually, much like chipping away as the price climbs. It's worth remembering that the crypto market is never too far from unexpected black swan events, which can potentially reverse an ongoing uptrend so nothing must be taken for granted.
Notably, the circulating supply of RSR is considerably higher than during the peak of the previous bull cycle, making a return to the old all-time highs a challenging yet not entirely impossible task. This would require RSR's market capitalisation to reach approximately $6.1 billion, compared to the previous high of around $1.4 billion. While this may seem like a formidable goal, it becomes more feasible in the context of overall cryptocurrency market growth and adoption. As mentioned earlier, breaking out of the green accumulation box is a positive signal for this asset's prospects.
Macro News & Analysis
QRA & FOMC
Last week was quite an eventful week, with FOMC and data prints. But the most important event in my view, was US Treasury’s quarterly refunding announcement (QRA) in which its debt issuance size and composition is communicated.
The Long, Nerdy Explanation
Treasury has a self imposed guideline of issuing 15-20% of debt in bills (up to 1 year tenor) but in August’s QRA that ceiling was increased to 22.5%. There’s greater demand for short dated issuance so this is welcomed by markets as less upward pressure is put on longer tenor yields. However, the real story in August’s QRA was the large upward surprise in total issuance to fund government. The extra 2.5% bills is all well and good, but the overall increase in supply of duration onto the market – along with continued duration increases “over several quarters” – contributed largely to the sell off in both Treasuries and equities in Q3.
Then comes the Q4 QRA which surprised markets once again. Last week’s QRA walked back some of Treasury’s hawkish stance from the prior announcement. Whilst this week sees $9.8bn auctions of 3, 10 & 30 year issuance, what markets really picked up on was that “[t]he Committee supported meaningful deviation from the historical recommendation for 15-20% T-Bill”, implying the share of new bills onto the market may increase considerably above the Q3’s new ceiling of 22.5%.
Now, that’s a lot of technical talk that I’m sure some of you really enjoy. But for those of you in a hurry, long story short: Treasury’s announcement last week dwarfed the FOMC’s decision to continue holding rates rather than resuming hikes.
Japanese Monetary Policy
Another big story from last week was the Bank of Japan’s (BOJ) policy adjustments. The BOJ have been conducting both yield curve control (YCC) and quantitative and qualitative easing (QQE) for many years, where they buy unlimited quantities of 10 year bonds in order to keep the 10 year bond yield below their policy target:
This has been an attempt to stoke inflation in an economy that’s stagnated since its 1980s boom. You could say it didn’t work:
That is, you could say QQE & YCC didn’t work until they did, over the last 3 years. Arguably however, the last 3 years of economic and monetary activity has been fuelled by the pandemic response from Western countries (notably the US) which has had a significant impact on the global economy.
There have been multiple minor tweaks to Japanese monetary policy over the last couple of years, in response to market pressure to let bond yields rise as inflation has taken hold in Japan. The BOJ has been reluctant to make significant changes however, in order to maintain market stability and in fear of inflation being cyclically event driven, rather than secularly durable.
Now that seems to be changing as last week saw the biggest change in Japanese monetary policy yet, with their relaxing of the current 1% cap on the 10 year JGB yield. Why does this matter? Japan’s YCC & QQE has for years kept a lid on global rates, as Japanese money seeks yield from other markets and speculators borrow in Japanese yen to fund high yielding trades in other markets.
The impact of this, if not carefully managed, could cause massive volatility in global sovereign (government) bond markets and consequently global equity markets. The BOJ has been doing a good job so far in controlling their changes in policy although the market continues to pressure their limits with yields responding very quickly to policy adjustments. The risk is that they lose control of their bond market and start a global domino effect of tumbling bond prices and rocketing bond yields. As we’ve seen through Q3 in the US, that’s a lethal combination for equities, inflation and ultimately, economies.
US Recession in 2024?
There are many forward indicators signalling we’re getting ever closer to the much hyped, but ever illusive recession. According to Michael Kantro, CIO of Piper Sandler, employment is the last of 4 stages in his HOPE framework which aims to gauge when a recession is more likely around the corner.
HOPE stands for Housing, Orders, Profits, Employment. Let’s take a look at each one to see where we may be in the cycle:
ccording to the HOPE framework, and the data series above, H O & P have all clearly peaked, and in the correct sequence. Has employment now peaked in September this year? We will have to wait and see how the data behaves over the coming months.
Whilst unemployment may continue to rise, the Fed’s continued pause and neutral tone, along with the Treasury’s dovishly interpreted QRA caused Treasury and equity markets to rally, the dollar to fall and consequently financial conditions have eased significantly.
This looks set to delay the recession once again by at least a quarter or 2, as US companies’ employment decisions are largely driven by stock prices. If stocks continue this big reversal and financial conditions continue to ease, any chance (hope?) of a recession could again have been successfully delayed.
Some of those who have been continually bearish and short the market have, sine last Wednesday, done a full 180 and have switched full risk on. I will leave you with this from Andy Constan. Whilst of course this in no way constitutes advice, I’m feeling rather bullish for the next few months :-)