Weekly Market Highlights - Jul 15, 2022
Happy Friday! The Weekly Market Highlights is an initiative from the Binance Research team to round up the week, summarizing key market events and views from the team.
🔎 Macro / Tradfi
- U.S. CPI rose 9.1% in June, the largest increase since November 1981. Note that CPI data is backward-looking and there are signs of disinflationary forces gathering steam (e.g. falling energy prices in recent days). Just a day ago, the market was pricing in more than 80% probability that the Fed will raise rates by 1% in July. Current expectations have eased - traders are pricing in a 0.75% hike with a 57% probability. For additional context, the last time the Fed hiked 1% was in 1984, nearly four decades ago.
- The Euro struck parity with the US dollar for the first time in nearly 20 years as energy concerns and the risk of recession weigh on the outlook for the region. Rising risk of an economic slowdown raises the difficulty of reining in inflation without causing further economic pain for the European Central Bank (ECB).
- The 2-year and 10-year yield curve inverted to the widest level since 2000. Historically, protracted inversions of the yield curve have often preceded recessions in the U.S. and have been cited as an indicator of an impending recession.
- What a strong week for capital raises - over $700M was raised across crypto funds and projects. Just to name a few: Multicoin Capital ($430M fund); Protagonist ($100M fund); Safe ($100M raise); Animoca Brands ($75M raise). Additionally, Lightspeed, a global venture capital firm reaffirmed its commitment to the blockchain ecosystem and launched Lightspeed Faction, an independent, crypto-native team focused on early-stage blockchain infrastructure projects. The firm is not new to blockchain and has over nine years of experience investing in some of the largest blockchain companies.
- There are several developments on the policy front this week. The United Nations Conference on Trade and Development published a report recommending developing nations to consider regulating crypto. Suggestions include banning of crypto advertisements, registration of crypto exchanges, regulation of financial institutions’ ability to hold stablecoins, among others. Separately, researchers from the ECB published a deep dive into crypto financial risks and called for regulation in the space. The Financial Stability Board and the International Organization of Securities Commissions’ fintech task force are also developing policy recommendations for crypto and will prioritize policy-focused work relating to crypto assets for the next 12-24 months. Quoting CZ’s recent tweet, “At Binance we welcome regulations that are globally consistent, enable responsible innovation, protect users, and give them choice.”
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About Binance Research: Binance Research is the research arm of Binance, the world's leading cryptocurrency exchange. The team is committed to delivering objective, independent, and comprehensive analysis and aims to be the thought leader in the crypto space. Our analysts publish insightful thought pieces regularly on topics related but not limited to, the crypto ecosystem, blockchain technologies, and the latest market themes.
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