Daily News | HK Plans to Release Stablecoin Regulations Next Year, MakerDAO Once Again Increased Its Holdings in RWA Assets, BTC OTC Trading Volume Has Dropped to A Nearly 5-year Low

Crypto Daily Digest: The payment application Venmo will launch the stablecoin PYUSD; Hong Kong plans to release stablecoin regulations in 2024

According to The Block, PayPal’s payment platform Venmo will soon provide PayPal’s US dollar stablecoin, PYUSD. PayPal stated in a press release that PYUSD will be launched in the “coming weeks.” Users will be able to purchase and send PYUSD through PayPal, Venmo, or compatible external wallets.

Venmo is a subsidiary of PayPal and began providing cryptocurrency purchasing services in 2021. On August 7, PayPal and the crypto infrastructure company Paxos launched PYUSD, which is fully supported by US dollar deposits, short-term treasury bonds, and similar cash equivalents. Afterward, PayPal added a cryptocurrency exchange service for US dollars, allowing users to exchange digital currency for US dollars starting September 11th.

DefiLlama founder 0xngmi issued a warning on the X platform, stating, “Currently, friend.tech and all its fork versions store users’ keys in the front-end, so updating through the front-end may steal users’ keys or all funds. Some people may not store complete keys in the front-end, but they have keys in the front-end’s memory, so they are vulnerable to supply attacks in any case.”

Hong Kong legislator Duncan Chiu stated today that Hong Kong is currently conducting the second round of consultation on guidelines for stablecoin issuance. He expressed at a forum in Shanghai that he hopes Hong Kong can release regulatory rules for stablecoin issuers by the middle of next year.

According to Makerburn data, MakerDAO added $191 million in RWA assets in the past two days through Monetalis Clydesdale and BlockTower Andromeda. Among them, Monetalis Clydesdale increased RWA assets by $97 million, and BlockTower Andromeda increased RWA assets by $94 million. In addition, the total assets of the current agreement RWA exceed $2.9 billion.

In a statement, the South Korean National Taxation Bureau stated that following South Korea’s requirement to report overseas crypto assets this year, the total value of overseas crypto assets declared by taxpayers this year is 130.8 trillion won ($98.5 billion). A total of 1432 individuals and companies reported their overseas crypto assets. The tax authorities stated that the overseas cryptocurrency holdings declared by Korean taxpayers account for 70.2% of the total reported foreign assets.

The country requires South Korean nationals with assets (including cryptocurrency) exceeding 500 million won (approximately $378,000) in foreign accounts to declare their holdings.

In terms of data, according to BTC.com, the difficulty of Bitcoin mining was adjusted around 5 p.m. yesterday (at block height of 808416), with an increase of 5.48% to 57.12T, setting a new historical high. At present, the average computing power of the entire network is 419.19 EH/s.

According to Glassnode data, the OTC desk Wallet has had an average of only 11 daily transactions over the past 30 days. Equivalent to an annual trading volume of 4015 transactions. The parent company of ETF issuer 21Shares and the research director of crypto investment product company 21co, @elindinga, stated that the last time such a low level occurred was in November 2018, and the current market does not seem to have started a large-scale fundraising phase.

Today’s Main Token Trends

BTC

The four-hour chart shows a dwindling volume at the bottom, indicating the possibility of a top formation in the short term. Short-term, there might be a retest of the $26,510 support level. The mid-term strategy should maintain stability within the current price range, while the long-term still anticipates a significant downturn before Q2 2024.

MKR

Over the past year, the trend of MKR has been impressive. Furthermore, a large bullish inverse head and shoulders pattern has emerged in the long term. After breaking through the overall downtrend earlier this month, MKR has once again started an upward move. In the short term, it encountered resistance at $1,371 USD, the highest level in the past year. In the short term, a breakout strategy is suggested, with sequential targets at $1,577 USD, $1,703 USD, $1,805 USD, and $1,905 USD.

ARK

Over the past week, ARK has seen a gradual increase in bottom volume, and its daily chart trends closely resemble those of HIFI. Unfortunately, the opening of contract markets on various exchanges poses a significant obstacle to further individual upward trends. In the short term, it is advisable to maintain stability at $0.5899 USD.

Macro: Expectations for interest rate cuts next year will be lowered, and Powell stated that he will not give up the possibility of raising interest rates

At 2:00 a.m. Beijing time on Thursday, the Federal Reserve announced that it would keep its benchmark interest rate unchanged in the 5.25-5.5% range. Although this aligned with expectations, it was also somewhat unexpected to the market. As I have said before, we should be more concerned about the expected rate cuts rather than whether there will be further rate hikes. Last night, I was most interested in the dot matrix of the Federal Reserve:

Firstly, the voting ratio: 12 out of 19 officials are inclined to raise interest rates again within the year, and the number of people supporting further rate hikes has exceeded many expectations (which is a good gap for Powell). Goldman Sachs believes that it is 10 people;

Secondly, expectations for next year’s interest rate cut: The median estimate shows that Federal Reserve officials currently expect the federal funds rate to drop to 5.1% by the end of 2024, higher than the 4.6% forecast in June. What is this concept?

In June of this year, the predicted interest rate by the end of 2024 is 4.6%, and the market’s expectation for peak interest rates is around 5.5%. This means that there will be nearly 100 basis points of interest rate cuts. Following the habit of reducing interest rates by 25 basis points each time, it is equivalent to four interest rate cuts next year; this time, Federal Reserve officials have raised the interest rate at the end of 2024 to 5.1%, which means they expect a rate cut of only around 40 basis points next year, equivalent to only expecting two rate cuts next year.

This is truly shocking to the market. Wall Street was originally prepared for the Federal Reserve to cut interest rates once, but who would have thought of such a magnitude? After the release of the dot matrix chart, traders quickly gave feedback that interest rate swap contracts reflected a decrease in the likelihood of interest rate cuts in 2024, with the first-rate cut expected in September 2024, rather than the previous July. However, the market still expects little possibility of further interest rate hikes, with a probability of 29% in November.

Federal Reserve Chairman Powell said, “The Federal Reserve expects the core PCE to increase by 3.9% year-on-year in August; given the progress we have made, the FOMC has decided to keep interest rates unchanged. We will make decisions on a meeting-by-meeting basis and, if appropriate, prepare to further increase interest rates. Keeping interest rates unchanged does not mean we have reached the restrictive position we seek. The Federal Reserve has not decided on whether interest rates are sufficiently restrictive.”

Overall, the Federal Reserve has hinted at keeping interest rates unchanged but warned that there may be further interest rate hikes in the future. It unexpectedly lowered its expectations for next year’s interest rate cut significantly. The market is mostly unhappy with this information. PIMCO has given a different view, and their core logic is that if the upcoming spending bill is not resolved, there will be no chance of raising interest rates in November.

Less than two weeks until September 30th, the US Congress is still struggling to reach a consensus on a short-term spending bill. After the debt ceiling negotiations in early June, Capitol Hill once again faced a head-on confrontation between the Republican and Democratic parties. There are currently multiple budget plans under discussion in the US Congress, but none can be voted through in both houses of Congress.

In its latest report, PIMCO stated that the US government is “likely” to begin a comprehensive and long-term shutdown at the end of the month, ultimately leading the Federal Reserve to abandon raising interest rates in November. “Given the strong stance of House Republicans, if the government shuts down, it may be difficult to quickly create a catalyst for reopening.”

Data shows that the longest comprehensive government shutdown in US history occurred in 2013, lasting for 16 days and resulting in a decrease of 0.6 percentage points in its gross domestic product (GDP). Many institutions have provided specific predictions on the impact of suspension. Ernst & Young Chief Economist Dakota said the crisis will “leave a clear mark on the economy.” He estimates it will cause $6 billion in losses to the US economy every week and reduce GDP growth by 0.1 percentage points in the fourth quarter. Goldman Sachs estimates that every week the government shuts down will cause a 0.2% decline in the US economy.

Libby Cantrill, Director of Public Policy at PIMCO, said, “Traditional wisdom in Congress suggests that government shutdown is only a matter of time, not whether it is a problem. Our concern is how long the government shutdown will last. Given the complex division within the Republican Party in the current House of Representatives, once the government shuts down, there may not be a catalyst for its reopening.” It is worth noting that a government shutdown will delay the collection and release of a large amount of key market data, including GDP, unemployment rate, and inflation data, which will challenge the Federal Reserve to measure economic strength.

In short, the upcoming negotiations between the two parties on the short-term spending bill will become the focus of market attention. If this bill fails to pass, it will inevitably affect the November interest rate hike cycle. Therefore, we need to maintain our attention. We cannot listen to what the Federal Reserve says at present, and we also need to see the results and expectations of congressional negotiations, and what they have done.