FX Market Review, Minority Mindset

Tether growth growth increases risks both for stablecoin itself and for the entire crypto nominee

Tether reports does not disclose that the issued loans are denominated and paid in tokens

FX Market Review, Minority Mindset

The company standing behind the Tether stabelcoin increasingly provides customers with its own USDT coins, and does not sell them for solid currency. Because of this, the risks of the fact that the company may not have enough liquid assets to pay customers to crisis are increased.

According to Tether Holdings Ltd. , loans are provided only to customers that meet the requirements, while borrowers should place large volumes of “very liquid” support, which can be sold for dollars in case of default of borrowers.

These loans were reported within several quarters in financial reports that Tether publishes on his website. According to the latest report, as of September 30, their volume reached $6.1 billion or 9% of the total company assets. At the end of 2021, loans were $4.1 billion or 5% of the total asset.

Tether calls them “wealthy loans” and practically does not disclose information about the borrowers or the received support. Alex Welch, a Tether spokeswoman, confirmed that all the secured loans specified in the reports were issued and nominated in Tether. The company said that loans are short -term and Tether has security.

Tether, registered on the Virgin Islands, does not publish financial statements confirmed by the auditors or complete information about the balance sheet, not allowing you to get an integral idea of the financial condition of the company.

“Tether disclosure is reduced to the information contained in the reports mentioned, ” said Welch.

Tether lending growth is a great risk to the cryptocurrency world. Stebblecoins, such as Tether, are the most important elements of the system. They are extremely necessary for trading in many cryptocurrencies and are widely used by traders. At the heart of Tether – and other stablecoins – is the idea that the issuer will always pay $1 for one coin. Emitters make every effort to provide sufficient funds for this.

The company’s reports indicate only the amounts of loans in dollars. They lack information that they were issued in Tether tokens. The reports also say that loans are “fully provided with liquid assets”.

“I am very skeptical and doubt that they will be able to avoid punishment for insufficient disclosure of information and limited transparency, ” said Peter Crane, president of Crane Data, who tracks short -term investment funds. “If you really have reserves, why not tell them about them? ”

It is believed that both short -term investment funds and stablecoins, such as Tether, should maintain the cost at $1.

Credit risks

The vast majority of assets listed in Tether reports are expressed in cash, treasury bonds and other safe instruments that are easily convertible into dollars. There are different loans. Tether cannot be sure that the loans will be returned that in extreme cases she will be able to sell loans to the buyer for dollars or that the available security will be proper.

In the days of financial shocks, such uncertainty can lead to the fact that investors hasten to get their tokens, since those who make this last may not immediately return their money. This is akin to massive deposits from banks.

“Clients satisfying the requirements take loan by USDT, ” said Alex Welch. —The loans are provided with very liquid assets, which Tether admits as security in the framework of its careful risk management policy, while their cost is more than the loan amount. ”

Tether is not paid for Tether tokens, so Tether can easily make a profit, investing in safe, low -income securities, such as treasury bonds. Typically, lenders take higher rates from borrowers than treasury bonds bring, which makes lending potentially more profitable. Tether does not disclose the conditions for the provision of loans.

The issuance of loans in Tether tokens contradicts some other information disclosed by the company. Judging by the information on the site, she issues Tether tokens only when buyers provide such a currency as the dollar.

“Tether produces new Tether tokens only when they are requested and acquired by customers, ” the site says.

It also states that all tokens are 100% provided with Tether reserves.

Tether took unusual measures after the collapse of the Celsius Network LLC cryptobank in July. Then she stated that “the position of Celsius was eliminated without loss for Tether. “

Although the statement was supposed to reassure investors, it also talks about the risks of receiving Tether loans. In a separate press release of November 17, the company said that “it was able to eliminate the provision of Celsius with such accuracy that Tether was even able to return part of the security. “Since Tether does not disclose data on security in the reports, investors cannot find out what was sold and under what conditions.

Tether reveals the shock -absorbed value of loans – a financial term that includes reserves for possible losses on loans. Amortized value may be higher than the market value of loans: this is the amount that Tether can receive for loans during sale.

The collapse in the cryptocurrency markets, which intensified after the recent bankruptcy statement of the FTX crypto accounts means that some support that Tether has can cost less than at the time of issuing loans. According to Tether, Celsius used bitcoin as security for a loan from Tether. Bitcoin fell 63%this year. Tether does not report what the market value of loans and whether the provision of cryptocurrencies includes.

Alex Welch from Tether said the market value of loans, “in estimates, is not much different from the amortized value. “She refused to tell if the provision of cryptocurrencies includes.

“Tether does not disclose and never revealed this information, ” she added.

Alarm

It is also unclear whether Tether issued loans to the associated sides, which could be an alarming signal for investors. Tether reports usually reported that not a single loan was provided to affiliated persons. However, the company abandoned this wording, starting from the report for the second quarter of 2022. Alex Welch did not explain why Tether did this and refused to tell how many loans were provided to the associated sides as of September 30, if they were available.

Tether promises safety such a bank or a short -term investment fund: the company claims that it will always give customers $1 per coin if they decide to redeem them. Nevertheless, banks are required to have large capital reserves in order to cover losses in case of a sharp decrease in the value of assets. Short -term investment funds should own short -term assets with minimal credit risk. According to Crane Data, as of October 31, not a single asset of $5 trillion belonging to the taxable American short -term investment funds was a loan.

According to the latest Tether report on the reserves published on November 10, as of September 30, the total assets amounted to $68.06 billion, and the total obligations – $67.81 billion. As a result, there was a small amount of capital of about $250 million, which is only 0.4% of the assets, compared to $137million, or 0.2% of assets, as of December 31. Most of the assets were highly liquid and had fair market value.

Since Tether loans are nominated for Tether tokens, their market value ranges from the cost of Tether, as well as the market value of the company’s reserves.

“If Tether falls, and they will have loans that can be repaid in Tether, then by definition they are not provided with a dollar, ” said William Vandenburg, a professor of accounting of Charles College, South Carolina, who writes about Tether and carefully monitors a coin.

This may not result in a problem while Tether is bargaining close to his binding at $1. Nevertheless, November 10, one Tether fell to 97.7 cents. On May 12, it fell to 95.6 centers. Now Tether costs $1.

A decrease in the cost of Tether loans by 4% would reduce the company’s reserves by $250 million. A similar reduction in market value would not be unusual. Recently, it is the norm when bank loans are traded at a discount on the balance sheet value.

According to data provided by S&P Global Market Intelligence, 36% of American banks registered on large exchanges said that the market value of their loans is more than 4% lower than the balance sheet as of September 30.

The Tether report, in addition to loans, as of September 30, indicates $2.6 billion of “other investments”, in respect of which she did not submit related data on market value. In the report of December 31, Tether indicated “Other investments (including digital tokens)” in the amount of $5 billion without breakdown.

“They must indicate the fair value of all basic assets, ” Vandenburg said. “We do not know if they can provide payments at the rate of one to one for all claims if the mass extension of deposits begins. ”

Prepared by Profinance. ru based on the materials of The Wall Street Journal

The dollar flew up after the release of a sharp increase in salaries in the United States

Futures fall, profitability jumps after stronger than expected, employment data

FX Market Review, Minority Mindset

The schedule of the dollar index intervals is 1 minute

Futures on S&P 500 fell, while the yield of 10-year-old treasury bonds increased sharply after wages increased more than expected, and the level of participation in labor decreased. The dollar also grew, and the oil retreated.

Fresh data put the idea of the market that the Fed will increase the rates in December “only” by 50 points, and the peak rate on fedifs will be just below 5% in May. In recent days, the market has overdone in playing out this idea. The movement of shares and dollar became short -term excessive and required technical correction. Now all attention is aimed at interpretation of a fresh portion of numbers by representatives of the Fed

Data on the labor market in the USA:

  • U-6 unemployment level, November: 6.7% October: 6.8%
  • The level of participation of the population as part of the total labor force, November: 62.1% Forecast: 62.3% October: 62.2%
  • The average working week in hours, November: 34.4 hours Forecast: 34.5 hours October: 34.5 hours
  • Average time wage, November: +0.6% m/m +5.1% g/g Forecast: +0.3% m +4.6% g/g October: +0.5% m/m +5.6% g/g (revised by+0.4% m/m +4.7% g/g)
  • Unemployment level, November: 3.7% Forecast: 3.7% October: 3.7%
  • Employment outside the agricultural sector, November: +263 000 Forecast: +200 000 October: +284 000 (revised by +261 000)

Mobius, predicting the collapse of bitcoin, is waiting for a fall by another 40%

According to him, although the mobius expects that Bitcoin will fluctuate at its current level of $17,000, a fall in $10,000 can occur in 2023.

Bitcoin can fall to $10,000, which means falling by more than 40% compared to current prices, on Thursday CNBC veteran investor Mark Mobius.

FX Market Review, Minority Mindset

Mark Mobius, founding partner Mobius Capital Partners. paul Morris |Bloomberg |Getty Images

The co -founder of the Mobius Capital Partners, who correctly predicted a fall of up to $20,000 this year, said that Bitcoin is Norough from $10,000 now, when he overcame the levels of technical support of $17,000 and $17,000.

According to him, although the mobius expects that Bitcoin will fluctuate at its current level of $17,000, the transition to $10,000 can occur in 2023.

The investor who made himself a name in Franklin Templeton Investments told CNBC that his bearish forecast for bitcoins is associated with an increase in interest rates and a more stringent monetary policy of the US Federal Reserve.

“With higher interest rates, the attractiveness of ownership or purchase of bitcoins or other cryptocurrencies is reduced, because simply ownership of a coin does not bring interest, ” said the mobius by e -mail.

“Of course, there were several offers with a percentage of 5% or higher for cryptodeposites, but many of those companies that offered such bets were partially due to FTX. ”

There were many companies offering investors from sky -high interest rates for storing their cryptocurrencies. Often these companies were supposed to be led by users cryptocurrency at very high interest, and then divided income with users. But when at the beginning of this year, cryptocurrency prices fell, and liquidity dried up, many of these companies crashed.

One of these companies is Celsius, which announced bankruptcy in July. The other is Blockfi, which was badly damaged by the collapsed FTX exchange.

The mobius also said that the cryptocurrency boom was directly related to the fact that “the Fed’s printed machine worked for a long time, so that the money supply in US dollars has grown by more than 40% over the past few years. “

“Thus, there was enough money for speculation on crypto monks, ” Mobius added.

The Fed had super -low interest rates, and over the past few years she was engaged in quantitative softening, which, as it is believed, contributed to the boom in such areas of the market as technological promotions and cryptocurrencies. But this year, the Central Bank tightened its monetary policy, sharply raising interest rates.

“Now that the Fed takes this money, it becomes much more difficult for people to play in the market, ” Mobius said.

This year, the mobius achieved relative success with his bitcoin departments. In May, when the price of Bitcoin was higher than $28,000, he told Financial News that Bitcoin would probably fall to $20,000, then jump up, but will ultimately fall to $10,000.

Although the $10,000 mark was not reached, Bitcoin fell to $15,480 this year.

If the forecast of the mobius of $10,000 will be carried out, this will add to several unfortunate months for the cryptocurrency market, the cost of which this year was deprived of more than 1.3 trillion dollars.

Based on materials from CNBC

Bitcoin is ready for new losses if the story of the right

Weak December almost always follows the November losses of tokens

According to data collected by Bloomberg, Bitcoin, the largest token fell by 16% in November, and over the past decade he always had a weak December after a decrease in the previous month.

This pattern was obvious in 2018, 2019 and 2021, as a result of which the average December decline was almost 11%. If the story is repeated, cryptocurrency can lag behind the shares, given the increased expectations that the restoration of shares in this quarter will continue on the eve of Christmas, since the federal reserve system is inclined to a lesser increase in interest rates.

“The class of digital assets is undergoing an infection, when the assessment of credit risk and solvency of the counterparty remains mandatory, ” said John Toro, head of the trading department on the Independent Reserve digital assets exchange. “It is most likely that during this period of increased credit risk, Bitcoin will lag behind other assets with a high beta-coefficient of risk. ”

FX Market Review, Minority Mindset

Source: Bloomberg.

Data for December 2022 dates back to the current month.

The cryptocurrency markets were in a state of fainting during the bankruptcy of the FTX trading platform Sam Bankman-Frida and a subsidiary of Alameda Research. Within a month, they stabilized, partly due to the signs that the Fed will switch to less aggressive tightening of monetary policy.

“We expect to see more stable and positive dynamics in December, since there are no longer such excessive fears and extreme infection extrapolations, ” said Richard Galvin, co -founder of the Digital Asset Capital Management Foundation. “In addition, the macroeconomic environment remains more positive – for now. “

The worlds of both traditional and digital finance are still shocked by FTX bankruptcy, which at some point could boast of an estimate of $32 billion, but whose founder Bankman-Fried now states that she has only $100,000 in a bank.

FX Market Review, Minority Mindset

The correlation between technological promotions and bitcoins is reduced, but still remains positive

Бывший председатель Федеральной корпорации по страхованию депозитов Шейла Бэр заявила, что регулирующим органам США «необходимо принять жесткие меры» в отношении наиболее проблемных аспектов криптовалюты после краха FTX и связанных с ней организаций.

The chief executive director of Galaxy Digital Mike Novogratz lowered his Bitcoin growth forecast to $500,000 in five years, referring to tightening monetary policy, adding that the token will ultimately get there.

Bitcoin changed little and traded just below $17,000 as of 14:31 in Moscow, while the air that took second place remained stable at $1286. The 100th best tokens this year fell by more than 60% due to a prolonged crypto red, which led to the bankruptcy of a number of companies engaged in digital assets.

Based on materials from Bloomberg

Than the weak yen will turn out for the Japanese economy

Typically, a weak currency is considered a blessing for Japan, one of the leading exporters in the world, but in recent years everything is not so clear

FX Market Review, Minority Mindset

The weak yen became a stick about the two -edges for the Japanese stock market. Japanese actions and currency can benefit from the fact that the federal reserve system, apparently, intends to slow down the rate of increase in interest rates.

This year, the Japanese Topix index demonstrates some of the best indicators among stock markets in the world. And although in 2022 it has practically not changed, this is already enough to circumvent most of the largest markets. For example, the S&P 500 index lost 14%this year, and the MSCI China index – 27%.

But, given the rapid fall of the Japanese currency in relation to the dollar, American investors were not ready to invest in this market. In dollar terms, Topix ensured the same profitability as S&P this year, since the Japanese yen depreciated by 15% in relation to the dollar. According to Japan Exchange Group 8697 (falling 0.78%), this year foreign investors sold Japanese shares for 2.2 trillion yen or $16 billion.

Traditionally weak yen supports the Japanese economy by increasing exports. To some extent, this is still the case, especially for exporters with large sales in the United States, but many Japanese companies, such as automakers, have moved most of the production outside the Japan over the past few decades. According to Jefferies, at present almost a quarter of Japanese companies are produced abroad. The lower yen can still increase their income, since now their income abroad is more in the yen. But they may not benefit much from reducing the cost of production within the country.

For example, Honda Motor and Nissan Motor recently increased forecasts for profit for this financial year due to weak yen. Sony also revised the forecasts for profit towards the increase. The company produces photo -matrixes in Japan and at the same time gains benefits thanks to a higher income from the game business abroad, in terms of yen.

The costs have grown

Nevertheless, the weakening of the yen also led to an increase in material costs, especially taking into account the fact that energy prices and other raw materials increased this year due to the conflict in Ukraine. For example, Toyota explained the lower profit in the last quarter, in comparison with expectations, the growth of material costs. Japanese companies operating in the domestic market will face the most serious consequences, since they suffered due to high costs and at the same time do not have such an advantage as sales abroad.

Given the hints of the Fed to a possible turn towards a less aggressive increase in bets, Yen also began to recover: in November, she added 6.5% in relation to the dollar. Japanese exporters can lose benefits, but a stronger Japanese currency may also help compensate for the growth of material costs. Apparently, foreign investors again begin to be interested in Japanese actions: in the last two months there has been a clean flow of money.

Prepared based on the materials of The Wall Street Journal

The ruble exchange rate is noticeably reduced on Friday out of perseverance of Poles

The introduction of a ceiling of oil prices from Russia at a level of $60 per barrel can greatly reduce its export income. The ruble is ready for a weekly fall in relation to the dollar and Yuan

FX Market Review, Minority Mindset

Dollar/ruble at Mosbirzh intervals of 1 minute

Dollar/ruble at Forex intervals at 4 hours

The Russian currency is reduced in relation to the dollar and Yuan, continuing the fall this week. Promotions are tuned for a third weekly reduction in a row. The ruble falls by 0.57% in Moscow, bargaining to 61.8000 per dollar by 12:46 Moscow time, and is ready by the end of the week to decrease by 2%.

A potential ceiling of prices for Russian oil at 60 dollars per barrel yesterday supported the dollar, and the ruble can end a week at $62 per dollar, said Yegor Zhinnikov, an analyst in Promsvyazbank. The dollar will probably continue to strengthen next week, ”he said in a note.

It is possible to weaken the ruble exchange rate in relation to the US dollar up to the level of 62 rubles ./$1 in the near future, the further dynamics of the national currency will be determined by the actual impact of restrictions (the introduction of the price ceiling on Russian oil) on export revenues, the commentary of analysts of the Bank “St. Petersburg” says.

According to rumors, the EU is approaching an agreement on the introduction of a limit of $60 for Russian oil, since the Poles stubbornly hold on to their proposal to introduce a ceiling of $30.

Oil Brent oil -0.2% to $86.75 per barrel. The ruble decreased by 0.7% in relation to Yuan to 8.78, fell by 1% in relation to the euro to 65.03, which is the lowest closing level from June 7. The index of Russian state bonds has almost not changed by 130.47. The Moscow Exchange index loses 0.3% to 2181.42.

The dollar is waiting for employment data

The dollar cannot yet stop the fall at the idea of a peak of bets below 5% in May

FX Market Review, Minority Mindset

The schedule of the dollar index in intervals of 15 minutes

The dollar is steadily on Friday, but about a 16-week minimum remains with respect to the basket of the main currencies. The data showing the growth of consumer expenses in the United States strengthened the hopes of investors that the peak of interest rates is close.

The dollar index, which measures the currency in relation to six main currencies, including Ien and the euro, falls by 10:30 Moscow time by 0.09% to 104.65, being not far from the minimum of Thursday of 104.56, the lowest from August 11.

Data published on Thursday showed that consumer expenses in the USA in October increased at the highest pace since January, and the labor market remained stable, while the number of Americans who submitted new unemployment benefits was reduced last week.

The last signs of a strong US economy appeared after the chairman of the federal reserve system Jerome Powell said on Wednesday that it was time to slow down raising bets, noting that “slowing down at this stage is a good way to balance risks. “

The data “strengthen the opinion of the market that FOMC is approaching the end of its tightening monetary policy, and this was pressure on the US dollar, said Carol Cong, the Comonwealth Bank of Australia currency strategist.

Now investors are paying their attention to employment data in the non -agricultural sector on Friday to get an idea of how an increase in betting affected the labor market.

“In the near future, the foreign exchange market will depend on employment reports in the United States, and, given that the market carefully monitors any signs of FOMC reversal, a weaker report today will put pressure on the dollar today, ” Kong added.

The prospect of slowing the tightening of the FRS monetary policy revived the mood of investors and led to a fall in the dollar after four raises at 75 basic points in a row, which greatly contributed to the growth of the dollar this year.

Futures traders now expect that the base rate of the Fed will reach a maximum of a little less than 5% in May, compared with the maximum more than 5% to the comments of Powell on Wednesday.

Meanwhile, the dollar decreased by 0.41% to 134.75 yen, dropping to 135.01 yen earlier – the lowest level from August 18. The euro decreased by 0.02% to 1.0524 dollars after growth by 1% per night.

The President of the European Central Bank Christine Lagarda warned on Friday that the tax-budget policy of some European governments could lead to excessive demand, and that tax-budget and monetary policy should work synchronously for sustainable, balanced economic growth.

The pound of Sterling was last bargaining at $1.2236, decreasing by 0.06%per day. The pound grew by 1.7% in four and reached a 5-month maximum of $1.2311.

Based on the materials of Thomson Reuters

2022-12-03 05:13