#63 Binance Inflows, Outflows and Reserves On-Chain Analysis. 2023 Economic Outlook.
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Binance Inflows, Outflows and Reserves On-Chain Analysis
This week in Crypto was an eventful one - again. A report on the fact that Binance might be charged with money laundering, together with mixed feelings regarding the audit that Mazars performed triggered a big wave of outflows from the world's largest centralized exchange. So far, nothing really broke down, and CZ used the opportunity to call this a good stress test.
Diving deeper, CryptoQuant looked into Binance’s reserves and compared it to the other main exchanges. They essentially followed the published proof-of-reserves addresses and analyzed the amounts and breakdown of assets, as well as how much an exchange relies on its own token when it comes to reserves. In contrast to FTX, CryptoQuant claims that Binance has significantly cleaner reserves, having 89% non BNB assets. They compared this to other exchanges as well, some doing better (Crypto.com, OKX), and some doing worse (Huobi, Bitfinex).
What’s more interesting is the total reserves breakdown. A Nansen extract that CoinDesk published shows that Binance holds over 57 billion USD in reserves, followed by a distant second OKX with over 6 billion.
It’s clear that the recent events have caused some people to withdraw their assets into their own wallets, but judging by the volumes and by the fact that deposits are making their way back, it’s safe to say that the convenience of centralized exchanges still reigns supreme over the care for self custody, even after FTX going down.
Mihnea
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2023 Economic Outlook
This last year has been crazy for economics and will probably serve as a case study (well actually, the entire 2020-2024 period) for future reference. We experienced supply chain disruptions, inflation and interest rates last seen decades ago around the world. Add the Russia-Ukraine war and energy costs skyrocketing to this and we’ve got a perfect storm.
It might not look as terrifying as it actually is in the graph above, but remember that the scale starts at 6.5%. We are currently in a downtrend for inflation but that’s not to say that it won’t stick around… and we’re significantly far from the FED’s target of ~2%.
What about 2023, what’s in store for us (investors, traders and crypto people)? So far, we’re looking at more rate hikes (remember that Powell’s speech did NOT mention a pivot, but rather slow increases and pauses further down the road). The chances for a soft landing are slim, given that the EU is already likely in a recession and the US is not that far from it. Basically, we can expect Powell to stick to the FED’s mandate and keep interest rates up until something breaks… or inflation comes down enough. How high will they go? Goldman Sachs expects the highest funds rate to reach 5-5.25%, more than the market is pricing in today.
I recommend you take all these analyses with a grain of salt - after all, nobody has a crystal globe to tell the future. They are educated assumptions from industry-leading analysts but are still assumptions. Economists did not predict Covid-19 and we know how fast and crazy today’s world is, anything could happen. Watch out for Russia-Ukraine, China-Taiwan and the tensions in the Middle East.
So what does this mean for financial markets? And what does it mean for crypto specifically?
Generally, higher interest rates mean that stocks (and other similar assets) decline in value, because companies can borrow less money (or they do so but at higher costs). As long as they increase, we can expect bad market conditions for investing. Exhausted from many months of very high inflation, consumer spending might decline. In turn, because of these two factors, companies will (and already do) make less money (and products) and offer fewer services. Therefore, unemployment rises because fewer employees are needed for a decreasing output. Let’s recap. High inflation → increasing interest rates → higher unemployment. This is known as the Phillips Curve:
That’s the FED’s dual mandate in one picture. Basically doing the best they can to maximize employment all the while keeping stable prices (low or moderate inflation).
So in 2023 we can expect slower growth (some analysts say there will even be stagnation in GDPs across the globe). And the crypto market, as a risk-on (digital) asset class, is one of the most vulnerable to these changes - but this shouldn’t surprise us, as we’ve seen the decline in the last months. People flock back to “safer” investments such as Treasury bonds, companies with low debt and good cash flow and consumer staples.
There are clearer skies ahead but we have to wait for them. Survive, try not to lose capital (before trying to multiply it) and look out for opportunities. Until proven otherwise, we’re in a bear market and so far, breakout attempts haven’t succeeded. Stay safe.
Matei
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Dolce & Gabbana Launches New NFT Collection
Italian luxury brand Dolce & Gabbana (D&G) collaborated with the inBetweeners NFT for its latest ‘drip’ collection launching on OpenSea. The inBetweeners NFTs were popularised by Justin Bieber who used one of its bears as his profile picture. The D&G drip collection involves 2000 NFTs featuring digital bears designed by Italian artist GianPiero D’Allesandro. D&G’s NFT partner UNXD is also involved.
Each NFT contains unique variations of one of the 21 inBetweener bear designs ‘dripped out’ in Dolce & Gabbana apparel. Additionally, every NFT is redeemable in 2023 for one of 21 physical garment designs from D&G.
Serving as the second installment of a collaboration that celebrates the work between the two Italian groups, the Dolce & Gabbana and UNXD x inBetweeners Drip Collection was certainly a long time in the making, as Dolce & Gabbana co-founder and designer, Stefano Gabbana explains “An exclusive Gianpiero and Dolce & Gabbana collaboration has been nearly 10 years in the making and were excited to bring it to life through the inBetweeners x Dolce & Gabbana & UNXD Drip Collection. With physical and digital collectibles, the Drip Collection introduces a new era in the world of luxury fashion and art that spreads peace, love, and happiness around the world.”
In 2021, the UNXD luxury marketplace released D&G’s nine-piece genesis collection. Sold alongside physical elements, the collection generated close to $6 million in sales. The standalone inBetweeners NFT collection consists of 10,777 digital bears on the Ethereum blockchain. Within two months of its release, the InBetweeners had generated over $18.6 million in transactions.
Evelyne
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