Extreme Fear

GB Market Commentary 22/09/2021

by Will Morris

Gary Gensler gave a rather damming talk last night on the crypto industry which triggered more downside shockwaves across the market. He emphasised that the term security has been painted with a broad brush and that the breadth of the definition was wide, speaking to Washington Post columnist David Ignatius, last night. As well as stating that under this broad definition many crypto projects should fall under the definition of a security, while some are commodities, and some are both. Gensler emphasized that he has studied blockchain technology at MIT for many years and acknowledged that it was interesting and innovative. However, he went on to say he didn’t think the technology would last long outside of social and public policy framework. Gensler reiterated that the SEC would continue to bring enforcement cases against lending and trading platforms as well as crypto assets.

The Bitcoin fear and greed index has registered extreme fear, the lowest it has been since late July, currently sitting at 21/100. Extreme fear can be a sign investors are too worried, the index states this could be a buying opportunity, while the reverse can be said in times of greed where people FOMO into buying. Galaxy Digital CEO Mike Novogratz appeared on CNBC saying he won’t be feeling ‘nervous’ unless Bitcoin fails to hold above $40,000 and Ether holds $2.800. Bitcoin is currently trading at just over $42,000, down 1.4% in 24 hours.

There is still fear surrounding the potential of a Black Swan event coming from the Evergrande story. While markets rebounded yesterday, contagion continues among Evergrande’s largest competitors and the Chinese real estate market in general, which accounts for over 25% of China’s economy. China’s major developers have all seen decline over the past months but have registered sharp sell off in the short term. Sinic Holdings, Shanghai based developer, fell nearly 90% in yesterday’s trading, with volume roughly 14 times over the averagecanv. Nevertheless, prominent figures such as Ray Dalio (Bridgewater Associates) and Ming Tan (S&P) believe Evergrande’s debt is not significant enough to cause structural damage and that the Chinese government would step in if it looked likely there will be a cascade event.

Ripple’s request for SEC crypto trading disclosures has been denied. Judge Sarah Netburn denied access to documents that could show whether employees of the SEC have executed transactions in Bitcoin, Ether or XRP.

Celo (CELO), a mobile first platform, focused on payments and financial dApps has bucked the downtrend this week and is up over 30%. One quarter of Salvadorians have now downloaded the Bitcoin wallet, President Bukele continues to buy the dip.