What The Central Bankers are Planning!

Who would be a central banker these days? What with inflation, fears of recession, yield curves to control and everyone going nuts when you so much as tweak interest rates by a few measly basis points, it’s a job you’d imagine most people would pass up.

As if their day-to-day jobs weren’t tough enough, there are also minefields like public inquisitions to deal with as well. Such a grilling took place recently in Portugal, at a forum hosted by the European Central Bank. It featured our old friend Jerome Powell of the Federal Reserve; ECB grande dame Christine Lagarde; new Bank of Japan head Kazuo Ueda and governor of the Bank of England, Andrew Bailey. It’s safe to say none of them particularly enjoyed the experience.

This was in no small part thanks to Sarah Eisen of CNBC, who as panel moderator was ruthless in her line of questioning. All four central bankers endured an unflinching interrogation, and their answers to her questions could prove to have major consequences for the global financial system. One comment in particular could foreshadow economic catastrophe.

In today’s video, we break down what was said over the course of this extraordinary discussion and analyse what the panellists’ answers could mean for the global economy. And of course, we’ll reveal who uttered that potentially seismic comment and dissect its potential implications.

You can watch that video here.

📈 Crypto Market Forecast 📈

There seems to be some FUD on the horizon. For starters, you may have seen the news that Singaporean regulators banned retail investors from lending, borrowing, or staking crypto on exchanges. This is a surprising move, given that Singapore is considered to be pro-crypto. It could foreshadow similar restrictions on retail investors in other emerging crypto hubs.

These emerging crypto hubs have also been hostile to stablecoins, which isn’t surprising considering they’re de facto digital US dollars. Nevertheless, it’s concerning that Hong Kong authorities are reportedly pushing to create competitors to USDT and USDC. This foreshadows more regulatory scrutiny of Tether, which is apparently based in Hong Kong.

It’s possible that other crypto activities in Hong Kong could soon face scrutiny as well. That’s because the CCP has appointed a new head of the Bank of China. Pan Gongsheng is infamous for being anti-crypto, and he appears to have been a key player in China’s previous crypto crackdowns. Given that Hong Kong is heavily influenced by China, this is bad news for crypto.

There’s lots of crypto FUD emerging from Western countries too. EU regulators recently passed the Data Act. The final draft of the act has yet to be released, but it’s believed to contain a provision which mandates kill switches on smart contracts. In other words, every smart contract would need to have a back door so that it can be shut down by regulators. That’s bad news for dapps.

Meanwhile in the United States, Digital Currency Group (DCG) is under extreme pressure to pay up on the 1+ billion dollars it owes to Gemini. You’ve probably seen the public spat between Gemini co-founder Cameron Winklevoss and DCG CEO Barry Silbert. This must be the third time that Cameron has taken things public, and it’s led to speculation that DCG is insolvent.

If you don’t understand why that’s a big deal, take a second to consider that DCG owns Grayscale, which holds almost 20 billion dollars in BTC in its Bitcoin Trust. GBTC has been trading at a discount relative to its backing for a long time, but it recently started to recover towards parity due to the FOMO around potential spot Bitcoin ETFs. It’s possible that this parity is a contrarian top signal.

That said, there are quite a few catalysts that could have marked a local top for BTC. Besides Blackrock’s spot Bitcoin ETF filing, another possible catalyst could have been the listing of a Bitcoin ATM company on the NASDAQ. That may sound silly, but it’s not all that different from the impressive price action the crypto market saw around the time Coinbase stock listed.

Then again, the crypto market could just as easily continue its rally if the upcoming CPI print for June comes in cooler than expected. This wouldn’t be surprising, given that headline CPI has been coming down for months, but what the Fed needs to see is a cooling core CPI. Unfortunately, core CPI has remained sticky. We will see how much it has come unstuck this Wednesday.

There’s another catalyst that could continue the rally, and that’s Binance settling with the SEC, CFTC, or both. Binance has been saying since February that it expects to pay massive fines to settle these cases. A settlement of some kind would be bullish, considering a lot of the uncertainty in the markets over the last few weeks has come from regulatory scrutiny of Binance.

But still, something tells me it’s not over yet…

📉 NFT Floors Through the Floor 📉

Last week, data analytics platform Nansen published a report which highlighted June 2023 as the month in which users paid the lowest amount of money towards creator royalties in over two years.

Interestingly, this decline in creator earnings appears to also coincide with a steady wave of crumbling floor prices seen in many blue-chip NFT projects. The most notable decline among the blue chips seems to be for the Bored Ape Yacht Club, whose floor price fell under 30 ETH for the first time since August 2021.

As you would expect, there’s a lot of chatter about what is causing this NFT market cascade. The loudest complaints seem to be coming from those who blame NFT marketplaces like Blur and OpenSea for their policies that facilitate and encourage certain behaviours from users.

To be more precise, there are two main complaints investors seem to have with these platforms.

The first concerns the optional royalty policies adopted by Blur and OpenSea. The second is the introduction of incentivised trading programs from marketplaces like Blur, which encourage users to actively place bids and make trades on the platform in order to secure token airdrops.

While the discourse on creator royalties has existed for some time now, the pushback on incentivised trading programs is relatively new. So, what’s all the fuss about?

Well, Blur’s incentivised trading programs encourage airdrop farmers to imitate market-making activity by placing bids close to the floor price of the NFT project. I say ‘imitate’ because, unlike traditional market makers who provide liquidity due to a fundamental interest in the asset itself or its long-term value, the liquidity provided by Blur traders and bidders is short-term and based on incentives extrinsic to the asset (NFT) itself.

With that in mind, logic follows that the primary priority for traders or bidders on such a platform is to preserve bidding power or liquidity in order to maximise airdrop farming capabilities. This means that the first instinct for any bidder whose order gets filled is to resell the asset into the next bid, even if this means that they take a small loss in the process.

This effect creates a cascading effect for the floor price of NFTs, as bidders offload the asset onto the next bidder. Typically, in the case of normal assets, the cascading floor prices always lead to a level that is just too good to ignore, triggering a surge in the value of the assets.

However, this isn’t normally the case for NFTs, due to their perception as luxury or status items. This makes NFTs more akin to Veblen goods - products that see an increase in demand as their prices rise. Critics argue that this creates a death spiral that is impossible for most NFT projects to break out of, especially since a lot of the farming activity on Blur is carried out by super whales.

In a recent blog post, NFT trader Mihai called this phenomenon a “cyclic dumping problem” that undermines the platform’s long-term sustainability, as well as the overall health of the NFT market. I highly recommend giving Mihai’s article a read; he’s made one of the best cases against Blur’s incentivised trading program so far.

On a lighter note, while there certainly is a case to be made for Blur’s contribution to the market slump, not everyone seems to be reaching for their pitchforks over it. DeGods founder Rohun ‘Frank’ Vora seems to have accepted the current state as a “brutal reality” of traders “simply voting with their dollars” in a free market over what they believe is more valuable.

And to be honest, maybe he’s not wrong. ‘Free markets’ are the basis of the DeFi promise after all. If you don’t like the way the market is moving, find a way to change it.

📊 Personal Portfolio 📊

BTC 37.98% | ETH 30.86% | USDC 16.96% | USDT 6.78% | USD 3.43% | ATOM 2.80% | DOT 1.19%

🔥 Deal of The Week 🔥

If you took part in our exclusive $15k trading competition on Bitget last month, you should know that competition payments for June have just been paid out! So check your accounts to make sure they have been credited properly!

Missed out on getting your slice of that $15k in value? Well, we have another exclusive $15k trading competition running this month! On top of that you’ll get a 20% trading fee discount for life and airdrop bonuses up to $40K!

👉 Give Bitget a try

🔮 Video Pipeline 🔮

  • World Bank, Bill Gates, and CBDC’s: What is the verdict?
  • State of Crypto Report: This You Can’t Miss
  • DCG Update: $20B BTC Dump Incoming?
  • China Crypto Shakeup: What You Need To Know!
  • The IMF Is Coming For Your Crypto!

🏆 What's New At CoinBureau.com This Week? 🏆

Arbitrum: The Complete 101 Guide
How to Signup on OKX: Step-by-Step Guide
Top 9 Solana Projects With Huge Potential!

📖 Quote of the Week 📖

Informed investment decisions should, on average, yield you long-term gains. Uninformed investment decisions, on the other hand…

“Risk comes from not knowing what you are doing” - Warren Buffet

Team Coin Bureau

Disclosure: Authors may own cryptoassets named in this newsletter. These are unqualified opinions, and a Coin Bureau newsletter, is meant for informational purposes only. It is not meant to serve as investment advice. Please consult with your investment, tax, or legal advisor.

Guy Turner

Guy is one of the founding members and face of the Coin Bureau. Like many of us, he is just an average joe who became “crypto curious” back in 2013. After recognising the potential of blockchain technology, Guy set off on a mission to create crypto educational content, working with others to start the Coin Bureau website and released our first video on YouTube in 2019. You can learn more about him in his Who is Guy? blogpost.

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