“Celsius nears bankruptcy, SoLend voted to seize a whale’s account, and Elon Musk is being sued regarding his endorsement of Doge.”
Stock Market Roundup
On Friday the S&P 500 closed at 3911.74, up 6.71% for the week and roughly flat over the last two weeks. On June 15th, the Fed raised rates by 0.75 percentage points, pushing the federal funds rate to 1.75%. The hike is the largest by the Fed since 1994 but matched the consensus expected rate rise. The day of the announcement, the markets were green, but slumped during the latter stages of the week. Chair of The Federal Reserve, Jerome Powell, revealed the day of the meeting that a “softish” landing would not be easy to realise, and that a US recession could soon become a reality. Moreover, a week later, Powell declared that his war against inflation was “unconditional”, suggesting he would be willing to heavily impede economic growth to bring prices under control. Additionally, Fed official Christopher Waller supports another 0.75% hike in July. Despite the decisive action being taken by the Fed, US weekly jobless claims dropped in June, suggesting low unemployment and a tight labour market, which also bodes poorly for future inflation figures.
The day after the Fed meeting, the Bank of England raised UK rates by 0.25%, far lower than the US rate hikes. Moreover, the latest inflation figures show that UK CPI hit a startling 9.1% in May. Many commentators have suggested that the BoE has been too passive in the face of high inflation, especially when compared to the Fed. UK business confidence fell in May, while UK consumer confidence has fallen to the lowest levels since records began. This also comes at a time when strikes have been rocking the UK, with both airline and rail workers actively striking and teachers planning strikes. However, in slightly more positive news, the UK has signed a deal with Norway, securing extra gas for the winter. GBP/USD currently trades at 1.227, flat from 2 weeks ago.
In Europe, Germany raised major concerns regarding its supply of gas, due to Russia cutting supplies to the European powerhouse. Germany is currently in its second stage of its three-point emergency plan, which means it will now provide up to 15 billion euros of loans to help replenish domestic gas storage facilities. The DAX performance index was down 0.68% over the last 5 days. Large German biofuel manufacturer and supplier, Verbio, was down over 5% from the Friday previously. Overall, European stocks have fared reasonably well over the last fortnight, with Euro Stoxx 50 only down 1.7% over the last two weeks.
Crypto Market Roundup
Over the last fortnight, Bitcoin has been volatile, but the price is ultimately flat from two weeks ago, sitting at $21,200, only down around $1000. Ethereum’s chart exhibits a similar pattern, down less than 1%. The total crypto market cap has now been under the $1 trillion mark for half a month and is down over 20% from the beginning of June.
The crypto market continued to shed jobs, largely driven by the poor price action of the market. Firms such as Crypto.com, Bybit, and BlockFi joined Coinbase in laying off employees. Bybit has reduced its workforce by 30%, while BlockFi and Bitpanda also had considerable downsizes, letting go 20% and 27% of staff, respectively. Crypto.com employees have been less hit by the downturn, with only a 5% trim. While other crypto firms are feeling the strain of a crypto bear market, Binance has been making moves in a positive direction. Firstly, the crypto exchange started a temporary offer of fee-free crypto trading in the US. Additionally, Binance signed Cristiano Ronaldo, arguably the world’s most famous footballer, to an NFT partnership deal. Meta and Microsoft have launched a “Metaverse Standards Group”, promoting strong principles and ethics in the metaverse.
It was a very busy fortnight for stablecoins. USDD, Tron’s stablecoin, depegged from the US dollar, falling to a low of $0.93 and currently sits at $0.97. Tron currently has a $6 billion market capitalisation, down 18.8% for the month. Additionally, popular crypto YouTuber, Coffeezilla, accused USDD of being a Ponzi scheme. More positively, Circle, the provider of USD stablecoin USDC, released a Euro-related stablecoin on ETH, while founder of USDT, Tether, plans to issue a GBP-related stablecoin. Additionally, Tether revealed that a top-12 auditing firm would audit Tether’s USD backing for USDT. This could finally provide reassurance for crypto investors that the largest stablecoin’s reserves are genuine and well maintained.
The crypto bear market continued to make waves across the ecosystem. Publicly-listed Bitcoin mining firms, including Riot Blockchain and HIVE, continue to shed market cap. Riot is down over 19% over the last month, while HIVE is down 73% over the last six months. Due to rising energy costs and low Bitcoin prices, mining firms are having to sell a large percentage of the coins that they have mined. For example, Riot sold 250 of the 466 Bitcoins that it mined in May. The difficulties have not been localised to mining firms, however. Three Arrows Capital, a prominent crypto hedge fund, has been liquidated by numerous crypto exchanges, after failing to keep its collateral to a sufficient level to maintain its levered positions. The exchange, Voyager Digital, has the largest exposure to Three Arrows’ losses, potentially losing up to $655m. Elon Musk is being sued for $258 billion regarding promoting Dogecoin to retail investors. The lawsuit suggests that Dogecoin is a “pyramid scheme”. Celsius, the major crypto lending firm, has suspended withdrawals and hired advisors regarding bankruptcy options. Given the major size of Celsius, it has prompted the idea of financial contagion in the crypto market, with one firm failing causing many others to fall with it. Finally, users of SoLend, a prominent DeFi application built on the Solana blockchain, voted to seize a whale’s account due to the account’s liquidation exposure. The proposal was later overturned with a further vote.
In Other News…
South Korea has placed Terraform Labs’ employees on the no-fly list. The move comes after the implosion of Terra’s coins LUNA and UST. Currently, a South Korean financial crimes unit is investigating the collapse of LUNA.
A major finding of KuCoin’s “Into the Cryptoverse” report was that 72% of surveyed crypto investors use social media as their main form of crypto-related information.
Hublot, the luxury watch brand, revealed 200 limited-edition watches that one can buy with cryptocurrency. Through Bitpay, consumers can buy the $21,800 “Big Bang Unico Essential Grey” with Bitcoin, Shiba Inu and more coins.
Partnering with Universal and Fox, crypto startup Moonpay has launched its new NFT platform “HyperMint”. The primary function of HyperMint is to help large firms create and mint new NFTs for their brand.
Spanish airline Vueling announced it will accept 13 cryptocurrencies, beginning in 2023. The coins include BTC, ETH and LTC.
Tag Heuer’s new smartwatch allows the wearer to display NFTs. The watch allows for interaction with the blockchain to verify NFT ownership and exhibit a hexagonal version of the art piece.
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