Market Judges Coordinated Strike A Nothingburger

The News From Planet Ruby — Friday, June 9, 2023

The cat may be out of the bag.

For decades we have been scouting Planet Earth, judiciously sowing technology to enable the apes to achieve self-enlightenment. While these activities have always been conducted covertly, access to Earth-made intoxicants has occasionally resulted in altitude-related rapid unscheduled disassembly of craft, which some of the sneakier apes have then stolen and hidden.

We have managed to maintain an aura of plausible deniability by seeding obvious conspiracy theories among crackpots in the Earth media, but recent revelations from high-level apes mean that strategy may no longer be effective. If that proves to be the case and the apes gain widespread awareness of our existence, all hell will break loose, which may threaten Ruby’s access to fermented imports. We will be deploying a diversion imminently.

Will Higher Rates Be Inflationary?

With jobs data (NFP) coming in not just hot but smokin’ last week, markets have had to rethink their assumption of a looming recession. Stonks lifted and the DXY hit a near three-month high.

For now, expectations of an interest rate hike are limited, indicating the dollar might have topped (good for risk assets). But that’s a “might”, because there’s a good chance the Fed isn’t done raising rates just yet, which is why it hasn’t seen the pullback we’d expect if it really was hold (or pivot) time. Inflation data will be key.

One interesting side-effect of the debt ceiling fight being resolved is that the US Treasury now has the green light to hurl trillions of dollars more bonds into the market, driving down prices, raising rates, and potentially prompting depositors to pull yet more cash out of banks in search of the better returns available elsewhere. Analysts are divided on the impact this might have. It’s Arthur Hayes’ view that rising interest rates will (apparently counter-intuitively) be inflationary, because the Fed/Treasury will need to print dollars to pay the interest on the money being lent directly to it, rather than left to rot in banks for near-zero returns.

Away from the markets, UFOs are back in the mainstream headlines after a former Intelligence official claimed that the US is in possession of a number of craft of non-human origin — while withholding information from Congress.

Bitcoin Paints A “V”, Sort Of

Bitcoin has had quite the week. Having failed to benefit from the debt ceiling deal and positive jobs data, like other markets, BTC took a major hit from incoming regulatory action against Binance and Coinbase, only to rebound just as rapidly. The damage done on Monday — a $1,500 red candle, dropping through the 200-week EMA — was undone in a similar green candle the very next day.

Currently trading around the $26,500 level, down slightly from where it started the week, BTC has briskly retested the $25k area of resistance as new support. There’s clearly demand at those levels. The 200 WMA, just below $26,400, remains intact for now.

It’s hard not to be surprised, and bullish, that bitcoin has shrugged off the SEC’s onslaught. Glassnode notes that realized losses on-chain are low, suggesting an “increased degree of resilience amongst market participants”. With major players flushed out in 2022, there are fewer forced liquidations, and a higher percentage of HODLers who are prepared to sit out the volatility.

Jim Cramer, meanwhile, took the opportunity to warn investors off all crypto assets, listing a number he feels strongly about. These included the little-known “Solano” and “Cardanzo”.

Crypto Blamed For Everything

It should have been a brutal week for crypto. The SEC sued both Binance.US and Coinbase, charging them with operating unregistered exchanges, selling unlicensed securities, and more. It sought to freeze Binance.US’s assets, to “protect” investors from a company that allegedly commingled customer funds. Binance.US is losing its banking arrangements and will shortly become a “crypto only” exchange.

Meanwhile, tax evasion by crypto firms and users has been blamed for the tax shortfall in US, and CEX volumes have dropped to lows not seen since 2020. Binance has been making layoffs. Crypto has apparently lost its correlation with stonks, and has not benefited from the broader bump to the markets. And Do Kwon has been granted bail by the Serbian authorities, costing him 400,000 euros ($428,000, or 33 million UST).

In better news, Ethereum’s gas streak was finally broken, as the first inflationary block in weeks was printed — indicating that memecoin season might be over too. Plus, Coinbase has made some small steps of progress against the SEC with its petition for rulemaking, which may have relevance in the new case against it.

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That’s all for this week!

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