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Weekly Market Highlights - 2 September, 2022

Binance Research
2022-09-02 06:14
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
  • The Eurozone Consumer Price Index (CPI) printed hotter than expected in August, hitting a new record high of 9.1% compared to street estimates of 9.0%. All eyes are on the upcoming European Central Bank (ECB) meeting next week on 8 Sep. As a recap, the ECB raised rates by 0.5% at its previous July meeting. A similar or possibly even bigger move is expected on 8 Sep to curb inflation. Additionally, uncertainty over energy supply continues to weigh on the region. Russia temporarily switched off the flow of gas via Nord Stream 1 Pipeline to Europe, citing maintenance of the pipeline.
  • Interesting data point – September has historically been the worst month for the S&P 500 index since 1945. Based on data from CFRA, the S&P 500 index advanced only 44% of the time in September (the least of any month), and posted an average loss of -0.6% in September (the worst for any month).
🔎 Crypto
  • As the Merge nears, there have been increasing discussions about the impact of centralization risks on Ethereum. Earlier this week, Ethereum’s second-largest cloud provider, Hetzner, reiterated its terms of services that prohibits blockchain-related activities such as running nodes. Hetzner’s cloud services host nearly 9% of Ethereum nodes at the time of writing. Separately, in terms of price action, Ether’s outperformance compared to the broader market has slowed in recent weeks. The ETH-BTC ratio has been on a general downward trend since mid-August, falling by around 4% from 0.081 to 0.078 currently.
  • There have been a few developments on the stablecoin front. Firstly, MakerDao co-founder, Rune Christensen, reached out to the community to make recommendations that would limit the attack surface of DAI and likely cause Dai to free float away from USD. Citing that crackdown against crypto can occur with no advance notice, he suggested that MakerDAO must “choose the path of decentralization”. He later elaborated that Dai will remain 1:1 with USD for at least 3 years and the timeline for free floating away from 1:1 with USD would be delayed if there is no immediate threat. Clearly not all stablecoins are the same and how these products evolve in future will no doubt be of great interest to the community. Secondly, Curve Finance’s founder Michael Egorov provided an update on the launch of crvUSD stablecoin, stating that the stablecoin will likely be launched next month and it is currently in the alpha stage. News of Curve’s stablecoin plan was first reported in July.
  • Some key takeaways from Binance Research’s recently published Tokenomics report…. We find that Layer 1s have seen ‘Public Sales’ token allocations go down in favor of higher allocations towards ‘Ecosystem Incentives’ in recent years. We see interesting developments in the space and believe that an increased focus on long-term sustainability will be beneficial. Overall project utility will likely become more important, as we believe that in the long run, good projects with strong fundamentals will win over those with bad fundamentals. Read more here: Tokenomics - Deep Dive.
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Binance Research
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.
General Disclosure: This material is prepared by Binance Research and is not intended to be relied upon as a forecast or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities, cryptocurrencies or to adopt any investment strategy. The use of terminology and the views expressed are intended to promote understanding and the responsible development of the sector and should not be interpreted as definitive legal views or those of Binance. The opinions expressed are as of the date shown above and are the opinions of the writer, they may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by Binance Research to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Binance. This material may contain ’forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. This material is intended for information purposes only and does not constitute investment advice or an offer or solicitation to purchase or sell in any securities, cryptocurrencies or any investment strategy nor shall any securities or cryptocurrency be offered or sold to any person in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the laws of such jurisdiction. Investment involves risks.
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