Cryptocurrency market made marginal gains last week. After breaking above the consolidation structure, Bitcoin continued to recover but encountered resistance at $11,100. Ethereum recovered before Bitcoin, but price action the past week has generally been poor. ETH is currently consolidating in a narrow range between $364 and $388. However, short-term upside momentum is still intact, considering the ascending trend line has not yet been breached. Defi “yield farmers” are seen getting back in the game as TVL [Figure 1] continues to rise amid gas fee reaching as high as avg. 538 GWEI on Thursday. [Figure 2]
In the macro space, U.S. stocks closed at a six-week low, driven by weakness in technology stocks, which exert an outsized influence on major indexes because of their size. Even though more than 70% of the S&P 500 stocks were higher, the index closed lower for the third week in a row. On the flip side, cyclical, small-cap and international stocks, and oil, all rebounded, finishing positive for the week. The Federal Reserve signaled that it will maintain rates near zero through at least 2023 to help the economy weather the health and economic crisis. Latest economic data affirms that recovery is progressing, but the pace of improvement is slowing. We believe that a well-diversified portfolio is better prepared to weather potential volatility ahead.
In Japan, Yoshihide Suga was voted in as Japan’s prime minister by both houses of parliament on Wednesday, September 16. The new prime minister is widely expected to apply pressure on the Bank of Japan (BoJ) to be more responsive to employment conditions. A Reuters report noted that analysts believe the BoJ will cooperate, although employment is not part of the central bank’s mandate.
What is Happening?
Uniswap unveiled its new token (UNI), which will be used to power on-chain governance, late on Wednesday but it has quickly gained traction. Coinbase — an exchange that is usually critical and cautious about the assets it lists — added UNI to its Pro trading platform just hours after the launch. The project plans to issue one billion UNI tokens to the community, founder and the team over the next four years. Furthermore, the project gave away a minimum of 400 UNI to anyone who had used Uniswap prior to September — an amount now worth over $2,000.
Kraken became the first crypto exchange to win a U.S. banking license this week. The state of Wyoming awarded crypto exchange Kraken a license to create a crypto bank in the state, which it is tentatively calling Kraken Financial. This makes Kraken the first US crypto exchange to create a bank. Specifically, a “Special Purpose Depository Institution,” which means that Kraken can hold custody over digital assets, operate payment systems, and allow customers to easily switch between fiat and crypto.
As the crypto market evolves, more and more opportunities are created providing investors with juicy, ultra-high yield investments. While many of these innovative DeFi programs are legitimate, there are still numerous investors who are scammed by unscrupulous “rug pulling projects”. Doing your own research — “DYOR” is the key to survival in the fast moving DeFi world.