Weekly Crypto Market Update - August 7, 2023

LAST WEEK'S RECAP:

• Fitch downgraded US long-term credit rating from AAA to AA+.
• U.S. NFP expanded by 187,000 for July v.s. estimated 200,000, however, average hourly earnings rose 4.4% YoY, higher than the expected 4.2%.
• Base’s Memecoin BALD rose 30,000x in the first 24 hours before rugging more than 95%.
• Curve hacked for $61M due to Vyper‘s malfunctioning in historical versions, $8.9M (15%) has been returned so far.
• Curve founder has sold 106MCRV tokens through OTC and raised $42.41M to help repay CRV debt.
• Binance launched Binance Japan and offers 32 tokens including BNB for trading.
• HashKey and OSL received license upgrades from Hong Kong SFC to operate for retail investors.
• MicroStrategy plans to issue up to $750 million in stock to fund Bitcoin purchases and other uses.
  

LEGACY MARKETS – DXY

As mentioned last week, if DXY would regain 101 and get back into the previous range of risk assets, it would likely enter a longer correction. It seems we’re at that point now, with VIX rising to higher levels (see next slide), Crypto will likely get some more correlation pressure than it has in the last several weeks.

Energy is also ramping up again in the market, with inflation's downtrend likely slowing around current numbers, It’s a reasonable assumption that in the coming readings, we’ll see an uptick in inflation again. This could likely be a short-term negative catalyst for risk assets, leading to a more consolidated price range, instead of the only regime that big tech has been in since the start of the year.

LEGACY MARKETS – VIX

As mentioned in the previous slide, with earnings season well underway, VIX has seen quite the rise from lower levels. A higher VIX leads to more correlated action between markets, meaning that crypto could likely get some more correlation pressure from equities. The big question, however, is if the illiquid state of the market is large enough to offset the possible correlation pressure.

BTC WEEKLY VIEW

BTC is still frozen for now it’s more a sit-and-wait game. If risk assets get more pressure with higher VIX it’s likely we see some downward pressure on crypto. Crypto majors as a whole, were basically stale other than a couple of days in the entire year meanwhile stocks kept going higher nonstop. Now with stocks being in correction, the only question left is if the non-correlation continues, or if crypto goes down with it. A reasonable view would be if stocks go down “gently”, crypto likely stays stable. If they go down in a super volatile manner, crypto drops with it.

ETH WEEKLY VIEW

Timing-wise ETH seems to be concluding this week, with the largest downtrend line being reached from peak and the primary trend from 2023 reaching its apex this/next week. It’s likely we’re in for some volatility expansion this month.

ETH/BTC

ETH/BTC as mentioned last week ETH/BTC indicated movement before October. However, with the ETH/USD pair aligning for this month, we think volatility pick-up may happen rather soon. Also, 31st of July, the ETH/BTC ratio contracts went live.

TOTAL3 – USD MARKET STRENGTH

TOTAL3 is still showing ranging behavior. Likely waiting for a main move from BTC before making its own move. However, we’re noticing more and more alt strength. Mainly in the more illiquid ones that trade on larger exchanges and thus are easy to move.

TOTAL3/BTC – BTC MARKET STRENGTH

ALT/BTC ratio is still cooking for now. It likely needs more time to build a larger price structure before getting a true higher time frame direction again. It is, however, to be noted that BTC still broke out of a 2-year range to the upside.

SUMMARY

• Gamefi sees a small run over the weekend with YGG and MAGIC leading the pack.
• ETH/BTC CME contracts launched on the 31st of July.
• Tether announced Q2 numbers with more than 1B in operational profit.
• There will likely be volatility expansion throughout the majors soon.
• Alts that are popping off on CEXs seem to be a combination of having empty order books and being listed on top-tier exchanges. Making it fairly easy to move them at multiples with a little volume injection.
• NVDA earnings are scheduled for the 23rd of August. NVDA has been the market leader the entire year under the AI narrative, and will likely have some outsized short-term impact on equities - meaning, it could keep the market in limbo till that point (reverting behavior/range). Depending on the VIX levels at that moment, which is also important for crypto.
  
  

DISCLAIMER:

The information in this report is for information purposes only and is not to be construed as investment or financial advice. All information contained herein is not a solicitation or recommendation to buy or sell any digital assets or other financial products.

This post is prepared by Kairon Labs Traders: Joshua van de Kerckhove, Charles Belford, and Patrick Li

Edited by: Rizza Carla Ramos