Tuesday, Sept 12, 2023

what happened yesterday, building headwinds, inflation stickiness, India

“To be interested in the changing seasons is a happier state of mind than to be hopelessly in love with spring.” – George Santayana  ||

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IN THIS NEWSLETTER

• Crypto headwinds gather strength

• Inflation is warming up

• India plans to draw up crypto rules

WHAT I’M WATCHING

Crypto malaise

Remember those nice sleepy days of summer? Well, since touching a low in mid-August, volatility – both historical and implied – has been creeping back, and yesterday reminded us how fast things can move.

Yesterday, the BTC price dropped by more than 3% from the UTC open, briefly dipping below $25,000 for the first time since June. Short-covering triggered a bounce back above $25,800, and at time of writing BTC seemed to be climbing again.

(chart via TradingView)

Why this matters:

September is typically a red month for BTC (it has been down for the past six Septembers in a row, no other month can boast that streak), presumably because investors come back from holidays and start to reshuffle allocations. Of course, the expectation that September will be weak perhaps influences some decisions. Well, although we’re not quite half-way through yet, this September looks set to conform to the pattern.

This latest move was unusual, however, in that there was a clear crypto-specific catalyst: yesterday, FTX filed a court document detailing assets that include around $560 million worth of BTC, $1.16 billion worth of SOL and hundreds of millions of dollars worth of over 1,000 smaller tokens. Back in August, FTX announced that it had retained Galaxy Digital to help it unload some of the liquid assets in order to raise cash, and that it would take care to not affect the market. FTX has specified that it wishes to offload up to $100 million worth of crypto per week, which on the surface doesn’t sound like a lot given average spot volumes for August (a quiet month) of over $10 billion a day.