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Crypto Market Forecast: Week of October 10th 2022

A curated weekly summary of forward-focused crypto news that matters. This week, the Binance chain suffers a major hack and is forced to close, The market predicts another large interest rate hike in the United States, and Bitcoin lightning network firm Strike announces a major capital raise despite bearish market conditions.

Bitcoin (BTC) recovered by 1.3% this week, and is currently at US$19.5K. Ether (ETH) did likewise, by 2.2%, and sits at US$1.3K. Binance-coin (BNB) fell by 1.4% to US$279.

The Binance Smart Chain was hacked on Thursday, and some two million Binance-coin (BNB) were stolen. Binance published a blog post in response, stating that the company was able to “stop the incident from spreading… by contacting community validators one by one”, which encompasses “26 active validators… and 44 in total in different time zones”.

The Binance blog post noted that the hacker was able to exploit a cross-chain bridge between the BNB Beacon Chain and the BNB Smart Chain.

The hack raises new questions about the extent to which Binance’s chains may be said to be decentralized and the safety of cross-chain bridging technology.

The US Bureau of Labor Statistics (BLS) released its “Employment Situation” report for September on Friday of last week, and unemployment, as measured by weekly initial jobless claims for unemployment insurance, has reached its approximate pre-COVID levels. With this, the US Federal Reserve may be looking to raise interest rates yet again in its next FOMC meeting on November 2nd.

The BLS will also release the latest Consumer Price Index (CPI) numbers on Thursday of this week. The short summary is, with unemployment low and CPI high, we can expect a higher probability of further interest rate hikes (in the order of 75 or even 100 basis points) — especially given public statements over previous months from Fed Chair Jerome Powell about the central bank’s commitment to bringing inflation down closer to 2%.

CME’s FedWatch Tool shows markets projecting over an 80% probability of a 75 bps hike for the November FOMC meeting — over a 20% increase in confidence of such an event since just last week.

With further rate hikes, the downward push on crypto asset prices is likely to continue.

The US-based payment provider Strike has announced an $80M capital raise despite bearish present market conditions. A Business Wire press release announced that Strike will “use the capital to further enhance its growth, continue expanding existing partnerships, and launch new partnerships”.

The funding round was led by Ten31 – an investment platform focussed on Bitcoin ecosystem projects – and joined by "Washington University in St. Louis, the University of Wyoming, and other investors," alongwith with participation from existing investors.

Strike has become a leading company in the Bitcoin Lightning space and has worked to bring international remittance payments down to zero by using Lightning “as rails”.

Crypto news for the weeks ahead

13 October

The US Bureau of Labor Statistics will release its Consumer Price Index (CPI) numbers for the month of September.

2 November

The Federal Open Market Committee (FOMC) will be meeting. Possible interest rate hikes will be announced.

Top 10 Crypto Summary

BNC top 10 market cap - 9 Oct

For most digital assets in Brave New Coin’s top ten by market cap, there were minor improvements in price since last week. Ripple’s XRP would be the exception — with an impressive 15% recovery. XRP’s price may have reasonably expected to follow an upward trajectory following the news from September 29th in which a US District Court Judged ruled in favor of Ripple Labs for a motion in its ongoing Securities Act violation case. Even so, just last week, BNC reported a nearly 7% drop versus the previous 7D period.

Bitcoin Price Chart

BNC BLX - 9 Oct

In light of the series of events in recent months that eventually led to a miner capitulation, it is occasionally worthwhile to return to the subject of mining using available on-chain analytics. Glassnode concluded from various metrics in its most recent weekly video report that the vast majority of miners are presently mining at a profit, but a drop in Bitcoin’s price to, say, US$18K could change the order of things.


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