Executive Summary (TL;DR)
The Federal Reserve has paused interest rate hikes, leaving them unchanged, but foresees higher rates for a prolonged period.
The latest smartphone releases have ignited another US-China dispute, while Shell has abandoned an ambitious $100M/year carbon initiative.
Crypto exchanges like Binance and FTX face controversies trying to survive the bear market while Mukesh Ambani, Asia’s richest man, pushes for blockchain adoption.
Key Takeaways (September 2023)
1. Market sentiment at FEAR
2. Interest rates kept at ➡ 5.25% – 5.50%
3. U.S. House Republicans are urging sanctions on Huawei while China bans iPhones from their government.
4. TikTok is establishing itself in the U.S. e-commerce market, competing with Amazon.
5. Ethereum surpasses $10 billion revenue over other tech giants.
6. FTX is granted permission to sell its assets to repay its customers, creating fears of sell-off.
7. Binance risks collapsing due to ongoing market and regulatory challenges.
1. Market Overview
Financial Markets 2023 Performance
| Asset | January 2023 | September 2023 | YTD Performance |
| BTC | $16,540 | $27,165 | ⬆ 64.2% |
| NASDAQ 100 | $10,862 | $14,715 | ⬆ 35.4% |
| S&P 500 | $3,824 | $4,306 | ⬆ 12.6% |
Year to Date Performance of Bitcoin (BTC) showcased a significant rise, appreciating by 64.2% to reach $27,165. The NASDAQ 100, while still posting a notable increase, lagged behind Bitcoin, growing by 35.4% to settle at $14,715. The S&P 500 observed a moderate increase, climbing 12.6% to reach $4,306 by September 2023.
Market Sentiment
In September 2023, the Crypto Fear and Greed Index dipped to a distinct low around mid-month. However, it rebounded to stabilize in the mid to upper 40s, indicating a shift towards a more neutral sentiment by the month’s end.
| Date | Market | Sentiment | Score |
| September 30 | Crypto | Neutral | 46 |
| September 30 | Stocks | Fear | 36 |
Meanwhile, the Stock Market Fear and Greed Index began in a neutral to greedy phase. However, a sharper drop in the latter half propelled the index to a fearful territory in the 30s, marking a shift in sentiment for stock investors.
Macro Policies
Throughout 2023, U.S. inflation rate declined from 6.4% in January to 3.0% in June. However, inflation has started to rise again to 3.7% in August 2023. September’s inflation data is due on October 12th.
September interest rates remained consistent, with percentiles fluctuating slightly around a central value of 5.33%. The target rate was steady within the range of 5.25 – 5.50%.
The Fed has prepared to raise interest rates further as inflation remains high.
Notes:
Inflation numbers for September 2023 to be announced (TBA)
2. Decentralized Finance
Blockchain Good News (September 2023)
Sources: Visa x Solana, ARK Invest, FTX (Docket #2463), PayPal, Su Zhu
Blockchain Bad News (September 2023)
Sources: Stake, Binance, Balancer, HTX, Mixin
Ethereum Soars Past $10B in Revenue, Outpacing Tech Giants
The Ethereum network recently celebrated a landmark achievement: surpassing $10B in all-time revenue in the last seven years.
Ethereum achieved this financial milestone faster than tech juggernauts like Facebook, Microsoft, and Zoom. The only company to reach this revenue target more quickly was Google.
However, recent activities by Ethereum whales, including co-founder Vitalik Buterin, signal a potential price drop as they moved $60 million of ETH to exchanges.
Visa Pioneers USDC Payments via Solana
Visa has made groundbreaking strides in revolutionizing the global payment landscape by enhancing its stablecoin settlement capabilities.
Partnering with merchant acquirers Worldpay and Nuvei, Visa now leverages the Solana blockchain, renowned for its efficiency and speed, to facilitate cross-border money transfers using the USDC stablecoin.
This shift aims not only to modernize transactions but also to offer an alternative to traditional bank wires, potentially accelerating payment processes in the future.
“It’s still early days, but Visa has already settled millions of dollars of USDC over the Ethereum and Solana blockchains between our clients. We are committed to continuing to innovate around how we move money and providing our clients modern options for settlement”
Cuy Sheffield
Visa Head of Crypto
Binance on Thin Ice: Regulatory and Financial Hurdles Emerge
Sources: BUSD, Paxos, CFTC, Canada, SEC, Executives, Mastercard
Binance, the crypto giant, has exhibited surprising resilience amidst a storm of controversies. Crypto analysts dub the scenario a “Slow Train Wreck” as Binance faces challenges like regulatory pressures and queries on its Proof of Reserves in the past year.
While CEO Changpeng Zhao’s substantial wealth could be buffering exchange withdrawals, the lack of transparency on customer deposits adds uncertainty for the masses.
The faith placed by Asian investors, particularly from China, in CZ and Binance is also believed to be shielding the platform from a possible collapse. However, the looming question remains: how long can this last?
“Binance has not collapsed because it has the largest market share in the world’s most important crypto markets — specifically Asia and emerging markets where crypto is heavily used for payments.”
Patrick Hillmann
Binance Former Chief Strategy Officer
Asia’s Richest Man Bets on Blockchain
Mukesh Ambani, Chairman of Reliance Industries and Asia’s wealthiest individual, announced that his company is exploring blockchain technology and central bank digital currencies (CBDC).
Following its recent establishment, Reliance’s financial entity announced its collaboration with global asset management titan BlackRock for a joint venture.
In a stride towards digital payments, Reliance Retail has already begun accepting payments via the digital rupee.
“Blockchain is very important for a trust-based equitable society and can be used to modernize the supply chains that form the lifeblood of the economy.”
Mukesh Ambani
Reliance Industries Chairman
Justin Bieber’s $28 NFT:
A Royalty Revolution or Risky Business?
Justin Bieber is pioneering a new market in the music industry, allowing fans to purchase a share of the royalties from his track “Company” through a $28 NFT.
The initial release sold out, earning $56k, demonstrating its success. However, there are caveats: the track requires a staggering 1.4 billion streams for initial buyers to break even, and given that the NFTs promise future revenue, they might technically qualify as unregistered securities.
NFT Apocalypse: 95% of Collections Now Worthless!
The once-thriving NFT market has hit rock bottom, with data revealing a staggering 95% of NFT collections are currently valued at 0 Ether (ETH).
Out of the 73,257 NFT collections identified, an eye-watering 69,795 have a market cap of 0 Ether (ETH).
However, experts and crypto natives believe this will pave the way for quality-driven NFT projects in the future.
Google Search Volume for NFTs using Google Trends
“Count out transformative tech [NFT] all you want, it doesn’t mind. It’s still coming whether you believe or not.”
Jeff Nicholas
Yuga Labs Creative Director
“This [NFT] is not at all surprising. Fractionalized links to the meta data of JPEG files are an offensive, shocking, and utterly ridiculous con game.”
John Reed Stark
Former SEC Chief of Internet Enforcement
FTX Secures Court Approval to Sell $3.4B in Digital Assets
Description:
The above include all of FTX.com, FTX.us, and Alameda Digital Assets. The top 10 holdings (in millions) currently represent 72% of FTX’s digital asset at market value as of August 31 pricing.
The Delaware Bankruptcy Court has approved the sale of FTX’s digital assets, excluding Bitcoin (BTC), Ether (ETH), and specific insider tokens.
In the initial week, the sales cap is set at $50 million, potentially increasing to $100 or $200 million with further approvals.
These measures aim to repay customers and mitigate exposure to crypto price volatility.
Contrary to widespread myths, FTX, holding $3.4 billion in its top 10 digital assets, will not liquidate all its holdings at once. Still, some fear that these events will trigger a crypto sell-off.
3. Traditional Finance
Smartphone Wars: US Sanctions Huawei as China Bans iPhone
Senior U.S. House Republicans are urging President Biden to intensify actions against Huawei and SMIC, citing national security concerns over the Chinese manufacturing companies’ latest advancements in smartphone development.
Conversely, China has recently initiated a ban, barring its government officials from using iPhones for work. This move, coming just ahead of Apple’s much-anticipated event, further escalates Sino-US techno-political tensions.
“The truth is, we don’t have perfect visibility on exactly what they’re doing and why, and we certainly would call on them to be more transparent about what they’re seeing and what they’re doing.”
John Kirby
US National Security Council Spokesman
“China has not issued laws and regulations to ban the purchase of Apple or foreign brands’ phones. We just noticed that there have been many media reports about security incidents concerning Apple phones.”
Mao Ning
Chinese Foreign Ministry Spokeswoman
Shell Makes a U-Turn: $100M Carbon Offset Plan Scrapped
Shell, a European oil titan, has abruptly dropped its ambitious $100M/year carbon offset initiative.
Just six months into CEO Wael Sawan’s tenure, the firm re-evaluated, choosing to maintain oil production levels until 2030 instead of reducing them, casting doubts over its net-zero goals.
“The reality is, the energy system of today continues to desperately need oil and gas. And before we are able to let go of that, we need to make sure that we have developed the energy systems of the future — and we are not yet, collectively, moving at the pace required for that to happen.”
Wael Sawan
Shell CEO
Private Equity Giants Sue Morgan Stanley with Allegations of $750M Fraud
Morgan Stanley faces a staggering $750 million lawsuit from prominent private equity firms Certares Management and Knighthead Capital Management.
Certares and Knighthead allege that Morgan Stanley concealed and misrepresented critical terms during a high-speed rail line deal., favoring another company, Brightline Holdings.
Morgan Stanley said, “the firm does not believe the claims have merit and will defend itself vigorously.”
Short-Form Video is Taking Over E-Commerce: TikTok Shop, An Amazon Copycat
TikTok is aggressively expanding its e-commerce footprint in the U.S., positioning itself as a serious contender against e-commerce giant Amazon.
With the launch of the TikTok Shop in-app service, users can now seamlessly purchase inexpensive products featured in videos, capitalizing on the platform’s viral potential, with influencers taking the lead. This, in turn, has spawned trends like ‘TikTok made me buy this.’
However, amidst its growth aspirations, TikTok faces challenges stemming from data security concerns, potential government bans, and competition from other Chinese e-commerce platforms.
“TikTok is really good at data tracking. It makes it easier to get the right products in front of the right person who wants to purchase. Teens or those in their 20s go to TikTok to search for a product before they go to Google. It can present a lot of purchase opportunities for you.”
Kendall Fargo
GrowMojo President
“It’s not that we know TikTok has done something. It’s that distrust of China and awareness of Chinese espionage has increased,”
James Lewis
Strategic and International Studies Center Senior Vice President
