Bitfinex Alpha | In a Tumultuous Trading Week, a Curve Exploit Is in the Spotlight

In a tumultuous trading week, traditional finance (TradFi) has staged an entrancing surprise to the downside this August. Bitfinex Alpha’s latest insights spotlight the S&P 500 and the NASDAQ 100, both of which, after an elegant ascent, have pivoted with pullbacks off their July highs. Amidst this backdrop, the S&P 500 has hinted at a potential further retreat to 4450, a refrain echoed by NASDAQ 100’s pullback momentum, with the possibility of descending to a sobering 13700.

However, it’s the silent whisper of the volatility across risk assets that could steal the limelight moving forward. The typically dormant VIX has stirred, showcasing an uptick reminiscent of past economic tumults. This potentially hints at a forthcoming shift in the market’s rhythm, as the VIX often moves higher in the year’s latter half.

In the cryptocurrency realm, Bitcoin remains a testament to unwavering faith. With an astounding 69.2 percent of its supply dormant for over a year, the cryptocurrency market stands on the brink of an impending supply crunch. Data suggest that by 2028, this could manifest as a staggering 90 percent reduction from current on-exchange levels of BTC balance, magnifying Bitcoin’s allure in the eyes of investors. In an unprecedented lull, Bitcoin’s 24-hour historical volatility, BVOL, has touched a record low before a minor uptick, possibly heralding a significant price movement on the horizon.

In essence, as markets oscillate and evolve, investors, whether in TradFi (especially tech-related stocks with higher correlation to digital assets) or crypto, stand at a pivotal juncture. The current financial tapestry weaves a tale of anticipation, potential upheavals, and steadfast optimism. As always, only time shall unveil the next chapter in this enthralling financial saga.

Amidst a backdrop of economic turbulence, the second quarter of 2023 unfolded with a series of noteworthy events that have left a significant impact on the United States financial landscape.

The Federal Reserve’s Senior Loan Officer Opinion Survey (SLOOS) revealed that banks tightened credit standards and observed weaker loan demand from both businesses and consumers. This was a result of the Fed’s campaign to raise interest rates, aimed at slowing down the nation’s financial gears.

On a positive note, construction spending experienced a slight uptick in June, with both private companies and the government undertaking various projects across the country.

In the job market, job openings dipped by 34,000 in June, reaching the lowest level since April 2021. Despite this, the demand for workers remains strong, indicating a tight labour market with limited slack. The latest employment report suggests moderate job growth of 187,000 new jobs in July, falling short of the consensus forecast of 200,000. This raises concerns that the economy might be cooling down, potentially leading to lower inflation and deterring further increases in interest rates.

Amidst these events, American workers and companies showed resilience, with productivity rebounding at an annual pace of 3.7 percent in the second quarter. This noteworthy recovery came after a decline of 1.3 percent in the first quarter.

The recent development in the crypto-sphere underscores the industry’s rapid evolution and dynamic nature.

Robinhood reported a drop in crypto trading revenue by 18 percent in Q2 due to decreased customer trades and volumes. Meanwhile, Ether futures ETF filings are generating excitement amid pending SEC approvals for spot Bitcoin funds. 

Hong Kong has emerged as a frontrunner in the race to establish itself as a global hub for the crypto industry. HashKey’s achievement of becoming the first licensed exchange to offer retail cryptocurrency trading after regulatory approval highlights the region’s crypto-friendly approach.

Finally, we delve into the security breach on Curve Finance and its profound impact, sending shockwaves through the DeFi industry.

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