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Bitcoin corrects as US inflation data emerges — Is the rally to $100K at stake?

Bitcoin’s correction reflects investors’ inflation concerns and highlights the potential impact of future US fiscal policies.

Bitcoin (BTC) traded down by 4.1% on Nov. 14 following US inflation data that marginally exceeded market expectations. This decline mirrored the S&P 500 index futures, which fell from 6,023 to 5,980 over four hours.

As a result, traders are now questioning the extent of this correlation and when Bitcoin’s inflation-hedging attributes might offer some protection in an environment of persistent inflation.

S&P 500 index futures (left) vs. Bitcoin/USD (right). Source: TradingView

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Possible Trump Pick for SEC Chair Outlines Plan To Position US as One of Global Leaders in Crypto: Report

$10,000 Tax Bonus Should Be Handed To Struggling American Workers Every Year, Says JPMorgan Chase CEO

,000 Tax Bonus Should Be Handed To Struggling American Workers Every Year, Says JPMorgan Chase CEO

JPMorgan Chase CEO Jamie Dimon says he supports changes to the tax code that would give working Americans and their families more relief from the IRS. In a new interview with PBS NewsHour, Dimon says the Earned Income Tax Credits (EITC) should be expanded and apply to all low and mid-income workers, regardless of whether […]

The post $10,000 Tax Bonus Should Be Handed To Struggling American Workers Every Year, Says JPMorgan Chase CEO appeared first on The Daily Hodl.

Possible Trump Pick for SEC Chair Outlines Plan To Position US as One of Global Leaders in Crypto: Report

US Credit Card Debt Soars To $1,140,000,000,000 As Bank of America CEO Issues Warning on ‘Depleting’ American Consumer

US Credit Card Debt Soars To ,140,000,000,000 As Bank of America CEO Issues Warning on ‘Depleting’ American Consumer

Americans are holding more household debt than ever before as one of the biggest banks in the country warns of a weakening US consumer. According to a report from the New York Fed, US credit card debt just hit $1.14 trillion. On the whole, Americans have more student loan, mortgage, credit card and home equity […]

The post US Credit Card Debt Soars To $1,140,000,000,000 As Bank of America CEO Issues Warning on ‘Depleting’ American Consumer appeared first on The Daily Hodl.

Possible Trump Pick for SEC Chair Outlines Plan To Position US as One of Global Leaders in Crypto: Report

Apple Security Alert Issued As New Scam Drains Bank Accounts, Steals Personal Info

Apple Security Alert Issued As New Scam Drains Bank Accounts, Steals Personal Info

Security experts are warning millions of Apple users about a new scam designed to extract your sensitive personal and banking information. The scam comes in the form of several fake iCloud text messages containing malicious links, reports Trend Micro. Here’s a look at the fake alerts: CLOUD SERVICE TERMINATION. Upgrade now or lose your stored […]

The post Apple Security Alert Issued As New Scam Drains Bank Accounts, Steals Personal Info appeared first on The Daily Hodl.

Possible Trump Pick for SEC Chair Outlines Plan To Position US as One of Global Leaders in Crypto: Report

Circle and BlockFi questioned on banking with SVB by Warren and AOC

Circle and BlockFi executives were questioned after the lawmakers accused SVB of “coddling” and giving “white glove” treatment to its largest depositors.

Executives at the stablecoin issuer Circle and the bankrupt cryptocurrency lender BlockFi have been questioned by two members of Congress investigating the so-called “mutual backscratching arrangements” alleged to have taken place with the now-failed Silicon Valley Bank (SVB).

On April 9, letters from Senator Elizabeth Warren and Representative Alexandria Ocasio-Cortez (AOC) were sent to Circle, BlockFi and 12 other non-crypto tech firms asking a series of questions on each firm's relationship with SVB.

The lawmakers stated that more needs to be known about SVB’s reported “coddling” and “white glove” treatment towards its largest depositors in order to understand if these firms played a role in SVB’s collapse.

Jeremy Allaire and Zac Prince, the respective chief executives of Circle and BlockFi, were questioned on the length of their financial relationships with SVB, amounts deposited with the bank along with what “agreements” were made between their firms.

Senator Elizabeth Warren and Representative Alexandra Ocasio-Cortez’s letter to Circle CEO Jeremy Allaire. Source: U.S. Senate

In addition, the pair wanted to know if SVB offered “perks” such as low-interest rate mortgages or SVB-sponsored “ski trips, conferences and fancy dinners.”

“Congress, bank regulators, and the public are owed an explanation for the bank’s hyper-reliance on tech industry firms and investors," Warren and AOC wrote.

Related: Polls suggest Elizabeth Warren’s anti-crypto army strategy won’t pay off

They added the extent of SVB's depositors in the tech industry resulted "in an abnormally high percentage of deposits" not insured by the Federal Deposit Insurance Corporation (FDIC) and questioned the executives on "the role that companies like yours might have played in precipitating the $42 billion single-day-run on SVB.”

“Obtaining information on these factors is important for understanding how SVB failed and how to prevent the next failure,” they added.

Warren and AOC said they believe it may explain why some customers, such as Circle, placed extremely large amounts of uninsured deposits at SVB.

Shortly after SVB collapsed, Circle disclosed that they had $3.3 billion tied up at SVB. While BlockFi was found to have $227 million in uninsured deposits with the bank.

Magazine: Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Possible Trump Pick for SEC Chair Outlines Plan To Position US as One of Global Leaders in Crypto: Report

Experts Predict More Bank Failures in the US Following Interest Rate Hike and Unsettled Banking Crisis

Experts Predict More Bank Failures in the US Following Interest Rate Hike and Unsettled Banking CrisisAfter the recent bank collapses in the U.S., a number of people believe that more failures are coming following the Federal Reserve’s increase of the benchmark interest rate by 25 basis points (bps). American journalist Charles Gasparino insists that Wall Street’s “low-rate” junkies are ignoring the U.S. banking crisis. Quill Intelligence CEO Danielle DiMartino Booth […]

Possible Trump Pick for SEC Chair Outlines Plan To Position US as One of Global Leaders in Crypto: Report

Crypto trading firm Auros Global misses DeFi payment due to FTX contagion

Auros is an algorithmic trading and market-making firm that provides liquidity for exchanges and token projects.

Crypto trading firm Auros Global appears to be suffering from FTX contagion after missing a principal repayment on a 2,400 Wrapped Ether (wETH) decentralized finance (DeFi) loan.

Institutional credit underwriter M11 Credit, which manages liquidity pools on Maple Finance, told its followers in a Nov. 30 Twitter thread that the Auros had missed a principal payment on the 2,400 wETH loan, which is worth in total around $3 million.

M11 Credit suggests that it is always in close communication with its borrowers, particularly after events in the last month, and said Auros is experiencing a “short-term liquidity issue as a result of the FTX insolvency.”

While Auros, an algorithmic trading and market-making firm, has not yet addressed the statement by M11 Credit, the thread has been retweeted by Maple Finance itself.

M11 Credit has also stressed that the missed payment does not mean the loan is in default. Instead, the missed payment has triggered a “5-day grace period as per the smart contracts.”

This implies that Auros has until Dec. 5 to make the late payment before it will be declared as being in default.

According to an official Maple Finance Youtube video, if a default occurs, it could result in the borrower’s collateral being liquidated and/or staked maple tokens and USDC on the platform being used to cover any shortfalls to lenders. Enforcement action could also be pursued through New York courts.

M11 credit claims that it is “working with Auros to provide a joint statement that provides further information to lenders.”

Cointelegraph has reached out to both M11 Credit and Auros for comment, but did not receive a reply before time of publication.

Crypto exchange FTX announced on Nov. 11 that it would file for Bankruptcy after having suffered a liquidity crisis and being unable to honor withdrawals. The resulting contagion has spread to numerous other firms. BlockFi declared bankruptcy on November 28.

Galois Capital and New Huo Technology have lost millions of dollars from FTX’s collapse, and Nestcoin has had to lay off workers because of its exposure to the failed exchange.

Possible Trump Pick for SEC Chair Outlines Plan To Position US as One of Global Leaders in Crypto: Report

UBS raises US recession odds to 60%, but what does this mean for crypto prices?

Analysts believe the possibility of a recession in the US is increasing and this could be an important stress test for cryptocurrencies.

On Aug. 30, global investment bank UBS increased its view on the risk of the United States entering a recession within one year to 60%, up from 40% in June. According to economist Pierre Lafourcade, the latest data showed a 94% chance of the economy contracting, but added that it "does not morph into a full-blown recession."

Partially explaining the difference is the "extremely low levels" of non-performing loans, or defaults exceeding 90 days from credit borrowers. According to Citigroup Chief Executive Jane Fraser, the institution "feels very good about" liquidity and credit quality. Furthermore, Reuters states that the financial industry wrote off merely 0.1% of its loans in the 2Q.

The problem is that even in the now-improbable scenario of avoiding a generalized recession, companies will face diminishing earnings as surging inflation limits consumption and Central Banks increase interest rates while winding down their balance sheets. Either way, the pressure on corporate profits is huge and this puts pressure on stock prices.

The valuation dynamics for cryptocurrencies vastly differ from equities, corporate debt, and stock markets. The truth is that there are no set metrics or indicators to guide token prices. Market participants have different perspectives on the protocols and their use cases.

On the other hand, the stock market has battle-tested valuation indicators that have been consistently used for decades, pounded by analysts, pundits and investors. For instance, the Price / Earnings multiple measures how many years would take a company to generate enough profit to cover its current market capitalization.

Regardless of how one measures the stock market success, it depends on margins, revenues, interest rates, and the U.S. dollar foreign exchange rate. That's why a stock can go down 70% or more even before a recession hits the markets, as it desperately needs a constant inflow of revenues. It’s unlikely that the same rationale is applicable to crypto?

Understanding stock markets and commodities valuation

The first rule of equities valuation is: investors have different inputs, expectations, and timeframes for a stock. Sure, there are consolidated models, indicators and analysts' recommendations, but ultimately, there's no guarantee that the equity price will follow any rationale.

We can chart the Price / Earnings multiple, Enterprise Value / EBITDA, or whatever metric investors closely monitor. However, one will never know what the future holds for those companies, even those carrying long-term contracts, such as the energy sector.

Trader’s should not confuse volatility with valuation. A company can have steady and predictable cash flow, but that might become a liability during bull markets when other sectors are growing earnings and expanding. Moreover, a stock market price is never immune to the broader economy because, ultimately, a financial institution's collapse might as well drag down counterparties.

Let's take a simple and utopic example, the New York real estate market. If development enters a grinding halt, there is no change in the utility of the land, including houses, commercial and agricultural spaces. If an aggravated crisis causes the rupture, there's even room for price appreciation since some investors would seek shelter in hard assets.

The same can be said for oil, gold, or cattle. There's no need for a constant flow of earnings to sustain those assets' value. Worst case scenario, no more gold and oil gets extracted from the ground, but their price will likely increase as the currently available supply diminishes.

What are cryptocurrencies after all?

It does not matter whether investors consider Bitcoin (BTC) and Ethereum (ETH) as commodities, currencies or novel technology bets. Both assets have extremely limited production schedules, which will be kept even if the hashrate and validators (nodes) drop by 90%. Their use as independent digital asset transmission systems will continue working as planned.

As previously stated, the price of cryptocurrencies might be heavily impacted by an enduring economic recession, but there's hardly a scenario where the networks become useless due to inflation, rising interest rates or credit defaults. The same rule cannot be applied to Walmart, UnitedHealth Group, or Ford Motor Company — all top 20 companies by revenue.

Paradoxically, failing companies are not a suitable store of value during a recession, meaning bankrupt assets can be liquidated and the shareholder gets zero. The decentralization aspect of cryptocurrencies shields investors from even the worst-case scenarios, including delisting from major exchanges.

At the same time, the initial shock of a global recession, for example, the housing market crash and growing distrust in the financial system, could pave the way for alternative hard assets, including cryptocurrencies.

Right now, it sounds like a distant dream, but a full-blown recession would be the first major global financial crisis experienced by cryptocurrencies since Bitcoin's inception in 2009.

Whether or not crypto valuations will sustain themselves in the long run is still undecided. So far, the sector has endured major market participant failures, including exchanges and lending intermediaries and during this time no need for intervention was required. Thus, one could say that it passed its first test, although it’s too early to issue the final report.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Possible Trump Pick for SEC Chair Outlines Plan To Position US as One of Global Leaders in Crypto: Report

Payments Giant Visa Launches New NFT-Focused Program for Crypto Entrepreneurs

Global credit card giant Visa is launching a new crypto program to help content creators and entrepreneurs grow small businesses with non-fungible tokens (NFTs). According to a new company blog post, since NFTs authenticate the ownership of digital media and collectibles, they can help small and micro businesses expand and generate more revenue. Says Cuy […]

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Possible Trump Pick for SEC Chair Outlines Plan To Position US as One of Global Leaders in Crypto: Report

US Inflation Expectations Highest Since 2013, Gas Prices Skyrocket, Supply Chains Buckle

US Inflation Expectations Highest Since 2013, Gas Prices Skyrocket, Supply Chains BuckleAmericans are still concerned about dealing with inflation, as the cost of goods and services has continued to rise significantly in a short period of time. The Federal Reserve has published the latest Survey of Consumer Expectations report and U.S. households believe inflation will be up 5.3% one year from now. In addition to the […]

Possible Trump Pick for SEC Chair Outlines Plan To Position US as One of Global Leaders in Crypto: Report