September Curse Strikes Bitcoin, Markets. Gold Steadies 🛝
September Curse Strikes Bitcoin, Markets. Gold Steadies 🛝
September bear market is here. What drives gold higher and what it means for Bitcoin? BTC ETFs saw their largest negative flows since May. Bitcoin ATM scams rises. Binance executive struggles to walk.
Hello, y'all. Enjoy long-form articles trusted by the best in Web3? Get them right in your inbox 👇
Brought to you by Joel John, Saurabh Deshpande, Shlok Khemani and Siddharth.
Summer blues. It’s September and are we feeling cold already?
That’s no reason to not like September.
This is👇🏻
The historically worst month for the markets.
S&P 500 in September.
2023: down 5%
2022: down 9%
2021: down 5%
2020: down 4%
2024 has started on the same tune.
The S&P 500 falling 2.12%
The Dow Jones Industrial Average dropping 1.51%
The Nasdaq Composite declining 3.26%
Over $1 Trillion has been wiped out.
If you zoom out a little
Weak manufacturing data: The Institute for Supply Management (ISM) report showed that US manufacturing remained subdued in August, falling short of economists' expectations.
The weak manufacturing data reignited worries about a potential US recession, causing investors to pull back from riskier assets.
Interest rate uncertainty: Investors are closely watching for signals about potential Federal Reserve interest rate decisions, with upcoming labour market reports expected to influence these expectations.
Global market weakness: The US market decline was part of a broader global trend, with markets in Asia and Europe also experiencing losses.
Bank of Japan Influence: Comments from Bank of Japan (BoJ) Governor Kazuo Ueda about potential interest rate hikes rekindled recession fears, negatively impacting global markets. A reminiscent of the BoJ's previous rate hike in July, which destabilised risk assets, including Bitcoin.
Nvidia's $279 billion wipeout
Tech stocks were hit the hardest.
Nvidia experienced a $279 billion market capitalisation loss, marking the largest single-day drop (10%) for a U.S. stock in history.
But that has another reason too.
This historic drop follows news of a US Department of Justice antitrust subpoena, which has raised concerns about Nvidia's potential anti-competitive practices.
Subpo … what?
A subpoena is like a legal order telling someone to show up in court or give something to the court. It's used to get information for a lawsuit.
The DOJ is investigating whether Nvidia is pressuring businesses to exclusively use its chips and services.
Now, the subpoena legally compels Nvidia to provide information.
“Nvidia wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them.” - the company said.
The decline pulled down other major chip stocks.
Intel (-8%)
Marvell (-8.2%)
Broadcom (-6%)
AMD (-7.8%)
Qualcomm (-7%)
Despite the plunge, Nvidia remains up 118% year-to-date in 2024. The company dominates the AI data centre chip market.
All of this didn’t go well with the crypto world.
Bitcoin's price fell to as low as $55,746 late on September 3, 2024, before slightly rebounding to $56,598 atm.
Ethereum also fell over 4%, reaching a low of $2,396, erasing gains made since August 7.
Other cryptocurrencies? Binance Coin is 6% down, Solana down 2.5%, XRP down 2.7%, Dogecoin down 3.7% and Ton coin is down 10%.
Adds to the fear - Retail interest in Bitcoin has plummeted since its all-time high of $73,835, with claims of "almost dead" demand among retail investors.
But not all gloom and doom.
VanEck still gives us hope - Bitcoin could reach $2.9 million by 2050, with a best-case scenario of $52.38 million.
Unlock Web3 Insights by the Web3 Builders
A weekly podcast that takes you closer and deep into things that are shaping the world of crypto and Web3. Senior executives from 140+ enterprises trust them to keep them updated on what's going on in crypto.
Do tune in for depth, insight & numbers on how the internet is evolving.
What’s Driving Gold Price Up?
Gold reached a record high in August.
Surpasses $2,500 per ounce.
Bitcoin? Remains 20% below its all-time high.
Key drivers of gold prices
The world is facing an economic crisis. And where do we run to during these times? Gold, the safe heaven. And the demand goes up during inflation period.
The digital gold should also ideally perform in a similar way? but refuses to do so.
Bitcoin, despite being touted as an inflation hedge, has historically performed poorly during high inflation periods, as seen in early 2022.
Why is that?
Gold is seen as a hedge against economic and political uncertainty, while Bitcoin has been more closely tied to riskier assets.
This reduces its appeal during market volatility.
A good example would be, Central banks, particularly in China, Turkey, and India, have increased gold holdings due to its long-term value.
In contrast, Bitcoin has not garnered similar interest from central banks.
The mining part?
Gold mining production has stagnated, creating scarcity that enhances its value.
Bitcoin miners also face challenges, particularly after the recent halving event, which reduced the rewards for mining. Miners are seeing worst revenue in 11 months:
While Bitcoin is often compared to gold as "digital gold," its current performance and market behaviour suggest it is more volatile and sensitive to broader market risks and political factors.
The cryptocurrency's appeal as a stable investment is questioned? or are we just waiting for it to go further down for a better buying opportunity?
In The Numbers 🔢
$287 Million
US spot bitcoin ETFs experienced their largest negative flows since May.
BlackRock’s IBIT, the largest spot bitcoin ETF, recorded zero flows for the day.
Grayscale’s GBTC saw $50.39 million in outflows.
Fidelity’s FBTC experienced the largest outflows of $162.26 million.
Other notable outflows included Ark and 21Shares’ ARKB ($33.6 million) and Bitwise’s BITB ($24.96 million).
The outflows coincided with a broader market selloff.
Ether ETFs also affected: Spot ether ETFs recorded net outflows of $47.4 million, with Grayscale’s ETH Trust seeing $52.31 million in outflows, while Fidelity’s FETH logged $4.91 million in inflows.
Block That Quote 🎙️
Tigran Gambaryan, Binance's head of crime compliance.
"This is f*cked up"
In a recent courtroom appearance, Gambaryan was seen struggling to walk without a wheelchair. Frustrated and not at all pleased with the way it is unfolding.
"I can't fcking walk, my spine is – this is fcked up. I'm a f*cking human."
Gambaryan's lawyers filed a new bail application on medical grounds, citing serious health issues developed during his detention, including malaria, pneumonia, and complications from a herniated disc.
The prosecutor from the Economic and Financial Crimes Commission opposed the bail application, claiming Gambaryan was not in poor health and was refusing treatment.
Gambaryan has been denied adequate medical care, access to his lawyers, and communication with US embassy staff, raising concerns about his treatment in custody.
Gambaryan's wife, Yuki, urged the US government to take action. So has the CEO of Binance.
Background: Nigeria's Crypto Crime Thriller 🇳🇬
Bitcoin ATM Scams on Rise
The Federal Trade Commission (FTC) is sounding the alarm on a surge in Bitcoin ATM scams.
These schemes have seen 1,000% increase since 2020.
How the scams work?
Scammers often employ a tried-and-true tactic: posing as customer service representatives from tech giants or government agencies.
They create a sense of urgency, claiming a breach or identity theft, and then direct victims to scan a QR code and deposit cash into a Bitcoin ATM.
This seemingly simple act transfers the funds directly to the scammer's digital wallet.
Seniors at high risk
The FTC found that seniors are particularly vulnerable to these scams, over three times more likely to be targeted than younger adults.
What can you do to stay safe?
Be wary of urgent requests: Legitimate agencies won't demand payment in Bitcoin or other cryptocurrencies using a Bitcoin ATM.
Verify before you send: Always double-check the legitimacy of any transaction before sending funds.
Avoid unknown wallets: Never send crypto to addresses you don't know and trust.
QR codes: Avoid scanning QR codes from unknown sources.
The Surfer 🏄
Japan's Financial Services Agency (FSA) plans to overhaul the tax code for fiscal year 2025, potentially lowering crypto asset tax rates. Currently, crypto profits are taxed as miscellaneous income at rates between 15% and 55%, while stock trading profits are taxed at a maximum of 20%.
Bluesky gained 1 million new users in just three days following a court-ordered ban of X (formerly Twitter) in Brazil. The platform experienced 15 times its normal traffic over the weekend, leading to significant technical challenges.
Former Mt. Gox CEO Mark Karpeles is set to launch his new crypto exchange, EllipX, later this month in Europe, specifically from Poland. Karpeles emphasises a commitment to transparency and user-friendliness, aiming to set a new industry standard.
This is The Token Dispatch 🙌 and you can find all about us here 🤟
If you like us, if you don't like us .. either ways do tell us✌️
So long. OKAY? ✋