Bitcoin is confusing

Good morning! Welcome to The Daily Moon. NatGeo made an entry into NFTs on Wednesday. The magazine’s ardent lovers, however, weren’t impressed. Some called it a bubble while others termed it a scam on social media. A few even urged NatGeo to delete it. Ouch!

The market rally continued. Bitcoin was at $21,540 levels and Ethereum crossed $1,600. Nasdaq rose in early trade. Back home, Sensex and Nifty ended higher on positive global cues.

BTC’s Moves Are Confusing 

Bitcoin crossed Mount 21K for the first time since the FTX fiasco in November. But the market’s not really convinced about the rally. Whales and institutional investors are sitting it out, for now.

But aren’t the bulls back?BTC rose 21%+ over the past seven days. But it's not clear whether it is permanent. There has been no trigger as such for BTC to rally. Transaction volumes are stagnant and institutional buys have been minimal. Some traders have termed it “bull trap”, meaning it is a mirage. 

Then why is BTC rallying? The drop in inflation across major economies may have been one reason. There is a slight drop in inflation rates in the US as well as the UK. If inflation is under control, there won’t be aggressive rate hikes. That means more money in the hands of customers. BTC rallies whenever inflation falls.

Another factor is a drop in the Dollar Index. This index is a measure of the US dollar’s strength against six other global currencies such as the Euro, Franc, and Mark among others. The Dollar Index slipped to 112.07 to 110.84 on January 12. Since then, it has slid further to ~101.98 levels. Whenever this index drops, BTC rises. 

What’s the worry?The world’s not out of the doldrums yet. So if inflation rises again, rate hikes will continue. And if that leads the US into a recession, there is no escape.

Let’s Talk Blockchain, But No Crypto 

At the World Economic Forum, everyone’s excited about blockchain. TradFi discussed how blockchain technology opens new possibilities to build climate solutions and send aid to countries in crisis. But participants consciously stayed mum about its links to crypto. 

The blockchain promise WEF panellists spoke about how distributed ledger technology cuts out the middleman. There was buzz around the use of blockchains for all transactions. NYSE’s President, for instance, talked about instant stock market settlement on the blockchain. Mentions of crypto and Bitcoin were missing. Interestingly, the attendees seemed okay about Ethereum. 

Blockchain, without cryptoWe have told you earlier how blockchain without crypto is a futile exercise. Unless there’s crypto and DeFi to initiate instant transactions, what use is a blockchain? But TradFi’s still reluctant. Let’s hope there’s a change of heart soon. 

Twitter Is In Trouble

The genius of Elon Musk hasn’t been able to stem the tide of Twitter bleeding. The company’s revenue was 40% lower than what it was just a year ago.

What happened?Short answer: Advertisers abandoned the platform. 

Long answer: The new CEO and reluctant owner of the social platform had sworn that he would turn the company around and then proceeded to lay off his entire content moderation and trust and safety team. Think about it as selling an ad in a newspaper, large companies don’t want to advertise in a newspaper, which allows disinformation, racism and sexism to run riot in the name of free speech. 

What next?More pain. Elon Musk has saddled the company with a massive amount of debt. It has to be repaid. He can: raise capital (but his $44 billion valuation will be difficult to attain), raise debt, find ways to earn more money, or sell the company. 

Another FTX Triggered Crash Incoming?

FTX is now deep in the throes of a bankruptcy and the managers are looking at the tokens that the company holds to find ways of recovering value. This has sparked a few (predictable) fears.

The bad news doesn’t stopFTX holds a plethora of tokens including but not restricted to:

1. Solana (of course)

2. XRP

3. Doge (not surprising)

4. Matic

5. BitDao

The bankruptcy managers will be keen on selling them soon to recover costs. The question now is what is the value of the dump? $3.5 billion. It never ends. 

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