“Reddit officially launches its Community Points initiative, WallStreetBets attempts another short squeeze, and the CEO of Kraken wants to buy a Bugatti for 1 BTC.”
The Stock Market
The S&P 500 extended its rally over the last fortnight, climbing a further 2%. The Nasdaq100 is up too, but has gained a more modest 0.18%. Last Friday was a particularly volatile trading session, with the S&P 500 and Nasdaq100 falling 1.3% and 2%, respectively. Some commentators believe that the both indices have rallied too much, too soon, with the S&P 500 having recovered 15% from its June lows. Hedge funds seem to be mirroring this sentiment, having built up $125 billion in short positions against the S&P, according to BNP Paribas. Additionally, a Citi index tracking the ratings of sell-side equity research analysts shows ratings are at peak bullishness levels, a signal that preceded the crashes in 2000 and 2007.
Inflation continues to be the dominating story regarding the market. US CPI figures came in at 8.5% for July, below the consensus figure of 8.7%, causing a large rally on the day of announcement. Mary Daly, member of the Fed’s Open Market Committee, stated that it is too early to “declare victory” on inflation, and that a 0.75% hike is still on the table. She did also state that she is likely to recommend a 0.5% hike in the next session.
In the UK, July CPI figures were announced as 10.1%, far above the consensus forecast of 9.8%. The higher-than-expected figure was largely driven by higher food-related costs. Due to the level of inflation, UK real wages dropped by the largest rate on record. In further bad news, the UK economy contracted by 0.1% in the second quarter, further signs that the country is slumping into a recession. Despite this, the FTSE100 gained 1.5% over the last two weeks.
The most exciting spectacle of the last fortnight was the Bed Bath & Beyond (BBBY) saga. Reddit community, WallStreetBets, attempted another short squeeze, akin to their GameStop play in 2021. BBBY gained over 400% in less than a month, before a major insider, Ryan Cohen, sold his entire stake causing the stock to crash. Currently, the stock sits at $11, down over 60% from its local high.
The Crypto Market
It has been a tough couple of weeks for crypto. Bitcoin is down around 6.5%, while Ethereum has shed 3%. The losses were largely caused by the stock market declining on Friday, which saw Bitcoin fall 8% in 24 hours. The total crypto market cap now sits just above $1 trillion, down roughly 6% from this time two weeks ago.
Major crypto exchange, Coinbase, announced its quarterly earnings. Coinbase revealed a 64% drop in revenue compared to Q2 2021, while they had a loss of $1.1 billion in the quarter. Revenue was worse than expectations by 7%. Since the earnings release, the stock is down 15%.
It was another busy fortnight for stablecoins. Both AUSD and HUSD depegged. AUSD fell to as low as $0.01 but has gained back some value since then, now sitting at $0.86, due to the burning of coin supply. HUSD fell as low as $0.85 but has thankfully regained its $1 peg.
Reddit officially launched its Reddit Community Points (RCPs), after two years of beta testing. RCPs are rewards on the Ethereum blockchain based on contributors’ karma scores, with monthly distributions. The points are supposed to help govern subreddits, with users being able to vote on governance polls with voting weight in proportion to how many tokens they own. Points can also be used to acquire “Special Memberships”, which provide the users with extra features. Reddit uses Layer 2 provider Arbitrum to reduce transaction fees. The scheme is in partnership with FTX, which is providing Ethereum purchases inside Reddit to finance the transaction fees. Currently, the most popular RCP is Moons, which are native to the crypto currency subreddit. Moons are currently worth around $0.1 a token, with a market cap just shy of $10 million. Last distribution, achieving the maximum contribution, users received about $675 worth of Moons.
In Other News…
Coca-Cola has launched a new series of NFTs on Polygon. The entire series sold in a single batch for $575,000. The proceeds went to Special Olympics International.
Dave Portnoy is being sued by Safemoon. Portnoy, founder of Barstool Sports, didn’t reveal many details as for why he is being sued. Portnoy still holds Safemoon and is down over 94% on his $40k investment.
The CEO of Kraken wants to buy a Bugatti for 1 Bitcoin by the end of the year. Bugatti’s currently cost north of $1 million.
Buenos Aires announced it will begin running Ethereum validators by 2023. Diego Fernandez, the secretary of innovation of the city, believes running validators will help with understanding and future regulation of the asset.
NFL franchise, the Houston Texans, announced they will accept crypto. For the moment, the Texans will only accept crypto for its “game suites”.
