2024.5.5 Currency Market Interpretation
The main contents include: macroeconomics, the three yuan paradox, the Federal Reserve slowing down its balance sheet reduction, comprehensive net inflows into US ETFs, Hayden Adams's views, 1,155 WBTC being phished, Dogecoin, USDT surpassing Boeing, etc.
The U.S. dollar index plunged to the 105 line, breaking away from the oscillation position of 106, showing significant signs of weakening. This confirms that the weakness in usd is really weak, rather than the reference basket currency of the dollar index (cnh is not in the basket) strengthening. Gold is still oscillating at $2,300. BTC had a V-shaped reversal in just 3 days and returned to the opening level of 63k on April 30.
Traders moved up expectations for the Federal Reserve's first interest rate cut to September from November after a weaker-than-expected U.S. jobs report. The latest data showed the U.S. economy added 175,000 jobs in April, down from a revised 315,000 jobs in March and below market expectations of 243,000. Elsewhere, annual job earnings growth slowed to 3.9%, beating expectations, and the unemployment rate unexpectedly rose to 3.9%, a two-year high in February. After the Fed's interest rate meeting earlier this month, the Fed kept interest rates stable. Chairman Powell ruled out the possibility of raising interest rates again to deal with stubbornly high inflation, reaffirming the Fed's easing bias, albeit with a delay.
Despite weaker-than-expected U.S. labor data, investors took advantage of gold already trading at record highs to book profits. While the jobs data may have supported zero-yielding gold by reinforcing belief that the Federal Reserve will begin cutting interest rates this year, it has led to investors turning to riskier assets. Gold fell more than 1.5% this week as optimism over a geopolitical ceasefire reduced the metal's safe-haven appeal.
Interestingly, when the market's risk appetite increases, BTC becomes more like a risky asset, although it also has zero interest like gold.
Since most people are still conceptually dollar-based, or in other words, most investment contracts use the U.S. dollar standard, which in turn constrains and strengthens people's concepts, the U.S. dollar thus becomes the preferred safe haven in people's minds. . When risk aversion is strong, people will sell other assets and hold them in U.S. dollars. This in turn shows that most professional investors are actually leveraged investors.
The leverage mentioned here adopts a broader definition. If an institution raises LP funds for investment, then investing in BTC spot also has an invisible leverage - the investment contract will force the institution to sell at a specific time, even if it is not the best time to sell.
If BTC were the basis, most investment institutions should not exist. Because, almost no one can outperform BTC in the long term.
The so-called investment of most ordinary people is a false illusion. It is nothing more than an action forced by the over-issuance of the U.S. dollar (and all legal currencies under the umbrella) in order to avoid losing wealth by holding the U.S. dollar. Over-issuance has caused people to fall into a trilemma: do they choose to hold fiat currency and be harvested by the shrinking purchasing power, or are they forced to choose to invest and are harvested by junk investment products and scammers. Or wasting a lot of effort and management fees just to protect your savings from inflation. (Like a rat in a rotating cage running as hard as possible but just spinning in circles)?
Therefore, if your “investment” in BTC can get rid of the constraints of the investment contract, then you can escape the ternary paradox through standard transfer—from the US dollar standard to the BTC standard. This advantage gives you an advantage over institutional investors. When you are forced to flee to the US dollar for "safety", it is an excellent opportunity to purchase temporarily discounted BTC at a low price, thereby gaining a better price advantage than institutional investors, and ultimately allowing your "investment" income to exceed that of institutional investors.
/2. According to data from the Federal Reserve’s official website, as of April 30, the Federal Reserve had reduced its balance sheet by US$77 billion in April, and its current balance sheet has dropped below US$7.4 trillion to US$7.362 trillion. However, the Fed is about to slow down its balance sheet reduction. Let’s look back at the executive summary of the Federal Reserve’s interest rate meeting in early May:
Roll over at auction the portion of the Fed's principal payments on Treasury securities due in May that exceed a monthly cap of $60 billion. Beginning June 1, the portion of Treasury securities held by the Fed that mature each calendar month for which principal payments exceed a monthly cap of $25 billion will be rolled over at auction. The redemption of coupons on Treasury securities does not exceed these monthly caps, and the redemption of Treasury securities with coupon principal payments below the monthly caps.
Reinvest the portion of principal payments on agency debt and agency mortgage-backed securities (MBS) held by the Federal Reserve in excess of the monthly cap of $35 billion in May in agency mortgage-backed securities. Beginning June 1, reinvest in Treasury securities the portion of the principal payments received each calendar month on the Federal Reserve’s holdings of agency debt and agency mortgage-backed securities in excess of the monthly cap of $35 billion in Treasury securities to roughly match the outstanding The maturity composition of Treasury bills due.
Let’s take a closer look: the Fed’s two major assets, U.S. Treasuries and MBS. Starting from June (next month), we will reduce (sell) 600 + 350 = 95 billion knives every month, directly dropping to 25 billion knives! This is a cliff-like decline.
The other is to adjust the structure and replace $35 billion in MBS with U.S. debt every month. In fact, according to legal regulations, the Federal Reserve is not allowed to buy MBS. Isn't this the 2008 financial crisis? They broke the rules and went straight to take over. To put it bluntly, the Fed prints money. It prints money to take over, and essentially people all over the world help take over.
Therefore, the rebound of BTC is not so much a reaction to the deteriorating employment data and an uncertain interest rate cut, but rather a reaction to the inevitable sharp slowdown in balance sheet reduction.
/3. U.S. ETFs achieved comprehensive net inflows for the first time in history.
First, the decline in net outflows has finally ended.
Second, there is a historic comprehensive net inflow, that is, all ETFs are net inflows. (Except BTCW is 0)
Third, even GBTC, which has been lagging behind net outflows, actually achieved an unprecedented net inflow!
/4. Uniswap founder Hayden Adams tweeted to share his views on token distribution. Below is the full text of his post:
Not targeting any specific project, but I've seen a lot of discussion on this topic lately, so I wanted to share my thoughts on a good token distribution:
1) Tokens, not points
2) Don’t harvest “cultivators” (the name for DeFi “mining” users) — teasing token allocation and creating ambiguity for the sake of business data growth is bad behavior. If you don't know yet, don't openly speculate. If you know, but aren't ready to share the full details, don't tease them. Just share the real details when you're ready
3) Maintain real liquidity from day one — Low float tokens are malicious and what I hate the most. You don't need to work with an exchange or market maker. It's too simple. All it takes is a public issuance of enough tokens to enable true price discovery on a DEX (decentralized exchange protocol). People should start thinking in terms of FDV (full float market capitalization) instead of mcap (market capitalization) when valuing these things.
4) Don’t create an absurdly high amount of token supply and use unit (visual) deviations (cryptotradingcafe note: such as the one with too many zeros) to farm people. This is also bad behavior.
5) Don’t be stingy — give away lots of tokens. If you don’t think the community deserves to give away large amounts of tokens, don’t issue tokens
6) Don’t market token prices — If you tweet about how your token will appreciate in value, or hire an influencer or marketing firm to do so, I think you’re just trying to get rich quick, rather than creating real value
7) Keep it simple
8) Be thoughtful when making decisions – so you can support your decision and explain your reasoning. Don’t end up fighting or apologizing over encrypted Twitter posts. Create something you're proud of and stand behind it
I think Hayden is a genuine guy. When we look at the tokens of other projects, we might as well refer to these points (values) he mentioned to see whether the tokens of the new project are sincere or a harvesting sickle.
/5. It is reported on the Internet that the person who was phished for 1,155 WBTC by hackers because of copying and pasting the transfer address, Pond Coin founder PAULY revealed that it was himself. Of course, this kind of revelation is not completely credible, and it is not possible to rule out that this person wants to take advantage of the opportunity to market himself.
This fishing technique is low-level but effective. Last year, a Binance staff member also fell victim to the scam. This time, the old whale driver also fell into the trap. It’s also to blame that the UI design of wallets and blockchain browsers use omitted addresses such as 0xb1AC…78af to take advantage of visual effects, which gives hackers an opportunity.
There are too many speculators in the world. Still have to keep your eyes open.
/6. Tesla stated on its website that some products support Dogecoin payment.
/7. The total market value of Tether, the issuer of stable currency USDT, surpassed Boeing Company (total market value of US$110.37 billion), reaching US$110.78 billion, ranking 148th in global asset market value.
The U.S. dollar index plunged to the 105 line, breaking away from the oscillation position of 106, showing significant signs of weakening. This confirms that the weakness in usd is really weak, rather than the reference basket currency of the dollar index (cnh is not in the basket) strengthening. Gold is still oscillating at $2,300. BTC had a V-shaped reversal in just 3 days and returned to the opening level of 63k on April 30.
Traders moved up expectations for the Federal Reserve's first interest rate cut to September from November after a weaker-than-expected U.S. jobs report. The latest data showed the U.S. economy added 175,000 jobs in April, down from a revised 315,000 jobs in March and below market expectations of 243,000. Elsewhere, annual job earnings growth slowed to 3.9%, beating expectations, and the unemployment rate unexpectedly rose to 3.9%, a two-year high in February. After the Fed's interest rate meeting earlier this month, the Fed kept interest rates stable. Chairman Powell ruled out the possibility of raising interest rates again to deal with stubbornly high inflation, reaffirming the Fed's easing bias, albeit with a delay.
Despite weaker-than-expected U.S. labor data, investors took advantage of gold already trading at record highs to book profits. While the jobs data may have supported zero-yielding gold by reinforcing belief that the Federal Reserve will begin cutting interest rates this year, it has led to investors turning to riskier assets. Gold fell more than 1.5% this week as optimism over a geopolitical ceasefire reduced the metal's safe-haven appeal.
Interestingly, when the market's risk appetite increases, BTC becomes more like a risky asset, although it also has zero interest like gold.
Since most people are still conceptually dollar-based, or in other words, most investment contracts use the U.S. dollar standard, which in turn constrains and strengthens people's concepts, the U.S. dollar thus becomes the preferred safe haven in people's minds. . When risk aversion is strong, people will sell other assets and hold them in U.S. dollars. This in turn shows that most professional investors are actually leveraged investors.
The leverage mentioned here adopts a broader definition. If an institution raises LP funds for investment, then investing in BTC spot also has an invisible leverage - the investment contract will force the institution to sell at a specific time, even if it is not the best time to sell.
If BTC were the basis, most investment institutions should not exist. Because, almost no one can outperform BTC in the long term.
The so-called investment of most ordinary people is a false illusion. It is nothing more than an action forced by the over-issuance of the U.S. dollar (and all legal currencies under the umbrella) in order to avoid losing wealth by holding the U.S. dollar. Over-issuance has caused people to fall into a trilemma: do they choose to hold fiat currency and be harvested by the shrinking purchasing power, or are they forced to choose to invest and are harvested by junk investment products and scammers. Or wasting a lot of effort and management fees just to protect your savings from inflation. (Like a rat in a rotating cage running as hard as possible but just spinning in circles)?
Therefore, if your “investment” in BTC can get rid of the constraints of the investment contract, then you can escape the ternary paradox through standard transfer—from the US dollar standard to the BTC standard. This advantage gives you an advantage over institutional investors. When you are forced to flee to the US dollar for "safety", it is an excellent opportunity to purchase temporarily discounted BTC at a low price, thereby gaining a better price advantage than institutional investors, and ultimately allowing your "investment" income to exceed that of institutional investors.
/2. According to data from the Federal Reserve’s official website, as of April 30, the Federal Reserve had reduced its balance sheet by US$77 billion in April, and its current balance sheet has dropped below US$7.4 trillion to US$7.362 trillion. However, the Fed is about to slow down its balance sheet reduction. Let’s look back at the executive summary of the Federal Reserve’s interest rate meeting in early May:
Roll over at auction the portion of the Fed's principal payments on Treasury securities due in May that exceed a monthly cap of $60 billion. Beginning June 1, the portion of Treasury securities held by the Fed that mature each calendar month for which principal payments exceed a monthly cap of $25 billion will be rolled over at auction. The redemption of coupons on Treasury securities does not exceed these monthly caps, and the redemption of Treasury securities with coupon principal payments below the monthly caps.
Reinvest the portion of principal payments on agency debt and agency mortgage-backed securities (MBS) held by the Federal Reserve in excess of the monthly cap of $35 billion in May in agency mortgage-backed securities. Beginning June 1, reinvest in Treasury securities the portion of the principal payments received each calendar month on the Federal Reserve’s holdings of agency debt and agency mortgage-backed securities in excess of the monthly cap of $35 billion in Treasury securities to roughly match the outstanding The maturity composition of Treasury bills due.
Let’s take a closer look: the Fed’s two major assets, U.S. Treasuries and MBS. Starting from June (next month), we will reduce (sell) 600 + 350 = 95 billion knives every month, directly dropping to 25 billion knives! This is a cliff-like decline.
The other is to adjust the structure and replace $35 billion in MBS with U.S. debt every month. In fact, according to legal regulations, the Federal Reserve is not allowed to buy MBS. Isn't this the 2008 financial crisis? They broke the rules and went straight to take over. To put it bluntly, the Fed prints money. It prints money to take over, and essentially people all over the world help take over.
Therefore, the rebound of BTC is not so much a reaction to the deteriorating employment data and an uncertain interest rate cut, but rather a reaction to the inevitable sharp slowdown in balance sheet reduction.
/3. U.S. ETFs achieved comprehensive net inflows for the first time in history.
First, the decline in net outflows has finally ended.
Second, there is a historic comprehensive net inflow, that is, all ETFs are net inflows. (Except BTCW is 0)
Third, even GBTC, which has been lagging behind net outflows, actually achieved an unprecedented net inflow!
/4. Uniswap founder Hayden Adams tweeted to share his views on token distribution. Below is the full text of his post:
Not targeting any specific project, but I've seen a lot of discussion on this topic lately, so I wanted to share my thoughts on a good token distribution:
1) Tokens, not points
2) Don’t harvest “cultivators” (the name for DeFi “mining” users) — teasing token allocation and creating ambiguity for the sake of business data growth is bad behavior. If you don't know yet, don't openly speculate. If you know, but aren't ready to share the full details, don't tease them. Just share the real details when you're ready
3) Maintain real liquidity from day one — Low float tokens are malicious and what I hate the most. You don't need to work with an exchange or market maker. It's too simple. All it takes is a public issuance of enough tokens to enable true price discovery on a DEX (decentralized exchange protocol). People should start thinking in terms of FDV (full float market capitalization) instead of mcap (market capitalization) when valuing these things.
4) Don’t create an absurdly high amount of token supply and use unit (visual) deviations (cryptotradingcafe note: such as the one with too many zeros) to farm people. This is also bad behavior.
5) Don’t be stingy — give away lots of tokens. If you don’t think the community deserves to give away large amounts of tokens, don’t issue tokens
6) Don’t market token prices — If you tweet about how your token will appreciate in value, or hire an influencer or marketing firm to do so, I think you’re just trying to get rich quick, rather than creating real value
7) Keep it simple
8) Be thoughtful when making decisions – so you can support your decision and explain your reasoning. Don’t end up fighting or apologizing over encrypted Twitter posts. Create something you're proud of and stand behind it
I think Hayden is a genuine guy. When we look at the tokens of other projects, we might as well refer to these points (values) he mentioned to see whether the tokens of the new project are sincere or a harvesting sickle.
/5. It is reported on the Internet that the person who was phished for 1,155 WBTC by hackers because of copying and pasting the transfer address, Pond Coin founder PAULY revealed that it was himself. Of course, this kind of revelation is not completely credible, and it is not possible to rule out that this person wants to take advantage of the opportunity to market himself.
This fishing technique is low-level but effective. Last year, a Binance staff member also fell victim to the scam. This time, the old whale driver also fell into the trap. It’s also to blame that the UI design of wallets and blockchain browsers use omitted addresses such as 0xb1AC…78af to take advantage of visual effects, which gives hackers an opportunity.
There are too many speculators in the world. Still have to keep your eyes open.
/6. Tesla stated on its website that some products support Dogecoin payment.
/7. The total market value of Tether, the issuer of stable currency USDT, surpassed Boeing Company (total market value of US$110.37 billion), reaching US$110.78 billion, ranking 148th in global asset market value.
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