Investors continue to be paralyzed by global economic and political uncertainty. Ray Dalio, founder of the world's largest hedge fund, Bridgewater Associates, urged investors to place bets on "both horses in the race" amid rising trade tensions between the US and China. Dalio argued that investors still have a historic opportunity to buy into China as it opens up its markets to foreign investments.
Aside from the never-ending trade talks, Matteo Salvini, Italy’s deputy prime minister and the leader of the far-right League party, has called for a snap election, urging the prime minister to reconvene parliament to confirm that the coalition government is no longer viable. The dramatic move on Thursday came after months of fighting between the League and its coalition partners, the anti-establishment Five Star Movement (M5S). Separately, as reported by Bloomberg, Turkey’s central bank removed at least nine high-ranking officials, including chief economist Hakan Kara on Thursday, according to two officials with direct knowledge of the matter. Other officials removed from duty include the bank’s head of research, the banking department chief, the risk management chief and the institutional transformation manager, the people said. No reason was provided for the removals. They follow the firing on July 6 of former Governor Murat Cetinkaya by President Recep Tayyip Erdogan, who criticized the bank for not cutting interest rates quickly enough. The new governor, Murat Uysal, cut borrowing costs by 425 basis points in his first meeting and signaled that more cuts would come.
Still, the recent sell-off in equities has provided market participants with an opportunity to re-establish long positions, especially in the EM space. This, together with the absence of fresh catalysts, may prevent new hot money from entering crypto and result in BTC prices gravitating towards the $11k region. However, with ETH borrowing rates near a 3-month low and USDC rates coming off recent highs, the chances of an extended move lower are not great.
Looking ahead, Ethereum Classic’s hard fork, the Atlantis hard fork, is scheduled for September 17 or at block 8,772,000 on the blockchain. Atlantis, paired with a later upgrade called Agharta, is intended to boost chain interoperability between the Ethereum Classic (ETC) and Ethereum (ETH) networks. Given the underperformance of ETC relative to ETH this year, to many it seems like a good RV play. Spread narrowing may also be aided by the fact that Litecoin’s block reward has recently halved and some spec money will look for new short-term opportunities while the blockchain network adjusts (mining difficulty).
In other news, Amir Zaidi, the director of the United States Commodity Futures Trading Commission’s (CFTC’s) Division of Market Oversight (DMO) is rumored to be leaving the CFTC within weeks. Multiple anonymous sources aware of the situation have confirmed this claim, according to a report by Bloomberg Law on Aug. 8.
Elsewhere, German financial services giant Allianz Global Corporate & Specialty SE (AGCS) is developing a blockchain-based ecosystem to facilitate cross-border insurance payments for its corporate customers.
Thank you for reading,
The BeQuant’s Analytics team