|PTGR OCTOBER HIGHLIGHTS|
Dear valuable clients,
We aim to present you on a monthly basis some key insights which might be of interest to you.
Overall Take-Home Message:
September as in the last years, has again proven that it is not in favor of digital asset classes. It historically has been a difficult month for Bitcoin and other crypto currencies. Financial assets have struggled because of soaring inflation and interest rate hikes over the past months. The overall market situation can be summed up with a market snapshot:
The HICP (the Harmonised Index of Consumer Prices is at 10.1% in the EU, the CPI in the US is at 8.3% and at 8.6% in the UK and the inflation rate is at 2.5% in China. With those high inflation rates, the ECB interest rate is at 1.5%, the federal funds effective rate is at 2.33% and the official bank base interest rate in the UK is at 2.25%. We are starting to see fear over a potential systemic banking crisis similar to that of September 2008. One prominent example is currently unfortunately Credit Suisse with its CDS rate at 250 bps. Massive outflows are expected and could be avoided with a proactive leadership approach.
In contrast, besides all these negative impacts we have not seen big losses for crypto in September. What we have seen is a sideways trend over the month with some volatility.
October seems to be a key month providing us with a direction where the market could head until the end of the year. Historically October has been a good month for digital assets!
NEWS UPDATE OVERVIEW
1) What happened in September?
🤙 We became witness of a successful Ethereum Merge through which Ethereum moved from a Proof of Work blockchain to a Proof of Stake blockchain.
🤙 Ethereum Proof of Work Hard Fork took place, which was traded from ~$32 and with some volatility back to $12.
🤙 FTX acquired after a bidding process Voyager Digital for $111M.
🤙 Fuel Labs a modular execution layer raised $80M, which was lead by Blockchain Capital.
🤙 SUI a Facebook Libra Project spinout raised $300M at an evaluation of $2B, which was lead by FTX, a16z, Jump, Binance, Coinbase, Circle and Lightspeed
🤙 FTX ventures acquired 30% of Skybridge Capital
🤙 NEAR partners with Caerus Ventures on $100M ecosystem fund
🤙 KRAKEN CEO Jesse Powell resigned
🤙 Celsius CEO Alex Mashinsky resigned
🤙 South Korea issued an arrest warrant for Do Kwon
🤙 The Crypto Market Maker Wintermute was hacked and lost $160M
🤙 CME started to launch EHT options
🤙 NASDAQ announced to plan offering Crypto custody and other services
🤙 Helium Network signed a 5 year contract with T- Mobile
🤙 California and New York issued an order for Nexo to cease offering yield products
2) Where do we stand?
October has always been a good month for digital assets and we are already seeing first positive signs. Bitcoin has flipped the $19.500 for support and if it is holding will continue to $22.400. So far October seems to feel good and is pushing the right direction. Physical (PAXG) and digital gold (BTC) are moving up in a similar way. The bottom for Bitcoin might be closer than we think.
But the Bear Market seems not to be over yet!
A few things happened in the last three months.
1. Miners are at a loss.
2. Ethereum miners lost their stronghold and shifted to other chains. Some even sold their mining equipment.
3. Bitcoin hash rate spiked and reached All-Time High.
Bitcoin price, however, remains in the same range (18.5k-20k). But the rising hash rate shows the confidence of miners in the long-term future of bitcoin. Ideally, it reflects the overall health of the crypto market and is evident from the high correlation between gold and bitcoin.
Other than that, Miner Balance has seen high outflows in September. Miners spend around 8000 $BTC to cover their expenses. So the absence of volatility in recent weeks has its roots in forced selling and equivalent buying (Microstrategy, long-term holders).
Notice the fast depleting miner reserve (blue line) from August level.
The overall sentiment is still following a bearish trend. But since miners are unable to hold and accumulate bitcoin, the bear market bottom is not easy to find. If you think about it, the rising energy cost is a vicious bear cycle.
Select Operating Highlights
4.2 EH/s online as of September 30, 2022, up 180% from September 2021 and 8% from August 31, 2022.
3.95 EH/s average online for month of September.
122 BTC/ average EH/s for the month of September, down 42% from 211 in September 2021 and down 13.5% from 141 in August 2022.
481 new BTC mined during September 2022, up 57% from September 2021 and down 10% from August 2022. The decrease from August 2022 production was primarily due to a 13% increase in network difficulty, a brief farm outage and a shorter month.
16.0 BTC mined daily on average in September, equivalent to about US$310,400 per day and approximately US$9.31 million for the month based on a BTC price of US$19,400 on September 30, 2022.
3) Outlook: What could happen?
Looking into October, Wall Street and others fully focused on inflation, interest rates and the forex market. The Economic uncertainty in the U.K. sent the Pound to new lows against the US dollar in late September. For some investors, crypto could be a good alternative compared to the Pound.
According to GlobalBlock analyst Marcus Sotiriou, the uncertainty and volatility in fiat currencies might help the crypto market in the long term. As per Sotiriou: “There is a lack of confidence in the Bank of England and U.K. Treasury currently, as the market has demonstrated with volatile currency moves. This raises the notion that cryptocurrencies can provide a solution to this mess, a way out of depending on a small selection of individuals to provide economic stability.” Unfortunately for the crypto market, the strong US Dollar points out that still lots of investors are worried about a potential global economic downturn, and see the USD as the safe-haven.
According to Mitch Mechigian Blockchain Coinvestor the crypto winter has not slowed down institutional investment into blockchain. Large companies and financial players continue to heavily invest into blockchain. With that being said we would like to point out ETH and its Merge, as this might have made Ethereum more appealing to institutional investors. Especially the reduction of energy consumption post-merge may enable institutiaonal investors to consider ETH.
MONTHLY SPECIAL OFFER
Offer Of This Month
Swing Trade Strategies coming mid October:
We are delighted to announce that PTGR AG is going to implement swing trading strategies through a private group for its ADVANCED and PRO clients. If you want to learn more, book a free consultation call or speak to your personal advisor.
The First Free Consulting Call:
This month we offer a free 30 min consulting call for you or friends of your network you want to refer to us. Please feel free to share the link within your network or use it yourself.
Free Consulting Call Link
In addition, we will be holding our bi monthly German speakers Webinar on:
20th October 7 pm CET. This time we are going to focus on “How the Future of Crypto Currencies might look”. We are looking forward to welcoming you to our Webinar. If you have any contacts that might be interested in the topic please do not hesitate to share the invite. Here is the link to our Webinar.
3rd November 12 am CET. During the Webinar we are going to focus on “Decentralized Finance and how it is defined”. We would be honored to host you during our Webinar. Here the link.
We @PTGR help you to find the right moment.
GOOD TO KNOW – GET SOME INSIGHTS
After our last newsletter we got contacted with the request to look into Pulschain. As follows our estimate for you:
The Project is a very special and highly controversial project. Technically, it is an Ethereum fork.
PulseChain is a complete fork of the Ethereum Network. Meaning every coin and wallet that ever existed on Ethereum, will be copied and is available on PulseChain with one exception. Every ETH token will be converted to PLS on a 1:1 basis.
The main differences are speed, cost, deflation, and efficiency of the network. It is capable of processing hundreds of transactions per second.
Pulse Chain runs on Delegated Proof of Stake (DPoS), so it has very low transaction fees and is deflationary because 25% of gas fees are burned.
The exciting and crazy thing about Pulsechain is that Ethereum is copied 1:1, including smart contracts, NFTs, etc. On the Pulsechain these assets will have to find a new price if they will have any value at all (does anyone want an Ether Rock or Bored Ape on PulseChain, which is actually fake? Or does Chainlink, for example, still run at all without developers in the background?)
Pulse Coin (PLS)
The native ETH token will become PLS on the PulseChain network. The PLS supply will be inflated by at least 6,000x upon forking, with the extra supply being distributed to the users that sacrificed (sent real Crypto to the pulse project) during the PulseChain sacrifice phase and to the founders of the project.
Founder Richard Heart
The visionary behind Pulsechain is Richard Heart, who already launched the very controversial crypto project HEX. This is decried as a scam by various sources, as it tempts users to stake their coin on the hex protocol for up to 8 years (without the possibility of early release) – this for very high returns. But who knows whether the project will still exist in a few years and whether the HEX token will still have any value.
Potential: medium-high in the short term, hype seems to be high. Very small in the medium-long term, the project has the potential to collapse.
Risk: Very high
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