Goldman Sachs analyst Scott Feiler warns of a bleak outlook for consumers as stagflation looms, with a bearish stance on consumer cyclicals and defensive stocks. Amidst the administration’s troubled Bidenomics, heavily indebted consumers face mounting pressures as pandemic savings dry up and economic growth falters. “Our desk is getting bearish on consumer and our soft […]
Bitcoin News
Amid a Week of Severe Crypto Lows, TON and ONDO Record Gains Despite Broad Market Declines
The past week has not been favorable for the majority of cryptocurrency assets, with only four specific digital currencies recording gains. This week, ONDO appreciated by 13.2%, TON increased by 11.3%, PENDLE grew by 6%, and LEO saw a slight uptick of 0.5%. Market Update: A Tough Week for Crypto With Few Standouts The landscape […]
Bitcoin News
Severe Impact Expected for Miners With Outdated Hardware in Upcoming Bitcoin Halving
Following the downturn in bitcoin’s price on Friday, the hashprice of bitcoin has declined from slightly above 9 per petahash per second to marginally over 6 per PH/s on a daily basis. Should the prices remain low leading up to the forthcoming halving event scheduled for next week, certain mining devices may only be viable […]
Bitcoin News
Peter Schiff Warns of Severe Economic Repercussions, Highlights Inflation and Money Supply Concerns
In a recent analysis, economist Peter Schiff draws stark comparisons between the current U.S. economic optimism and the prelude to the 2008 financial crisis. Schiff, leveraging his expertise, warns of impending financial turmoil, emphasizing the critical role of money supply in understanding economic health. Peter Schiff Warns: U.S. Economy on the Brink, Echoes of 2008 […]
Bitcoin News
JPMorgan: Spot Bitcoin ETFs Could Put ‘Severe Downward Pressure on Bitcoin Prices’
Global investment bank JPMorgan has cautioned that the approval of spot bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC) could “put severe downward pressure on bitcoin prices.” The bank’s analysts estimate that billions of dollars could exit the crypto market after Grayscale Investments converts its bitcoin trust (GBTC) into a spot bitcoin ETF.
Market Impact of Spot Bitcoin ETFs
JPMorgan analyst Nikolaos Panigirtzoglou shared his predictions of the potential impact on the price of bitcoin from the U.S. Securities and Exchange Commission (SEC) approving spot bitcoin exchange-traded funds (ETFs) in a Linkedin post on Friday.
While emphasizing his belief in the imminent approval of spot bitcoin ETFs by the SEC, he cautioned that client discussions are centered on the potential capital outflow from the Grayscale Bitcoin Trust (GBTC) as it transitions into a bitcoin ETF.
“The argument being that a significant amount of GBTC shares has been bought in the secondary market this year at deep discounts to NAV in anticipation of its conversion to ETF and these speculative investors would take profit once GBTC gets converted to an ETF and the discount to NAV gets arbitraged away,” Panigirtzoglou explained. “We estimate that around .7bn could come out of GBTC.” The JPMorgan predicted:
In terms of market impact, if this .7bn exits completely the bitcoin space then such an outflow would of course put severe downward pressure on bitcoin prices.
“If instead most of this .7bn shifts into other bitcoin instruments such as the newly created spot bitcoin ETFs post SEC approval, which is our best guess, then any negative market impact would be more modest. Nevertheless, the balance of risks for bitcoin prices is skewed to the downside in our opinion as some of this .7bn is likely to completely exit the bitcoin space,” the analyst continued.
“Significantly more money than the above .7bn could exit GBTC if its fee (currently at 200bp) is not lowered sharply post ETF conversion towards our estimated range of the equilibrium fee of around 50-80bp,” he cautioned.
A Shift Towards Regulated Crypto Entities
Panigirtzoglou also shared his analysis of the impact on the crypto industry of the Binance settlement with the U.S. Department of Justice (DOJ), the Treasury, and other federal agencies.
“The Binance settlement is reinforcing an ongoing shift towards regulated crypto entities and instruments which has been the objective of U.S. authorities post FTX collapse,” he said, elaborating:
Such a shift towards regulated crypto entities and instruments should be positive for the crypto ecosystem as more regulation will help attract the interest of traditional market participants and investors.
“Indeed, the participation of big traditional asset managers such as Blackrock and Fidelity in the forthcoming approval of physical or spot bitcoin ETFs by the SEC is consistent with this thesis,” the JPMorgan analyst added.
Do you agree with JPMorgan’s analysis on the price impact of spot bitcoin ETFs? Let us know in the comments section below.
Commodity Strategist Warns US Economy Heading Toward ‘Severe Deflationary Recession’
Bloomberg Intelligence’s senior commodity strategist, Mike McGlone, has warned that the U.S. economy is “heading towards a severe deflationary recession,” emphasizing that the Federal Reserve is still tightening. “Typically, when you have commodities collapsing at this velocity in the past, the Fed has already been easing, and they’re still vigilant against that,” he cautioned.
Strategist Says We’re ‘Heading Towards a Severe Deflationary Recession’
Mike McGlone, a senior commodity strategist for Bloomberg Intelligence (BI), the research arm of Bloomberg, warned in an interview with Yahoo Finance Live last week that the U.S. economy is heading towards a severe deflationary recession. He described:
I see what we’re doing is heading towards a severe deflationary recession, as indicated by commodities, by the Fed still tightening.
“Now we have a pretty serious credit crisis going on with just pulling back of deposits from the major banks. That means it’s just starting to get started. And the key thing … is we were just looking at annualized industrial demand for natural gas in this country. It’s the lowest in six years now. And that’s an annualized basis so it’s not seasonal,” the strategist explained.
McGlone also cautioned that the Federal Reserve keeps talking about raising interest rates higher despite recent economic data. “They’re starting to get that trend of misses, misses on PPI, misses on retail sales. And it’s just, to me, part of what happens in a recession. I think that’s the stage we’re at right now,” he detailed. “The markets are getting it. T-note yields, 10-year notes are getting it, but the Fed is still being vigilant against inflation.”
The commodity strategist continued: “You look at PPI, I see PPI on a year-over-year basis heading towards negative by the time we get to July. And that’s just what happens normally when commodities collapse.” He stressed:
The Fed is still tightening. Typically, when you have commodities collapsing at this velocity in the past, the Fed has already been easing, and they’re still vigilant against that.
What do you think about Mike McGlone’s “severe deflationary recession” warning? Let us know in the comments section below.
Economist Peter Schiff Warns of Financial Crisis and ‘Much More Severe Recession’ Than the Fed Recognizes
Economist and gold bug Peter Schiff has warned of a financial crisis and a much more severe recession than the Federal Reserve recognizes. “The economy is not only going to weaken, but weaken much more than the markets expect,” the economist stressed.
Peter Schiff’s Warning
Gold bug and economist Peter Schiff voiced his concerns regarding the U.S. economy several times this week. Commenting on the Federal Reserve’s efforts to curb inflation, he said:
The reality is inflation is not going to weaken. It’s going to strengthen. The economy is not only going to weaken, but weaken much more than the markets expect.
“The real cause of inflation is the U.S. government and the Federal Reserve acting in concert with one another, where the U.S. government spends money it doesn’t have, and then the Fed prints the money for the government to spend — that is why we have inflation,” he explained.
In an interview with Fox Business on Wednesday, Schiff commented on the speech by Federal Reserve Chairman Jerome Powell who claimed that disinflation “has begun” but is going to take time. Schiff argued: “That disinflation is transitory. Maybe he doesn’t realize that yet, but it is.”
Emphasizing that the government has continued to spend billions of dollars every month, Schiff said if the Fed chairman believes that a slowdown in the economy is going to cool inflation, he would be wrong. The gold bug opined:
That’s actually going to fuel the inflation fire. The real risk is that we end up with a financial crisis and a much more severe recession than the Fed recognizes.
“And then the Fed tries to prop up the economy to try to stimulate, or combat the financial crisis by creating even more inflation,” he warned.
This was not the first time that Schiff has voiced his concerns about the U.S. economy. At the end of last year, he said that inflation was about to get much worse, and the U.S. dollar will face one of its worst years ever. In October last year, he said the dollar will crash and the U.S. is going to default on its debt. He also predicted that the Federal Reserve’s action could lead to market crashes, a massive financial crisis, and a severe recession.
Do you agree with Peter Schiff about the U.S. economy? Let us know in the comments section below.
Severe Vulnerability Identified and Fixed in The BNB Smart Chain
Changpeng “CZ” Zhao, the CEO of Binance, has revealed that a severe vulnerability was identified and fixed by the BNB Core team early this week.
Severe Vulnerability Fixed In The BNB Chain
In a tweet on February 9, the CEO extended his thanks to the security team behind Jump Capital. Jump Crypto, on their homepage, describes themselves as a group of developers, investors, and traders who are “building the future of web3.”
However, according to some, the Jump Crypto security team identified a defect that would have enabled hackers to infinitely mint BNB. BNB is the governance token of the Binance ecosystem. It is critical in the BNB Smart Chain (BSC), the smart contracting layer, and the BNB Beacon Chain.
According to the Binance Chain team, the Jump Crypto team identified the flaw. They then worked with the BNB Core team toward “responsible disclosure and resolution” of the bug. The Chief Scientist of the BNB Chain thanked the team for handling the bug professionally.
2 days ago, @jump_ reported a severe vulnerability and worked with BNB Core team to fix it within hours. I am amazed by their selflessness and top-notch security team. Really appreciate the professional handling and I am glad to be involved in such a community!
— V (@v_bnbchain) February 9, 2023
Sandeep Nailwal also took note and said the Jump Crypto team has been active in the technical development front, actively building various solutions. A noteworthy move, he said, is their active involvement in building the zero knowledge-based cross-chain bridging to layer-1 clients.
However, neither the Binance team nor the Jump Crypto team has revealed what the bug was.
The Binance Bug Bounty Program
Still, it is not immediately clear whether Jump Crypto was compensated by Binance’s bug bounty program. Presently, Binance pays out a maximum reward of 0,000 for finding bugs.
Every submitted bug, Binance claims, can be validated within a day. Also, for each identified bug, the team can pay the white hacker between 0 and ,000. However, the total reward can accumulate to 0,000.
White hackers are free to scour through Binance’s ecosystem code, covering the code behind BSC and others, searching for flaws that can be compensated, listed under Binance’s scope.
As of February 10, Binance said it had rewarded 300 vulnerabilities. There were 2,454 programmers under the Binance bug bounty program.
Last year, the BNB Chain Bridge, called the “BSC Token Hub,” was hacked for two million BNB, at that time, worth over 0 million.
Hackers exploited the cross-chain bridge connecting the BNB Beacon Chain and the BNB Smart Chain after they forged messages, allowing them to mint new coins. Because the tokens minted never existed before, there was no impact on other users’ assets.
Hackers eventually managed to steal 0 million after the majority of coins were frozen.
Severe Liquidity Shock Ahead for Bitcoin Market, Warns JPMorgan
A piece of excerpt allegedly taken from a JPMorgan & Chase’s report is warning its clients about a potential “liquidity shock” in the Bitcoin market.
The extract praises the cryptocurrency industry for improving its on-screen liquidity better than traditional asset classes on a relative basis. Nevertheless, it simultaneously warns about how most such liquidity provisions come from high-frequency-style traders who flee the markets when volatility picks up.
March Crisis
JPMorgan took the discussion back to March 2020’s global market rout, wherein liquidity shrank dramatically in the LIBOR, repurchase agreement, short-term commercial paper, and other large-volume money markets. The US dollar’s purchasing power soared, leaving even the safest of all US Treasuries in a critical condition.
Bitcoin was one of the victims of the said illiquid period.
It was not until the Federal Reserve decided to step in with its quantitative easing program that the global market recovered, taking the flagship cryptocurrency upward in tandem. The US central bank’s decision to slash interest rates to almost zero and buy government and corporate debts indefinitely prompted a lengthy bull cycle across stocks, bonds, gold, and even Bitcoin markets.
![Bitcoin, cryptocurrency, BTCUSD, BTCUSDT](https://www.newsbtc.com/wp-content/uploads/2021/01/inJhNSJV-860x498.png)
Bitcoin reached its record high near ,000 in January 2021. Source: BTCUSD on TradingView.com
The cryptocurrency has now rebounded by more than 700 percent from its mid-March nadir of ,858. Nevertheless, its potential to pare those gains is higher as long as the global market anticipates a March-like liquidity crisis. Moreover, according to JPMorgan analysts, Bitcoin’s biggest liquidity risks come from within the cryptocurrency industry.
“Most Bitcoin trading occurs, not against fiat USD, but USDT, a stablecoin issued by Tether Ltd and pegged 1:1 to the US dollar,” they explained, adding that the Hong Kong-based company avoids falling under the same strict supervisory and disclosure regime as traditional banks.
“Tether Ltd claims reserve assets of cash and equivalents equal to their outstanding liabilities, but has famously not produced an independent audit and has claimed in court filings that they need not mention full backings,” the JPMorgan note reads.
Risks to Bitcoin Bulls
According to data fetched by CoinMarketCap, Tether has a circulating supply of .52 billion, up more than 500 percent from its January 1, 2020’s market cap open of .096 billion. Its parent company iFinex, which also owns popular trading platform BitFinex, faces allegations of losing 0 million worth of its client funds to an entity allegedly based in Panama.
![tether, usdt, stablecoin, cryptocurrency](https://www.newsbtc.com/wp-content/uploads/2021/01/20210126-tether-charts-coinmarketcap-860x573.png)
Tether's market capitalization crosses the billion mark. Source: CoinMarketCap.com
The New York attorney general’s filings against iFinex states that BitFinex “faced extreme difficulty honoring its clients’ requests to withdraw their money from the trading platform” in 2018. In October 2018, the USDT stablecoin had lost its 1:1 peg to the US dollar, falling to as low as .86. Two months later, Bitcoin established its yearly low near ,200.
Nevertheless, Tether still controls 80 percent of all the Bitcoin trade volumes daily.
“A sudden loss of confidence in USDT would likely generate a severe liquidity shock to Bitcoin markets,” stated JPMorgan, adding that it “could lose access to by far the largest pools of demand and liquidity.”
Analysts Call XRP “Crippled” as Trend of Severe Underperformance Persists
XRP – the token closely associated with Ripple – has seen faltering momentum as of late, with its community dissipating as the company struggles to garner widespread adoption for the token.
It does remain loosely correlated to Bitcoin’s price action, but it has been failing to garner any significant momentum as it remains below a multi-month resistance level.
This has caused it to severely underperform both Bitcoin and most of its peers throughout the latest market-wide upswing, which could indicate that further downside is imminent in the near-term.
One trader is noting that the cryptocurrency’s lack of strength during any upside movements has come about due to it being “crippled,” indicating that further downside is imminent.
He is now looking to exit his XRP positions at its first resistance level, which sits just above where it is currently trading at.
Once this resistance is hit, the chart he put forth suggests that a move down towards its multi-month lows within the lower-.20 region is imminent.
XRP Struggles to Gain Momentum as Selling Pressure Ramps Up
At the time of writing, XRP is trading up marginally at its current price of .25.
This is a slight rise from its weekly lows of over .23 set during its latest dip, but it is important to note that this 10% rise marks a serious underperformance of many of its peers.
Throughout the past month, XRP has struggled to garner any sustainable momentum as it ranges between .22 and .26. The upper boundary of this range has been quite intense, with each visit here sparking harsh rejections.
Unless XRP shatters the selling pressure between .26 and .30, it may continue seeing technical weakness.
Analyst Claims the Embattled Token is “Crippled” Due to Lack of Buying Pressure
One analyst believes that XRP is crippled from a technical standpoint, with its lack of buying pressure not allowing it to match the momentum seen by the aggregated crypto market.
He now is looking to offload his long positions as soon as the crypto reaches its next key resistance level.
“Stupid thing has moved like 2% while everything moved like 10%. I…hate this coin with a passion and looking to sell the first resistance. Everything moves exponentially compared to XRP. Ripple is crippled.”
Image Courtesy of Loma. Chart via TradingView.
Because there are no immediate catalysts for XRP to see any intense upwards momentum, it may continue severely underperforming Bitcoin and the aggregated crypto market.
Featured image from Unsplash. Charts from TradingView.