BitcoinMacro

The Shanghai upgrade marks a significant milestone for the Ethereum network, enabling depositors to access their staked ETH for the first time since the launch of the Beacon Chain. With the upgrade, two main types of withdrawals will be possible: partial and full. Partial withdrawals, or skimming, will permit validators to withdraw their cumulative staking rewards, while full withdrawals will enable the complete withdrawal of staked ETH. This analysis aims to explore the potential implications of these withdrawals on the Ethereum economy and address concerns regarding the supply unlock event. Shanghai presents a unique situation where rewards have accumulated over two years and will be unlocked simultaneously. The excess balance, which is not actively participating in Proof-of-Stake, amounts to around 1.137M ETH or about $2.1B in value. After the Shanghai upgrade, this sum will be automatically withdrawn from the Beacon Chain and transferred to the depositor's Ethereum mainnet address as an automatic balance update. Validators with 0x00 withdrawal credentials own nearly 75% of the total accumulated rewards, while those with 0x01 credentials will have access to the remaining 25% (equivalent to 276k ETH). In an extreme scenario where all remaining validators update their withdrawal credentials after the Shanghai upgrade, we could see the entire sum of 1.137M ETH exit the Beacon Chain over 4.5 days. Considering the depositor segmentation, a significant portion of the staking rewards is expected to be locked up again, as large staking providers such as Lido have vowed to primarily re-stake their rewards. Furthermore, non-institutional depositors with more extensive holdings are less likely to feel pressure to sell their ETH, especially given the recent positive market trend. For full withdrawals, the daily number of validators that can exit is limited by the churn rate, which currently allows for a maximum of 1800 validators (or 57.6k ETH) to be withdrawn daily. Considering the withdrawal period determined by the churn limit, validators must pass through a withdraw-ability delay. This waiting period is 256 epochs for voluntarily exited validators, or around 27 hours long, and for slashed validators, it is 8192 epochs, or about 36 days. We have simulated the accumulated ETH accessible right after the Shanghai upgrade, approximately 45,098 ETH (equivalent to $83.3M). Most existing validators belong to solo-stakers or stakers from the early days of the Beacon Chain, who are likely to have a high conviction rate. Therefore, most withdrawals are expected to be related to changes in their technical setup rather than completely exiting their position. Considering partial and full withdrawals, we can model the potential supply pressure during the first week after the Shanghai upgrade. 1.54M ETH ($2.93B) could become liquid in the most extreme case. On the other hand, based on a 50% withdrawal credential update, segmentation of depositors, and different assumptions, our best estimate suggests that 170k ETH ($323M) could be sold. Comparing these numbers to typical weekly exchange inflow volumes, even the most extreme case of 1.53M ETH is within the average weekly exchange inflow range. This indicates that the unlock event is on a similar scale to day-to-day trade for ETH markets and is unlikely to be as dire as many speculate it to be. In conclusion, while it is impossible to predict the outcomes of the Shanghai upgrade fully, this analysis provides insights into the potential economic implications of the supply unlock event. The bulk of unlocked staking rewards is expected to come from users redeploying towards liquid staking providers, which have little need to sell due to being underwater. Moreover, Ethereum's Proof-of-Stake exit queue design will limit the amount of stake that can be drained from the pool at once, stretching the economic impact over days. This piece was the summary of this analysis by Glassnode. If you want to read the full analysis, read this: insights.glassnode.c...nchain-week-15-2023/

This is a summary of Michael Pettis' 'Can China’s Long-Term Growth Rate Exceed 2–3 Percent?' As the text was quite long, this summarizes some critical points. China's high investment share of GDP and growing debt burden are interrelated, stemming from an investment-driven growth model that began in the 1980s when the country needed significant investment in infrastructure, urban property development, and manufacturing facilities. High domestic investment required high domestic savings, leading to a rapid savings increase by constraining household consumption and income growth. Policymakers now recognize the need to rebalance China's economy towards domestic consumption. High investment levels initially benefited the Chinese economy, as productive investment grew at the fastest pace in history. However, a successful development model should make itself obsolete, and China has closed the gap between its actual investment level and the level its businesses and workers can productively absorb. As productivity benefits of additional investment decline, more investment begins to generate less economic value than the value of employed resources. This can be observed in China's increasing debt numbers. Countries that followed this growth model experienced a period of rapid, sustainable growth with stable debt levels, followed by a period of rapid, unsustainable growth driven by a surging debt burden. China entered this phase around fifteen years ago. Therefore, the investment share of China's GDP must decline sharply in the next few years, as the conditions that made high investment levels sustainable no longer exist. Historical precedents suggest that reducing the investment share of GDP to a sustainable level is better for the economy's long-term health, growth, and stability. In this context, rebalancing the Chinese economy will require significant adjustments in its economic structure. Beijing must focus on boosting domestic consumption, though this would likely result in a decline in China's annual GDP growth to around 2-3 percent for many years. The current investment share of GDP is extraordinarily high, making it difficult to reduce it without significantly affecting overall economic activity. Policymakers in Beijing have increasingly called for an expansion in the role of consumption, but there are significant political constraints in implementing such policies. Rebalancing would require consumption to grow faster than GDP and GDP to grow faster than investment. This implies transferring income from governments and businesses to households, a process that has not yet seen concrete proposals. The decline in growth will be unevenly distributed, with local governments bearing the brunt of the adjustment while ordinary Chinese people experience less impact. This also means that sectors of the global economy that depend on Chinese investment growth will be more affected, while those reliant on Chinese consumption will be less impacted. China's investment share of GDP currently stands at around 42-44 percent, which is unsustainable in the long run. For the purposes of this analysis, it is assumed that China should reduce its investment share to 30 percent over ten years, a level typical of rapidly developing economies. As investment declines, the consumption share of GDP must rise. Michael presents five scenarios under which China can rebalance its economy: A. Rebalance with a surge in consumption: China's consumption would need to grow by 6-7% annually, while investment grows by 0-1% annually, resulting in a GDP growth rate of 4% over ten years. However, this requires politically difficult income transfers from local governments and wealthy individuals to households. B. Rebalance while maintaining current consumption growth rates: Consumption growth would remain at 3-4%, with investment contracting by 1-2% annually. This would lead to an average annual GDP growth rate of 1.5% over ten years. C. Rebalance with a sharp decline in consumption growth: If consumption growth drops to 1-2% annually, the investment must decline by nearly 3% annually, leading to flat GDP growth. D. Rebalance with a sharp contraction in GDP: This scenario involves a short-term, severe GDP contraction but is considered politically disruptive and unlikely. E. Rebalance over a much extended period: If China takes 15-20 years to rebalance, with consumption growth at 3-4% annually, GDP growth will drop to 2% and 2.5%, respectively. Key points include the limited ways China can rebalance, the difficulty in maintaining a high investment share indefinitely, and the necessity of a surge in consumption growth for a more balanced economy. Rebalancing will involve slower GDP growth without faster consumption growth, driven by significant and politically challenging income transfers. In conclusion, China's rebalancing process will require significant adjustments in its economic structure. The country must reduce its reliance on investment and increase the role of consumption in driving growth. However, the political constraints and the impact on various sectors of the economy make this a challenging task for policymakers. The five scenarios presented illustrate the complexities of the rebalancing process and emphasize the need for a well-thought-out and carefully executed strategy. China's future economic health depends on its ability to navigate these challenges and transition to a more sustainable growth model. Beijing must strike a delicate balance between addressing political constraints and implementing policies that promote consumption growth while minimizing the negative impacts on various sectors and local governments. Moreover, the global economy is intricately connected to China's growth trajectory. As China undertakes the rebalancing process, the repercussions will be felt in sectors reliant on Chinese investment and consumption. Businesses and governments worldwide must closely monitor the situation and adapt to these changes. This analysis highlights the importance of understanding the complexities of China's rebalancing process and its implications for the Chinese and global economies. As China grapples with these challenges, the world must brace itself for the changes arising from this monumental shift in the world's second-largest economy. Only time will tell if China's rebalancing efforts will successfully pave the way for a more stable and sustainable economic future.

Apple is one of the companies whose stock price is overvalued, and the company is facing several severe issues: 1. Big tech layoffs. If US tech is doing quite poorly and companies are laying off people, they probably won't buy new equipment or software. The fired tech workers probably won't be buying stuff for themselves either, and neither will those that see their colleagues fired. 2. Apple's production in China faces significant problems due to lockdowns or because the 'employees' are revolting. These disruptions hurt the reliability of Apple , as well as its image. Unfortunately, many employees are working and living in awful conditions, which is being exposed. Many ESG funds that hold Apple could end up having to dump their shares based on these concerns. 3. Some US politicians are increasingly worried about the connections between Apple and the CCP . With Apple 'threatening' to remove Twitter from its Appstore while supporting the CCP in an era where tensions between US and China aren't great, we could see Apple face more pressure to move away from China. That could increase their costs significantly while also disrupting production even further. 4. As retail consumers are affected by inflation and high-interest rates, they will spend less on buying new stuff, and many devices/apps aren't necessary. At the same time, Apple has been raising its prices due to increased costs (of production), which might further incentivize customers not to purchase their products/services. As if these weren't enough, some of its new products aren't that much of an upgrade to the previous versions. 5. As the world is moving closer toward open source and open technologies/marketplaces, the 30% tax on the Apple app store looks worse and worse by the day. Based on the above, the free market and politicians in the US might try to break Apple's monopoly, which could initially lower its revenue. 6. Current Apple valuation is 3.4x that of the entire crypto market (stablecoins excluded). This is just too large. AAPL is trading below all its major moving averages, has broken its old uptrend, and has plenty of room to move down toward that major gap at 96$. Most major US companies have fallen more than 30% and have filled many significant gaps, yet Apple has not. Therefore it is possible to see the stock price go down to those levels in the next few months.

Despite Copper falling 38% from its ATHs, we still haven't seen deflation, even though inflation seems to have peaked for now. The inflation story doesn't seem to be over; even inflation moderates and goes close to or below 2%. The big problem right now is that the Copper inventories are extremely low and that the demand for Copper seems to be increasing because of all the green technologies that are being developed. Therefore despite the high-interest rates and the drop in the money supply globally (reduction in overall liquidity, along with a strong dollar), it is possible to see Copper rally higher from here. With the recent drop in the dollar and the potential peak in the USD and short-term interest rates, the market may have bottomed. Of course, this isn't the only reason the market has bottomed. Copper fell a lot, and it hit critical support. They seem to have bottomed at their previous significant highs along with Silver and reversed the upside. I don't think the final bottom is in, although it could be. In my opinion, the market is heading towards 4$ in the short term. Still, in a long time, it is directed towards 2.7$, and maybe even towards 1.6-1.9$ if we get the short-term deflationary collapse, I expect. After the failure, I think new ATHs will come, as Central Banks and Governments globally will print insane amounts of money to save their economies from collapsing.

Silver had a huge move up in 2020, but that was all it managed to do back then. Since its first significant peak in August 2020, it went sideways and started declining. Silver was in a big bear market since 2011, then entered an accumulation range, and then had its capitulation move in March 2020. Then with all the fiscal stimulus, it skyrocketed, but most capital flowed into crypto and stocks, not precious metals. As inflation remains high and interest rates could be near their peak, and investment in metal miners has gone down a lot over the last decade, this precious metal that seems to have lost its shine might be ready to shine again. It looks like silver had a very healthy pullback into the top band of its accumulation range. Now resistance seems to have turned into support, and the market could head toward 24$ in the next few months. The truth is that I don't believe that the market has fully bottomed yet, although it could very well have, and that eventually, it will have on final leg down towards 16$ and bottom there. The main reason I think that has to do with how the market bottom is that there are two double bottoms around 17-18, and there is a little 'gap' at 16. Essentially I would like to see the market test 16$ because I want to see it thoroughly test that untested breakout, the Yearly S3 Pivot , and the Volume Profile Point of Control. Another reason that I think the market will go down there again is that I expect a major deflationary episode to take place in 2023, one that has the potential to create a liquidity squeeze (risk asset collapse) that would affect precious metals too. In my opinion, the current move up in Gold , Copper , Silver , etc., mostly has to do with low production/inventories of metals, while demand seems to have bottomed in the short term. Eventually, the market will get crushed again, but I think the bounce has legs for now. Therefore it would make sense to look for longs in the 16-20$ zone and take profits in the 21.7-24$ area. Shorting 24$ might be a good idea, but I would prefer to watch how the price action develops before I step in.

The situation is very tricky as Europe's condition worsens. As the global economy is in a depression, the USD could keep going higher and higher, especially as the world faces more problems than the US. In his tread, Marko Papic outlines very eloquently why he thinks the European situation isn't as bad as many think, and he could be right. I am not as optimistic as he is, but there is a chance that the market has bottomed with the sweep of the previous low and the close above it. Even if it hasn't, it provides a nice setup for the short term long. The EURUSD parity is a fundamental psychological level where we could see a lot of chops before it goes either direction. https://twitter.com/Geo_papic/status/1562183113156878338

The first sign that Coinbase was bottoming was that it dropped 90%. Very few stocks fall so much without bouncing at some point. The second was Fred Ehrsam, its co-founder who now runs Pm, a venture fund, bought 75m USD worth of shares with an average price of 70$. Whenever a founder is getting in after a crash, especially one running a venture fund, it's time to pay attention. https://www.coindesk.com/business/2022/05/20/coinbase-co-founder-fred-ehrsam-buys-the-dip-purchases-75m-of-company-stock/ Then despite Bitcoin and Ethereum making new lows in June, COIN didn't follow. Despite all the blowups in the space, Coinbase wasn't affected, and its business model remained healthy. The price then failed to make new lows when negative news about negative earnings , firing employees, insider trading, and nine tokens trading on its platform being declared securities led ARKK , which also prompted Cathie Wood & ARKK to dump their 1.4m worth of Coinbase shares. https://www.forbes.com/sites/haileylennon/2022/07/22/coinbase-is-ready-to-fight-the-sec/ https://markets.businessinsider.com/news/stocks/cathie-wood-dumps-75m-of-coinbase-stock-at-massive-loss-after-long-being-bullish-1031619400?op=1 As Coinbase was clearly in accumulation mode and was going sideways, the news about a partnership with Blackrock popped up and created a massive surge in the price. In my opinion, it wasn't so much the news that caused the pump, but it served as an essential catalyst. The rally was so strong that the stock trading was paused and fell lower once it resumed. However, it wasn't just the pause that led to a pullback but also the fact that it hit significant resistance. This looks like a normal pullback, and the stock will rally higher at some point, although it might first fill the gap lower and retest the 75-80$ breakout zone. Therefore a dip here could be an excellent buy-the-dip opportunity, with the following primary target being 200-220$. https://www.theblock.co/post/161469/coinbase-stock-pops-after-blackrock-announcement-temporarily-halts-due-to-volatility?utm_source=twitter&utm_medium=social

So AMC decided to do a clever trick and take advantage of the hype coming back into stocks and even meme stocks. Retail traders have taken a hit, with many retail-heavy companies like Gamestop, Coinbase and Robinhood, etc., taking massive hits. However, GME has been doing well, COIN doubled off its lows, and HOOD looks decent. As stocks are bouncing and the bull could be back, AMC decided to do an intelligent stock split by issuing new preferred stock they can sell. They named it APE, like the Apecoin , a popular NFT-related token, which could create a lot of hype around it. Essentially, it is a trap for retail to go and buy APE without hurting the price of AMC as much and allowing the company to raise the cash it needs. Last year, AMC dumped all of the company shares onto retail on the way up and raised 2B dollars that it has essentially spent and needs fresh cash as it still has a lot of debt. At the same time, they made this look like an airdrop, and it is like an airdrop, but one in which the company controls the majority of the shares. The company's price looks pretty good regarding TA, as it bottomed nicely. First, it had an 86% correction, which means the entire bubble popped, and there is no froth in the market. It retested some key levels and then reclaimed some key support levels. Since May, it has essentially been in accumulation mode, and today we had the confirmation of the breakout, as the market initially gapped down and then had a massive rally. In my opinion, this rally could last for a while, with the price increasing to 50-60$ before it goes back down again. It wouldn't be surprising if we saw the market go up for the next two weeks and top close to the date of the airdrop/split (22nd of August).

Hello everyone. I tried to put out regular market updates in the past, but I failed to do so for different reasons. This time, my idea is to gather the best tweets, articles, charts, etc., and add some brief comments. I will post these out regularly as long as I have decent material. 1. Sentiment is still very bearish , which means more upside is still possible. https://twitter.com/charliebilello/statu... 2. Soft landing team seems to be doing well so far... Until it eventually won't be doing so. I believe a scenario like 1989 is possible for markets, though I am slightly less optimistic than Jared. https://www.bloomberg.com/opinion/articl... https://twitter.com/FedGuy12/status/1555... 3. Valuations can get out of hand as multiple market forces drive stocks. Stocks could trade higher and higher despite bad earnings . https://twitter.com/JeremyDSchwartz/stat... https://twitter.com/JeremyDSchwartz/stat... 4. The US has low unemployment, but its labor market is nowhere near as strong as it was before Covid or before the 2008 GFC https://twitter.com/charliebilello/statu... https://twitter.com/charliebilello/statu... 5. Jobs are a lagging indicator; however, as the Fed is working with lagging data, they could hike more than they should. Good news now = bad news later; therefore, the market suffers now on good news, as it 'sees' the future. https://twitter.com/Jkylebass/status/155... https://twitter.com/lisaabramowicz1/stat... https://twitter.com/profplum99/status/15... 6. The yield curve inverting doesn't mean we will have a crash. A recession is guaranteed at this point, but remember that the recession comes many months after the inversion. https://twitter.com/lisaabramowicz1/stat... 7. So far, this is a worse situation than 2012, 2015, and 2018; however it is nowhere near as bad as 2008 or 2020. Could it get that bad? I doubt it for now. Of course, with new data, I am ready to change my mind if I have to. https://twitter.com/jnordvig/status/1555... 8. Some interesting comments by Jared Dillian with whom I agree: https://twitter.com/dailydirtnap/status/... https://twitter.com/dailydirtnap/status/... 9. My main worry is what happens between the US and China in the next few months, especially in October, as I think it would be tough to avoid an invasion. Heightened tensions alone can create a lot of problems... https://twitter.com/disclosetv/status/15... 10. The Turkish Lira is heading yet for another collapse. No idea what could stop the Turkish economy from falling off a cliff in the next few years. https://www.zerohedge.com/markets/desper...

I see many people expecting a massive crash because the yield curve has inverted, but they forget that stocks fell as the yield curve was inverting, something that didn't happen in the previous times. Before the earlier crashes, stocks rose before the inversion and kept growing for a bit after the inversion. In 1989 stocks didn't even fall after the 10y2y curve fell below 0. That inversion happened two years after the 1987 crash, and we have a similar situation this time. We had an inversion before the Covid crash, and now, two years after the Covid crash, we are having another. However, this time, we've already had a 25% correction on the S&P500 . Although I believe we will have a recession and used to think it would be gruesome, I am starting to feel things won't be as bad as many think. It would be very odd to have a second crash after the March 2020 crash, as many investors still expect a similar correction, making it less likely. Everyone also knows the Fed will eventually be forced to cut rates and return to QE , creating a market crash less likely. The market is like a junky that wants more QE and low rates, even if that would come at the cost of short-term pain, as the market is forward-looking and is already anticipating that Central banks will support demands. They will have to, as governments won't be able to fund themselves in any other way. At the same time, we must not forget many structural forces other than the Fed, like stock buybacks, indexation, passive investing, cheap & easy access, bank money/credit creation, and foreign investment inflows in the US. Of course, we definitely shouldn't forget how strong the US economy is, having some of the best companies worldwide. It feels like 2000-2013 was like getting out of the 1968-1982 period: massive consolidation and considerable changes in the structure of markets. From 1982 until 2000, the market rallied by 1275%, with very few significant corrections. None was more prominent than 40%, and the largest was similar to the Covid crash. We are nine years into this expansion and have rallied only 200% from the previous highs. Therefore I don't see why we should expect another massive correction soon, right after we've had a 20%, a 35%, and a 25% correction over the last 3.5 years. I think the only reason for a crash would be the Fed raising rates above 3.5%, which I see as nearly impossible. Of course, I am not saying another dip is impossible. If the SPX tops around 4350-4400, I can see us making another low, only to scare longs and trap shorts and send it much higher. This idea is more about not getting stuck in some doom porn and seeing that markets can go up even when things are not expected to go well or aren't going well.