Recession and fifth straight week of outflows - Crypto Investor's Weekly 22.05-29.05

Is the tide going out in crypto? ?

The year started so well, but is this where everything starts to go wrong??

Cypto sprang back into action in 2023 with price rises appearing on the scene like a bolt from the blue.??

After such a bad year in crypto, it was almost like most people forgot what the good times could feel like. But are they already over???

There’s some seriously challenging macro on the horizon and the uncertainty seems to be making investors skittish.??

First up, Germany, Europe’s biggest economy and the third largest in the world, officially just entered into a recession. This is worrying analysts as Germany is often seen as the powerhouse of the wider European economy. The economy shrank by 0.3% between January and March, the German statistics office showed. The German central bank, however, expects the economy to grow slightly in Q2.??

Then there’s the other elephant in the room, the U.S. debt ceiling. It’s been going on for weeks and guess what? It’s still not resolved.??

JPMorgan CEO Jamie Dimon has a dedicated war room to discuss it. U.S. lawmakers are exchanging blows over who is to blame for the standoff over the nation’s debt, with President Biden and House Speaker Kevin McCarthy not able to secure a deal.??

All this grizzly macro has had a knock-on effect on digital assets. Coinshares’ Digital Asset Flows Weekly report showed $32 million in outflows, a fifth consecutive week of more money leaving the sector than coming in.??

But if that’s all a bit much for you, then there’s some potential for schadenfreude, which we all know everybody loves.??

Check our news section to see Do Kwon’s latest misfortune, as well as a lost Bitcoin wallet heating up a divorce settlement.??

To top it all, the inner workings of the weirdo former power couple, Caroline Ellison and Sam Bankman-Fried, are set to be revealed through private diary entries. Get your popcorn ready.??

Chart of the week?

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Source: NYDIG?

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If I had a Bitcoin for every time I’d seen a chart explaining what’s happening with the crypto prices, put it this way, I certainly wouldn’t be writing this newsletter. But this chart from NYDIG has a new variable: summer.??

According to NYDIG, monthly returns usually decrease as the year shakes off those chilly mornings and relaxes into the summer. Apparently, the old trader’s phrase “Sell in May and go away” still rings true to some extent.??

As per the chart, monthly returns peak in April and then slowly wilt throughout the season like delicate summer flowers before turning negative in September. The report suggests that this year could have a more pronounced seasonal variation due to the strong start in Q1.??

This week’s crypto prices?

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It’s not been a great week for crypto prices. The positive gains that the industry saw throughout Q1 appear to have stalled for now and it’s possible we could see a price drop before things get better.??

Markets have uncertainty and as uncertainty goes, the U.S. debt ceiling issues is pretty much as big as it gets. If talks go on without much change, we could witness traders looking to shake off risky assets, something that could also have an impact on cryptocurrencies.??

Bitcoin appeared to bounce off resistance on Tuesday and has been on a downward slump since then. Failure to break resistance caused the bears to smell blood and start selling on Wednesday. If bears break through support, we could see a drop down until the $20,000 psychological barrier.??

Ether showed some momentum this week but not enough to break through resistance near $2,000. The bears pulled back the price from here and we could see prices fall slowly within this range. If support fails to hold then Ether could drop down to the $1,300s. If bulls rally, their target could be just north of $2,000.??

Tweet of the week??

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Source: Twitter??

This chart shines an interesting light on Germany’s slip into recession in Q1. Analysts are officially stating the the economy is in recession because it has been in the red for two quarters in a row. But this time it’s different, because it’s the first time Germany has seen a recession with pretty much full employment.??

According to Welt reporting, it was high inflation that brought many Germans to their knees, which forced down private consumption by 1.2% quarter on quarter. Government consumption also fell by nearly 5%. Welt reports that this was because of the discontinuation of state-funded corona measures like vaccines and tests.??

It looks like Germany’s so-called traffic light coalition will now come under ever greater pressure to break with its now-famous hesitancy and infighting to sort out the economy and stop the second half of the year sharing the same fate.??

Crypto news??

Crypto Mogul Do Kwon’s Bail Is Revoked in Montenegro?

The High Court in Montenegro’s capital Podgorica overturned a lower court’s decision to release Kwon and his former chief financial officer Han Chong-joon on appeal from the prosecutors, spokeswoman for the court Marija Rakovic said by phone on Wednesday.?

Full article: Bloomberg?

EU watchdog calls for curbing leverage in crypto trading?

European Union authorities should curb leveraged bets on crypto assets by introducing limits for investment funds, exchanges and other firms to stop shocks in that industry from jeopardising financial stability elsewhere, an EU watchdog said on Thursday.?

Full article: Reuters?

Las Vegas resident charged in $45 million metaverse scam that touted trillion-dollar returns?

Federal prosecutors alleged Friday a Nevada man helped defraud 10,000 investors out of more than $45 million by touting a fake metaverse project with its own crypto token that would one day be sold for trillions of dollars.?

Full article: CNBC?

Caroline Ellison’s ‘diary’ a key piece of evidence in Sam Bankman-Fried’s FTX fraud case: report?

A “diary” belonging to Caroline Ellison, the ex-Alameda Research CEO and former girlfriend of Sam Bankman-Fried, has reportedly emerged as a vital piece of evidence in the disgraced FTX founder’s upcoming fraud trial.?

Full article: New York Post?

Wife finds husband’s Bitcoin stash amid divorce proceedings?

The woman initially suspected that her husband — who earned $3 million per year — did not reveal all his assets, which would get split between the two during the divorce.?

Full article: Cointelegraph??

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Fancy seeing you here old friend? Right at the end of the newsletter.??

Good on you.??

Bye!?