- Equities are near YTD lows as the market gave back gains from a historic reversal yesterday. The SPX lost 2.13% while QQQ is down 2.7% after a sentiment survey from the University of Michigan showed consumer inflation expectations were increasing. The US 10Y is up to 4.00% at writing while DXY gained 0.80% to reach 113.36. Over the last 24 hours the global crypto market cap is flat 0.20% as BTC (+0.0%) looks to hold the $19,200 level. Currently trading at $1,296 (+1.8%), ETH has outpaced BTC and the rest of the top 10 digital assets by market cap over the last day. ENS was the top performer in the top 100 (+7.1%). The token governing the most popular wallet naming service on Ethereum has seen strong performance over the last 30 days (+36.5%) following continued momentum and adoption after the ETH merge.
- Leading stablecoin issuer Tether has announced they have sold all commercial paper holdings and replaced them with US Treasury bills. At a market cap of $68bn, USDT is the 3rd largest cryptocurrency by market cap. Tether has often been criticized for its lack of transparency on holdings backing USDT, which they claim will always be redeemable for $1 USD. As the most traded cryptocurrency, the majority of exchange pairings are $ USDT denominated markets. Following Terra’s notorious stablecoin collapse earlier this year, rumors swirled USDT holdings of commercial paper were “85% Chinese or Asian”, which Tether disputed to be untrue. In 2021 Tether and its parent company Bitfinex were fined $18.5 million in a settlement with New York State after prosecutors found that Tether’s promise its stablecoin was fully backed by U.S dollars was untrue. In a push for more transparency, the stablecoin issuer released an independent accountant attestation report conducted by BDO Italia, although critics point out this falls short of the transparency of an official audit. The report showed that ~80% of holdings were backed by cash equivalents, with the remaining holdings in a variety of assets including secured loans, corporate bonds, precious metals, and “other investments” such as digital tokens.
- Binance announced it will be funding a $500 million lending pool for Bitcoin miners. The world’s most popular cryptocurrency exchange is only the latest to move into the space, following the launch of a similar lending facility from DeFi platform Maple Finance ($300m). Despite the negative BTC in performance YTD ($59%), mining difficulty is at all-time highs meaning miners need even more infrastructure to be profitable. Throughout the bear market mining revenue is down nearly 60% since the beginning of the year, according to Blockchain.com. The combination of falling revenue and compressing margins leaves miners with few options considering traditional banks were already skeptical about doing business with cryptocurrency-related companies. Borrowers will need to provide collateral to Binance and pay interest rates between 5-10% for loan terms between 18-24 months. The leading exchange stated the initiative was launched to “help maintain a healthy digital asset ecosystem”.
Crypto Daily Report – October 14
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