Everyone.
They did it.
The feds fixed everything.
They finally did it.
There is a recession.
Contagion.
Oh.
Oh... oh...
All right.
I'm Joel Flynn.
You'll watching The Daily Forkast July 28th, 2022.
This is what's happening from Asia to the world.
So, okay, we've got a 75 basis point hike in US rates.
So what's next?
What are the risks on the horizon now?
Ethereum prices are bouncing as well as it's full steam ahead for the merge.
What's happening in Lido and ETH Classic though?
And regulators are finally making a move on dodgy goings on in crypto plus - The NFT you've
all been waiting for from the Dubai police.
Join thousands of NFT traders who already start their day on CryptoSlam.
All right.
Bitcoin is up almost 10% in the last 24 hours after the Fed's rate hike.
As of noon Hong Kong time, it was sitting around US$23,140.
Ethereum prices jumping around 16%, meanwhile, to around US$1,650.
Stocks also up following that decision.
The S&P 500 2.6% higher when it closed on Wednesday.
So is this a sign of correlation between the two?
We're going to get the crypto picture in just a second with Igneous Terrenus of bybit.
First, though, let's talk about the macro picture and what it means with Justin d'Anethan
from Amber Group.
Justin, listen, the Fed's done what it said, crypto prices up, stocks up.
Presumably it's mission accomplished, right?
We've hit the bottom.
In the immortal words of Yazz, the only way is up.
I personally am not sure I agree with that.
I think the market is reacting the way you would expect it to react right now.
As in we've had a decision, a lot of the uncertainty got cleared.
And as you said, you know, the Fed is acting as per plan and things are within expectation.
And so investors are willing to take new bets and reinvest money in markets.
Now, what we've seen in the previous decision at the latest FOMC meeting was markets rallied
and then prices went down relatively quickly after that, as in people put new bets.
But the fundamental situation of the world economy, if you want to see it that way, hasn't
really changed.
Meaning inflation, whether it's peaked or not, remains to be seen.
But it's still high.
The Fed is still hiking rates.
You still have geopolitical tensions, COVID issues, you know, in different areas in the
world, supply chain issues and so on, and a recession potentially coming or actually
already there, depending on how you want to look or measure it.
And so I'm not sure we're at a point where it's time to be bullish long term.
Alright.
Well, look, there's been a lot of talk about decoupling, about a correlation between crypto
prices and risk assets.
Is this now where we start to see that divergence?
I've been buying into the narrative of a correlation between crypto and traditional assets for
a long time.
It hasn't.
I mean, meaning the start of the year, that hasn't happened just yet.
I don't think it's happening now either because everything is so macro driven and investors
know that it's so macro driven that they don't look, I think at Bitcoin or Ethereum in a
very different way, unless you're looking at specific news or events that are happening
for blockchain, like let's say Ethereum was The Merge or Lido's staked ETH is or some
stablecoin that are changing their position.
But I would say broadly for the crypto market space, I think it's going to stick with traditional
markets for at least several months while the Fed and central banks are raising rates.
And we have some there's a bearishness in investor sentiment.
So people aren't going for risk.
Assets just right now.
Alright Igneous, let's get more from you now about Ethereum prices.
Those were up even more strongly after its latest May net test as well as this Fed decision.
We're looking ahead to the merge now in September.
There is also, though, some interesting divergence we've seen in Lido between ETH and staked
ETH prices, some concern there about a potential dumping on the market.
We also know that there's other things happening on the Ethereum blockchain.
Can you fill us in?
Ethereum's ecosystem is definitely the narrative that's taking hold in the wider crypto currency
market right now.
There's also this interesting kind of like pump, and it's actually far more it's twice
as large in terms of percentage than it is in Ethereum, classic ETC, because it's like
we're not going to kind of debate whether or not that narrative has actual merit, but
it's definitely a very attractive and very compelling narrative because, you know, once
it truly goes, Ethereum truly goes proof of stake or the proof work hash rate that is
currently mining if has to go somewhere.
So the easiest place for them to go is actually Ethereum classic.
All right.
Thanks so much for that.
Igneous.
Igneous Terrenus from Bybit.
And thanks again to Justin D'Anethan of Amber Group for his take earlier.
If you want to hear more about what's next, what it means for you and your portfolio like
and subscribe to this video, we'll give you all the content you need.
Let us know in your comments as well about what's going to happen next and what your
big concerns are.
One of the big threats investors are watching is what's next.
Of course, from regulators, crypto mixes look like they could be in the crosshairs if the
findings of a recent Chainalysis report are anything to go by.
There is good reason for that.
Usage of mixes has reached all time highs this year and both countries and cybercriminals
seem to be using them to hide their tracks.
Forkast's Lachlan Keller reports.
Crypto mixes create a disconnect between the funds which users deposit and what they withdraw
by mixing them together at random.
There are legitimate reasons for maintaining privacy in this way.
However, mixes are also proving very attractive to cybercriminals as they.
Rarely ask for know your customer information.
Chainalysis found that 23% of funds moving to mixes so far this year came from illicit
addresses.
That's up from 12% last year.
And organizations with known nation state affiliations, including North Korea associated
Lazarus Group, make up significant and growing share of these illicit funds.
The 30-day moving average value received by mixers hit an all time high in April, which
Chainalysis telling Forkast:
That spike is 100% to do with North Korean hacking.
A hacking event isn't a trend, it's a one off incident.
And so whereas with other types of crime like Darknet market or scamming activity, you might
see consistent usage over time.
Hacking happens in an instant and the laundering happens almost as fast, and so we'll see a
sudden increase in mixing and it won't necessarily be a consistent trend over time.
Grauer says that unless something dramatic happens in terms of law enforcement or regulation,
the situation will not change.
There's the perceived ability that they can that they can get away with crimes using mixers.
Of course, it's not certain that that will happen, but because of just the gravity of
the situations and and the bad actors involved, I think it's really become almost a no brainer
that people have to law enforcement has to kind of grapple with this issue.
Legal expert Brian Tan told Forkast that it often takes authorities time to catch up,
but believes they will.
Law enforcement typically takes some time to unwind and discover the modus operandi
of scams.
And so for now, they could be still working until law enforcement catches up and then
those tools will be clamped down on.
And so it looks like it while it's still small, it still works.
But as I said, they will be a victim of their own success when it gets too popular.
And then you would expect regulation to kick in.
Then you'll expect law enforcement to say, hey, know, this is really impeding law enforcement
efforts and there should be some regulatory oversight over these tools, then you'll expect
to see some kind of clampdown on them.
Brian says that when authorities do catch up, blockchain technology has the capacity
to allow for investigation into more than just crimes that have happened recently.
There are tools that make it make it easier for law enforcement to carry out investigations.
And that's why we have crimes from 2016 still getting prosecuted and investigated by law
enforcement, because those those traces on the blockchain are forever there.
So if you carry out an illicit activity, you can see that it doesn't go away.
If you go if you go and kind of buy a drug or something on the street corner with a cash
transfer.
There's no evidence of that.
But with blockchain, it's it's forever there.
Tan says that the global money laundering and terrorist financing watchdog, the Financial
Action Task Force, or FATF, would be well placed to help get the ball rolling.
The FATF does not have the ability to make law, but they would make very strong recommendations.
And should a jurisdiction not follow those rules, they will appear on some form of a
blacklist.
And that alone would encourage a lot of jurisdictions, especially those who are seeking to be financial
hubs, to want to comply to the FATF recommendations.
And I think we've seen over the last couple of years the FATF now makes fairly frequent
recommendations, especially on crypto regulation and the willingness of the financial hubs.
Singapore, Hong Kong, Switzerland to then follow those recommendations would be actually
pretty quick.
These things both agree the bad actors will take advantage of any loopholes they find
while they can, but a clampdown of mixes is likely on the horizon.
I'm Lachlan Keller, Forkast.
All right.
So here's today's takeaway.
Obviously, there is still loads of risk on the table for investors in crypto and investors
in traditional assets.
The Fed, though, seems to think it's doing the right thing and raising interest rates
at the right pace.
And based on price reaction, the markets seem to broadly agree, but inflation still isn't
under control yet.
It's not under control in Europe, it's not under control in the United States and elsewhere.
Recession, we know, is also coming in some way, shape or form.
And there's broader worries about lots of other things right across the world.
There's also a lot happening on Ethereum right now.
So pay very close attention to this.
MainNet testing is going well.
The merge looks like it's on course for September, although we've heard that before.
There's also risks as well though staked eth could be dumped from the likes of Celsius
that could have systemically large holdings and be significant for the blockchain.
So keep an eye on the merge.
Keep an eye on Lido as well as Igneous Terrenus told us today.
Watch out as well for what's happening with ETH Classic, especially as we look beyond
September.
And finally, the Dubai police might not immediately spring to mind when we talk about NFTs.
However, the force claims almost 23 million people registered an interest in its first
digital asset collection that was launched earlier this year.
Now a second set is planned for October.
Anyone can sign up to win one of the 150 free tokens they're offering.
A police representative said the move is in step with the Dubai government's growing interest
in digital assets.
Dubai is trying to make itself a new promised land for crypto.
Crypto.com and Bybit are among the exchanges setting up their offices there.
It will be certainly very interesting to see what the take up of that Dubai police NFT
collection goes on to do.
Follow us on Twitter for the latest updates.
We're @Forkast_News.
Follow me as well and let me know your thoughts about bear markets, regulation, everything
else that's going on right now in crypto @JoelFlynn.
That is it for today's Daily Forkast there.
I'll see you next time.