This week was the perfect example of no bad news being good news. BTC surged by 2.97% on a weekly basis. The aggregated news sentiment was neutral, and the price action movement was good. The weekend ended in panic due to reports citing the possibility of Lehman style collapse of Credit Suisse and Deutsche bank, but the same was mostly priced in by the broader market and funds already.
As mentioned in the previous newsletter, if the federal funds rate reaches 4.5%+, the same can cause catastrophe in assets across the board. But recent positions in trades indicate better control over the rate and market movements in the coming quarter. Subsequently, the dominance that USD and S&P have over assets across the board, a broad market rally can be seen if macro and geopolitical factors remain almost constant.
The initial tremors were felt due to the combined AUM of Credit Suisse and Deutsche Bank being almost 4 times that of Lehman Brothers. While a collapse of this fashion would not have been new for the authorities, the collapse and secondary effects can be devastating. The value of CDS for Credit Suisse has risen to its highest level since 2008. A CDS is essentially insurance that is bought against a possible default. Even in the absence of any underlying problem, such a rumor might easily materialize when panicked customers begin to withdraw their money. The stock has experienced a complete collapse so far. The share price has dropped by more than 40% alone in the last year.
While the CEO Ulrich Koerner has said that Credit Suisse has a strong capital base and liquidity, the exact condition is yet to be cleared. Blockchain’s ledger provides open transaction information thus helping in tracking the movement of assets across the network. The same can be used to track smart money and huge important movements in real time. Just a perk of DeFi that TradFi lacks. The same helps in generating better alpha and decision-making.
While Currency and energy markets are already facing the brunt of global instability, significant deviations weren’t seen this week. A lot of positive fundamental changes can be seen in the crypto space with the UAE Ministry of Economy opening up new headquarters in the Metaverse
is their third office after Dubai and Abu Dhabi being the initial two. The outlook for metaverse jobs is approximately 40000 by 2030. While a lot of fuzzy valuations have come down in this space, consistent developments are still taking place.
On account of jobs, Pantera Capital, one of the earliest hybrid crypto venture/hedge funds has seen bulk resignations in recent times. Companies like WazirX have laid off 40% of their employees owing to reduced trading volumes and subsequent profits. But Pantera is facing a different kind of talent crunch. While a lot of temporary and support staff are being laid off, specific and specialized skills talent is getting harder to get.
The same are having multiple offers and are hence considering jumping ships with changing market sentiment. While there’s a dearth of talent currently, a lot of educational initiatives have come up to train new entrants about the crypto industry. All this will have a huge impact on the next leg up. Funding is still not at a halt in crypto and web3 startups with funds like Pantera planning to raise $1.25 billion for their next fund.
Long pending change in the business and technical models of projects is on the rise. The COSMOS project has updated the tokenomics and features of its network with a lot of bullish developments for its ATOM token which showed a good rally depicting the same.
Bitcoin returns were 2.97% for this week. The Alpha Blue Chip Focused Strategy returns were 1.93% during the same period (22nd Sep-29th Sep). The Top Cap Digital Assets Strategy and Arbitrage and Balanced Opportunities Strategy returns were 2.75% and 0.82% respectively.