Mar 20, 2023
Weekly Market Recap
According to JP Morgan, after a week of bank failures and growth in the crypto market, it's important to have a wage growth close to 3.5% to achieve and maintain the Federal Reserve's 2% inflation goal over time. Despite many job cuts, recent unemployment and job opening numbers (3.6% and 10.8 million) still show a competitive job market. However, wages haven't kept up with inflation for the past 23 months, making the situation less stable than it seems. Chair Powell emphasized in his speech last week that wage growth must slow down to increase trust in the decreasing core services inflation, not including housing.
Wage growth is important because it's closely related to core services prices. Studies show that wage growth affects core services inflation more than unemployment rates do. Last Friday, average hourly earnings for workers increased 0.2% monthly in February and 4.6% yearly, making it the second slowest wage growth since March 2021. To reach and maintain the Fed's 2% inflation goal in the long run, wage growth close to 3.5% is necessary. A thorough look at job market statistics shows a general slowdown, but pay growth remains high. As a result, the Fed is likely to increase rates and keep them higher for a longer time than expected. While the bond market now better reflects these rate changes, the stock market may see some ups and downs due to the chance that the Fed might go too far and accidentally cause an economic downturn.
Bitcoin correlation to the S&P 500 has gone back to 0 (no correlation). 0.39 earlier this year was last seen in 2016! *30 day Pearson
FDIC, SVB, and Signature Bank News:
The FDIC addressed a Reuters article that cited two unnamed sources alleging that the purchaser of Signature Bank would need to relinquish all crypto-related operations at the institution. Following the article's release, an FDIC spokesperson informed the news outlet that the agency would not mandate the disposal of crypto activities in any sale, referring to previous statements from Chairman Martin Gruenberg that the FDIC has no intention of banning specific banking activities.
Initial claims suggesting that the FDIC demanded the buyer of Signature Bank to cease crypto operations seemed to validate suspicions that regulators targeted the bank due to its involvement with the crypto sector, prompting a strong backlash from the affected industry.
Barney Frank, a former congressman and co-author of the Dodd-Frank Act, told CNBC earlier this week that banking authorities closed Signature Bank to deliver a powerful anti-crypto message. Frank also served on the Signature Bank board. The New York Department of Financial Services promptly refuted his assertion, stating that the decision to put Signature into receivership was based on the bank's current condition and its capacity to conduct business safely and soundly.
Only bidders holding existing banking charters will be granted access to review the bank's financial records before submitting an offer, as reported by Reuters.
The FDIC announced that it will accept bids for Signature Bank, which it closed on Sunday, and Silicon Valley Bank, which it shut down on March 10, until Friday. For Silicon Valley Bank, this marks the regulator's second attempt to sell the institution following an unsuccessful auction last Sunday. The FDIC had tried to sell the remaining assets of Silicon Valley Bank over the weekend but failed to find a buyer willing to purchase the entire bank. According to Reuters' sources, the FDIC prefers to sell both banks in their entirety but will consider bids for individual components if unsuccessful.
Signature Bank began trading on Nasdaq under the SBNY ticker in 2004. By early 2022, its share price reached a record high of $365.71 per share. The bank also provided an instant settlement network for digital payments called Signet, which competed with a similar service at Silvergate Bank.
Nasdaq suspended trading of SBNY on March 10 when shares were valued at $70.
COINBASE MAY HAVE TRADING PLATFORM OUTSIDE US:
Cryptocurrency exchange Coinbase is reportedly considering establishing a crypto trading platform outside its current headquarters in the United States.
A Bloomberg report on March 17 revealed that Coinbase discussed the idea of creating a non-U.S. platform with some institutional clients. This development comes as numerous U.S. lawmakers and regulators criticize crypto firms for their perceived involvement in the collapse of Silvergate Bank, Silicon Valley Bank, and Signature Bank.
Recently, U.S. regulators like the Securities and Exchange Commission have been targeting specific crypto companies, such as Kraken for its U.S. staking services. In March, Coinbase informed users that its staking program would continue despite the crackdown and could potentially expand.
Arbitrum, the leading player in Ethereum's layer 2 scaling solutions, is set to launch its own token. The Arbitrum Foundation announced on Thursday that the new token, ARB, will be distributed to community members via an airdrop on Thursday, March 23.
The Arbitrum Foundation stated that the introduction of ARB will signal Arbitrum's official transformation into a decentralized autonomous organization (DAO). As a result, ARB holders will have the ability to vote on crucial decisions governing Arbitrum One and Arbitrum Nova – networks that enable users to transact on the Ethereum blockchain with faster speeds and reduced fees. The Arbitrum Foundation explained in a statement that the "Arbitrum DAO will have the power to control key decisions at the core protocol level, from how the chain's technology is upgraded to how the revenue from the chain can be used to support the ecosystem."
While the Arbitrum Foundation intends to allocate a relatively large portion of tokens to investors and core contributors (44%), Offchain Labs, the creator of Arbitrum, claims that the ARB token will render the Arbitrum ecosystem more decentralized than competing scaling chains.
Offchain Labs CEO Steven Goldfeder expressed his excitement about the increased decentralization, telling CoinDesk, "the fact that Offchain Labs will no longer have any control over the future of this chain." He added, "We will be a service provider, and if the DAO calls on us to build software, we will."
DeMaddalena Capital and Acquire.Fi announce a partnership to bring together their independent experience and opportunities to better serve the digital asset ecosystem. DeMaddalena Capital, a boutique investment firm specializing in bitcoin-based products and services, brings over 20 years of combined experience to the table, while Acquire.Fi, a marketplace connecting funds, investors, and entrepreneurs brings unparalleled deal-flow.
Additionally running through June 7th, there will be a new rewards rate available for stakers and holders of ACQ, which will coincide with the launch of the Acquire.Fi MVP platform!
You can find out more about LP staking rewards update here:
LP STAKING REWARDS UPDATE
And about the new partnership with DeMaddalena Capital here:
Have a great weekend everyone!!!
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