Dibixfund

The Clumsy Market Mechanism

We all work in the markets, and very often it seems that we are quite understanding what it is. However, someone calls a certain product a market, someone just a price, and someone generally thinks that the market is just a generalized concept of everything and everything, where something is bought or sold.

As you study this question, you will find that the market is people. Goods and prices are a secondary phenomenon of the market. For a market to exist, someone has to be willing to buy from those who are willing to sell, and it doesn't matter what it is.

Thus, we see that in any market, first of all, there must be people who bring money to the market, this ensures the liquidity of any market. Some people think that markets cannot exist without goods. Well, look at the futures and debt markets - none of that exists at this particular moment in time! People sell and buy something that either does not exist and will never be, or at best, something that may someday be mined.

People form markets. The mechanism is quite simple: there is a person who wants to sell a "bright future", on the other hand there is a person who wants to buy this "bright future". There are also brokers and exchanges who say they will guarantor your trade, but you have to pay both. A deal is concluded at a certain price and everything seems to be fine, but some other participant got wind of a possible "bright future" and told his friends about it. Now they all want it and go looking for where to buy it. "Bright Future" is growing in price, as there is a demand for it, and brokers and exchanges simply act as guarantors of transactions and they are all paid for it. Times and governments are changing, and now, the "bright future" is no longer so attractive, and now everyone wants to sell it. Its price is falling. And brokers and exchanges just continue to collect money from everyone for their guarantees. The fate of the "bright future" is becoming less and less predictable, and therefore the price begins to rise rapidly, then fall catastrophically, and we will get such a phenomenon as volatility. Money is becoming the only commodity everyone is after. For the sake of decency, someone will sometimes say that oil is important or gas is important, or maybe corn (of course, where can we live without it at all), but the market will cease to exist on any product whose prices do not have sufficient volatility and the price which is not moving. All this happens because the market is where people are, and people are where there is an opportunity to profit from price movements.

If you are not a manufacturer of any product and do not hedge or fix the price of your product, then trade and invest in whatever you want, provided that asset prices are in motion and have sufficient volatility! The rest doesn't matter.

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A new threat to the crypto market. Is it all about miner loans?

Cryptocurrency mining companies are forced to sell bitcoins to pay off loans taken on the security of equipment.

Large mining companies are beginning to face difficulties in repaying loans taken on the security of equipment, totaling up to $ 4 billion, according to Bloomberg. According to the publication, this creates a potential risk for large crypto lenders.

Given volatility of the crypto market, traditional loans for the modernization of the equipment fleet are difficult to obtain and have high interest rates. To fill the void, lenders such as Galaxy Digital, NYDIG, BlockFi Inc., Celsius Network Ltd., Foundry Networks LLC, and Babel Finance have begun accepting mining equipment as collateral in addition to payments.

Now the provision of such loans has proved insufficient due to the fact that the equipment has become cheaper. Equipment-backed loans are up to $4 billion.

According to Arcane Research, mining companies sold 100% of the coins they produced in May, while in the first four months of 2022, mining companies sold between 20% and 40% of mined bitcoins.

NFT sales are in serious decline

While the crypto market is going through a difficult period of recession, a similar situation is happening with non-fungible tokens. NFT sales fell 74.44% over the past month.

Over the past 30 days, NFT sales have decreased by 74.44% at once, and, judging by the latest data, the drop for the week is 17.33%, according to news.bitcoin.

Although the minimum values ​​of non-fungible tokens of popular collections have recovered this week in terms of the ETH rate, nevertheless, due to the low asset value indicators, NFT blue chips are sold at a much lower cost than a month ago.

The drop in sales of non-fungible tokens and interest in them is parallel to the bearish crypto market. If last month analysts recorded sales of non-fungible tokens for $4.18 billion, then after 30 days this sales figure dropped to $1.07 billion.

Last week's sales figures on 18 different blockchains show a level of $184,417,851. This is 17.33% less than it was a week earlier ($223,085,710).

Of this amount, sales of $151 million were non-fungible tokens based on the ETH blockchain, and in the case of Solana, sales amounted to $22.31 million. Thus, in 7 days, sales of Ethereum-based NFTs decreased by more than 18% 76.38%), and on the basis of Solana in 7 days such sales increased by 3.56%.

The third place in this ranking was occupied by sales of tokens based on Binance Smart Chain (BSC) with a figure of $3.16 million. However, last week sales in this direction based on BSC decreased by 32.45%.

The NFT collection with the highest minimum value of 90 Ethereum was the BAYC Bored Monkey collection. A month ago, this figure was 95.5 Ethereum. Interestingly, last month 95.5 ETH was about $204,000, and now 90 ETH is about $97,000.

Bitcoin has collapsed, the cryptocurrency market is confused

The cryptocurrency market began on the morning of June 13, 2022, when the value of Bitcoin (BTC) fell below $23,000.

Bitcoin, the largest cryptocurrency on this historic day, when the BTC/USD parity fell to its lowest level in over ten months, has been affected by many events that caused this decline both inside and outside the cryptocurrency industry.

For example, fintech protocol Celsius was on the verge of collapse after its operations were suspended, turning billions of dollars of collateral into a new risk for crypto markets. Similar to what happened in May 2022, Bitcoin and altcoins continued to lose value with this event as uncertainty reigned in the sector.

Meanwhile, there was a sell-off in Asian markets and Wall Street futures were poised to resume the downtrend that began in June 2022.

Similarly, ahead of the June 15, 2022 U.S. central bank announcement, concerns about inflation paved the way for the dire fate of BTC.

It’s getting closer to widespread adoption of cryptocurrencies.

Digital assets can be used to replenish the local budget, despite the fall of the crypto market by more than 50% over the past six months.

The mayor of the Australian city of the Gold Coast, Tom Tate, proposed accepting cryptocurrencies as payment for municipal taxes. The head of the city council instructed to study the possibility of receipt of digital assets in the budget, according to ABC News.

“Why can’t we pay taxes in cryptocurrency if the risk is low? Volatility is not so bad,” said the mayor.

Taxes can be partially paid with cryptocurrencies in the coming years, suggested Tom Tate. In his opinion, the use of digital assets will send an innovative “signal” to young taxpayers.

The City Council could accept 95% of the bill in Australian dollars and the remaining 5% in crypto, said Blockchain Australia Chairman Adam Poulton.

“We are happy to risk the other five percent, keep it and see how we can use it in the future,” admitted Poulton.

In his opinion, the underlying technology provides "many opportunities", but the main problem for its development so far is the difficulty of incorporation into bureaucratic organizations, such as local governments.

Taxes can already be paid with bitcoin in El Salvador and in the Central African Republic, where the cryptocurrency is recognized as legal currency.

The volume of coins blocked in Ethereum 2.0 exceeded 10% of the issue.

The amount of $ 25.9 billion from 73 thousand addresses are deposited in anticipation of the transition to the new protocol.

The number of Ethereum coins locked in ETH 2.0 staking in anticipation of the network transition to the Proof-of-Stake algorithm exceeded 10% of the supply on May 30, and amounted to 12.5 million ETH or about $25.9 billion. Deposits were placed with more than 73 thousand addresses.

The transition of the ETH network to the Proof-of-Stake algorithm will take place in August of this year.

On May 25, a sudden reorganization of 7 blocks took place on the Ethereum test blockchain. This blockchain is testing the transition to a new protocol. The error could be caused by the incompatibility of the new and old software of different network nodes.

On May 30, the ETH rate showed a daily increase of 2.7% and the coin is traded for about $1.8 thousand. The total capitalization was $227 billion.

What's going on with bitcoin? Is the situation still critical?

The crypto market is under pressure from macroeconomic factors. In particular, high growth rates of consumer prices in the world and in the USA remain. The situation was also affected by the collapse of the algorithmic stablecoin UST, which many analysts compare with the fall of Mt Gox, which launched a long recession in the crypto market.

Bitcoin is trading in the red for the eighth week in a row. Total losses were 39% and 44.59% to a low of $26.7K. The correlation of the first cryptocurrency with the S&P500 index is 0.78 and 0.75 for 30 and 90 days, respectively (indicators are inaccurate, since the cryptocurrency is traded on the weekend).

It is unlikely that bitcoin will be able to overcome the negative factors and enter the growth stage in the coming months, not just weeks.
In June, the Fed's rate is expected to rise again, which means that investors, against the backdrop of geopolitical instability and high inflation, will further increase investments in such protective assets as US Treasury securities, whose profitability will increase due to the increase in the key rate.

The collapse of Terra plunged the Bitcoin index into “extreme fear”

The crypto-currency sector again went into the red on Monday after a fateful week for this industry.

According to QCP Capital, the collapse of Terra (LUNA) marks “the biggest wealth destruction event in the brief history of the crypto market.”

The Terra USD stablecoin has lost 1:1 parity against the US dollar and is trading at 0.13, down 23%.
Meanwhile, Bitcoin is returning to the $30,000 mark, although last week it was at its lowest level since December 2020, losing 15% of its value. Until May, it lost more than 21%.

The Bitcoin Fear and Greed Index is currently at one of its lowest points, indicating “extreme fear.”

According to CoinGecko, more than $400 billion has been erased from the crypto market in the last 7 days. According to MarketWatch, all sectors of the crypto space suffered double-digit losses over this period, with cryptocurrencies associated with Web3, or the so-called next generation of the Internet, showing the biggest losses - by an average of 41%.

Traders have lost $430 million since the collapse of bitcoin.

During the day, traders of cryptocurrency lost $430 million as a result of the forced closing of margin positions. More than 112,000 users of crypto exchanges suffered losses, and the largest single liquidation occurred in the Bitcoin's pair and it was equal to $3.7 million, according to Coinglass.

The pairs with the first cryptocurrency carried the biggest losses, accounted $201 million. Ethereum is in second place with liquidations of $69 million. 86% of forced closed positions are long. This means that they were opened in anticipation of the growth of the market.

On the evening of May 5, the bitcoin rate fell to a minimum since February 24 at $ 36.3 thousand. The cryptocurrency has already fallen in price by 8%. At the same time, the price of Ethereum fell by 7% to $2.7 thousand.

Bitcoin Metrics: The spring compresses

Protracted consolidation, as a rule, leads to a sharp discharge in the financial markets. For four months, Bitcoin has been “circling” around $40,000, and the denouement may occur as early as next week.

The volume of Bitcoin perpetual futures trading equaled that of the spot market last year, but in the last eight months, a significant drop in derivatives trading volumes has been recorded: from an average of $70-80 billion to the current $31 billion per day.

The 21st monitored exchange’s total Bitcoin holdings are at their lowest level since September 2018. The efforts of the crypto enthusiasts alone are not enough to increase the price.

On May 3rd- 4th, a meeting of the Federal Reserve System will take place, at which the key rate can be raised immediately by 0.75%. This would boost the long-term value of the dollar, increase the risk of a US recession, and could trigger a sell-off in risky assets like Bitcoin.

According to the information of investing.com"

In the spotlight.

The news of Elon Musk's acquisition of Twitter is certainly in the spotlight. Investors are evaluating new Twitter prospects and are keeping an eye on the announcements.

Dogecoin's 30% rise today has a direct link to the Twitter deal. The fact is that Musk said that the introduction and use of crypto assets in the activities of Twitter was the right idea, but the implementation was wrong.

Elon spent $44 billion to buy Twitter, and it's safe to assume that such investments are not made just like that. The previous leadership of Twitter and the founder Jack Dorsey himself, for a long time, could not achieve full-fledged monetization of the platform.

Dogecoin is the most obvious contender for integration with Twitter. But you should also keep a close eye on the tokens and services that will be mentioned in the same text with Twitter. Potential contenders to interact with Musk's Twitter should definitely look forward to a new wave of growth.

Michael Burry is a well—known investor who became one of the heroes of Michael Lewis's book "The Big Short " (and the film based on it). However, he is not always right.

Burry was among the critics of the Federal Reserve System, accusing it of insufficient efforts to combat inflation. According to him, the Fed is "engaged in recharging the monetary bazooka." The central bank is taking steps that will allow it to save the market, and such a need is only a matter of time.

Whether the economy will be able to maintain this momentum in the face of multiple increases in the key rate is a big question. Investors believe that in May, the Open Market Operations Committee will raise the rate by half a point, but critics argue that this will not stop the price increase.

The "black swans" in the form of the Russian-Ukrainian conflict and the tightening of quarantine by the Chinese authorities are fueling inflation, once again emphasizing that the Fed should have acted earlier and nipped inflation in the bud.

Once you realize there’s a problem, it’s already too late…

As we observe how events of the current crisis transpire, we can assume that the real depression is still ahead of us. Since each country protects its interests by informational means, the scale of the world’s crisis is stubbornly hushed up.

Some investors still hope for a speedy settlement of the conflict and the restoration of relations between countries. The other part is leaving the assets. Falling US and European indices suggest that smart money is selling long-term assets.

But what happens next? In reality, after the assets are sold out, large funds will turn around and become bearish. It is that the most serious decline in the markets will begin.

“When greed or fear reigns in the market, people think alike. Therefore, very often many people buy at the top of the market and sell at the bottom.”

Jason Zweig

Three signs of dollar losing the ground

1. The deal between Russia and China took the dollar out of the equation. Russia is redistributing its reserves in favor of the euro and gold, while China is increasing gold production to form additional reserves to the disadvantage of the US currency.

2. Saudi Arabia and Nigeria are negotiating with China to pay for oil in yuan. Russia recently introduced a mechanism for energy payments in roubles, which will apply to "unfriendly" countries, thus supporting the rouble.

3. US inflation soared to 40-year highs, eroding the dollar's purchasing power. Abraham Lincoln said, "A house divided in half cannot stand the storm." The state of the economy and political differences affect the value of the dollar.

The US dollar is losing purchasing power and its status as the world's reserve currency is under threat.

Fiat currencies are based on complete trust in their issuers. It's time to get into crypto. Buy growing coins while it's possible. DBX for example 😉

According to Barclays, if in the short term strong demand for safe-haven assets supports the US dollar, then in the future, the continuation of the global economic recovery and the improvement in global risk craving will be a guilty verdict for it. In the second half of the year, the American economy will lose its exclusivity.

When bond prices fall, their yields rise inversely with price, and stocks also rise, and this could look optimistic for the prospects for the US economy. But this somehow does not fit with the readiness of the yield curve, which reflects the difference in rates on 10- and 2-year bonds, since it is already ready to go below zero.

When the indicator falls below zero, there is a high probability of a recession, which in fact means a slowdown in economic growth and a decline in production.

Thus, while the stock market is full of hopes, bonds are sounding the alarm. Investors fear that the Fed will act super-aggressively and eventually lead the US economy into recession.

After the sell-off that took place in the bond markets last Monday, the situation in the eurozone bond market calmed down, the yield of securities visibly stabilized.

But the market can again expect fluctuations in the near future, as Finland is going to attract up to 1 billion euros of new loans, due to the re-placement of bonds with a maturity of 10 years. A lot also depends on the speech of one of the members of the ECB leadership, Philippe Plein. The official must answer questions related to the too rapid growth in the yield of securities (bonds) on the EU market.

If we talk about the profitability of short-term government bonds, but it generally remained stable. Some fluctuations were present only in the US and UK markets.

The reporting season for the third quarter starts this week in the USA. This event affects global economic trends, the rise/fall of the indices of world stock exchanges. The main index in a series of reports to be presented by the largest government and financial institutions.

The inflation of the US economy (it is voiced in the CPI report) affects the dollar exchange rate on the currency exchanges of the world. Now inflation in the US is higher than before the pandemic, because there is an increase in demand for consumer goods and, consequently, an increase in prices for them.

According to experts, CPI will correspond to monthly growth for August by 0.3% and growth for 2021 as a whole - by 5.3%.

On Thursday, data on the index (PPI) – producer price inflation will be released.
On Friday– the report on retail sales in the United States for the third quarter of 2021. Due to the decrease in auto sales in the United States, it is unlikely that the data will be positive.

The growth in the value of Tesla shares continues

The growth in the supply of TESLA electric vehicles in the 3rd quarter of 2021 led to the fact that the company's shares became even more expensive (an increase of 2.85%), and their price updated a new historical maximum - $797.33 (as of 04.10.2021). According to Dan Ives, a leading financial analyst at Wedbush Securities, if strong demand for electric vehicles in China can be observed in the fourth quarter, Tesla will be able to look to the future with confidence in the 4th quarter of 2021, and in 2022 as a whole.

The slight decline in sales of Tesla electric vehicles, which could be observed in the second quarter of this year, was due to a shortage of automotive chips. As soon as this deficit was overcome, sales growth began to increase again.

According to Jeremy Grantham, a financial analyst and co-founder of the investment company GMO, which he expressed in an interview with CNBC, US securities are in a more deplorable state than they were in 1920 and 2000. Based on forecasts, over the coming months, the stock market and the S&P 500 index will inevitably sink by at least 10%.

The financial bubble can burst at any moment, because the market ignores the negative signals that are sent to it. Even when the Fed announced that it would no longer buy foreign bonds, the market did not pay attention to this.
Jeremy Grantham's words have already begun to come true. On Tuesday, US stocks fell the most since May 2021. The biggest decline was shown by shares of technology companies. But on Wednesday, futures showed some growth. If we talk about the S&P 500 index, then in 2021 it grew by 30% compared to the previous year.

Some investors believe that Jeremy Grantham's opinion is pessimistic, but usually all his forecasts come true.

&P 500

Berkshire Hathaway (NYSE:BRK b) lost to Mr. Gox portfolio in terms of profitability, Genesis Global Capital went down in history as the first company to carry out a transaction outside of exchange trading with bitcoin futures. You can learn interesting news from the world of cryptocurrency from our review.
Mr. Gox from the Twitch platform, known to the world as a crypto trader hamster, surprised – the price of the portfolio increased by 30% in 3 months. Warren Buffett, with the Berkshire Hathaway Fund, on the contrary, showed a negative result of work (- 2%). ARK Innovation Katie Wood also grew, as did Mr. Gox, but more quickly – by 5% in 3 months.

The meme "Puzzled Chloe" (a picture of a 2-year-old girl) was sold recently for 25 ETH. The transaction took place in the form of an NFT – a non-interchangeable token. 25 ETH for today - $ 74,000.

The price of the October futures for the TTF spot index on the ICE Futures gas exchange on Monday morning took the mark of 53.68 euros per kWh, or $659 per thousand cubic meters, according to the exchange data. On Friday, the value of this contract was $632 per thousand cubic meters.

The gas flow through the Yamal-Europe main gas pipeline, which goes from Russia through Belarus and Poland to Germany, fell twice on Monday morning compared to the level of Sunday and one and a half times to the level of working days last week. At the moment, the gas flow at the entrance to the GTS of Germany is 1.5 million cubic meters. m per hour.

A new gas year begins in October. Until the end of September, Gazprom has a long-term reservation of transit capacities of the Yamal-Europe gas pipeline. The Russian company has not yet booked the capacity of this highway at the past annual and quarterly auctions.

Zoom on Monday reported quarterly revenue that exceeded $ 1 billion for the first time, but signaled a slowdown in growth in the third quarter, after which its shares fell sharply.

The company's profit for the quarter ended July 31 was $1.04 per share, revenue - $1.02 billion. Both indicators were better than the market forecasts.

Meanwhile, in the third fiscal quarter, Zoom expects to receive revenue in the range of $1.015 to $1.020 billion, which implies an increase of about 31.2% year-on-year, while revenue showed multiple growth throughout 2020.

The company expects its adjusted earnings for the current quarter to be $1.07-1.08 per share, with analysts ' forecast of $1.09 per share.

The Japanese Nikkei index closed in the red on Friday, repeating the dynamics of Wall Street amid investor wariness caused by the prospect of an earlier-than-expected start to curtail the Fed's stimulus measures.

The Nikkei index fell 0.36% to 27,651. 51 points, while the broader Topix index fell 0.34% to 1,928.77 points. Both indexes suffered a deeper drop during the session, but partially recovered their losses by the close.

The US stock market closed in negative territory on Thursday, breaking a series of historical closing highs amid concerns about the events in Afghanistan, as well as on the eve of the Fed symposium in Jackson Hole.Japan's maritime transport sector performed the best on the Topix index, jumping by 7.92%.

# Nikkei

At the moment, the situation on the Chinese market is very depressing: investors have significantly reduced their interest in investing in shares of Chinese companies due to active repression in the country, which is why owners of large and small businesses have to work in a mode of severe uncertainty.

The country's authorities have strengthened control and monitoring of shares of companies operating abroad, after an active investigation began against Didi Global last month, immediately after the listing.

The level of stocks and the yuan also declined significantly after a large-scale sell-off organized by the Chinese government.

Investors are waiting for news from the Chinese PMI, which should be published in the coming week. At the moment, the second largest economy of the market is experiencing a severe recession, which is a serious test for the country.

Apple's financial report for the third quarter of 2021 shows a significant increase in revenue by as much as a record 36%, which is $ 81.43 billion, while 73.33 billion was expected.

Also, we learned from the report that the company's net profit amounted to $ 21.74 billion, which is significantly higher than last year's figures for this period – 11.25 billion.

The company's shares also rose significantly, amounting to $ 1.30 apiece, while analysts expected $ 1.01.

The company's main product, the iPhone, also shows significant revenue results, increasing it to $ 39.57 billion, compared to last year.
Other products and services also show excellent results. So the sale of the Mac brought Apple 8.24 billion, service revenue amounted to 17.48 billion, and the iPad – 7.37 billion dollars.

The second quarter of 2021 brought the company for the production of electric cars Tesla more than $ 1 billion in net profit, which is an absolute record in the entire history of its existence.

Moreover, Tesla exceeded all expectations, receiving revenue of $ 11.96 billion, against the expected 11.3 billion. In this scenario, the company's net profit amounted to $ 1.14 billion, and distributed earnings per share – 1.45

Speaking of production, Tesla produced 206,421 cars in the second quarter, 201,250 of which were put on the market. This brought the company about $ 10.21 billion.

At the moment, Tesla plans to start production of the Model Y electric SUV in 2021 on the territory of Texas and Germany.

The Dogecoin cryptocurrency appeared on the Coinbase payment platform

As it became known from the Twitter account of the Coinbase crypto exchange, after the IPO in April 2021, a new cryptocurrency was added to the platforms – Dogecoin.

Thus, there are six cryptocurrencies on the Coinbase platform, including, in addition to Dogecoin, Bitcoin, Ethereum, Bitcoin Cash, Litecoin and USDC stablecoin. The company is confident that such an arrangement will ensure the demand for payments in Dogecoin.

At the moment, Coinbase Commerce serves more than 8000 retail outlets around the world, providing its users with the opportunity to accept payments in cryptocurrency on a par with fiat money.