Daily Brief, January 11, 2023: Estimated Withdrawn Funds From Binance Exceed $12 Billion

Crypto Faces Crisis of Confidence.

According to Forbes, Binance lost $12 billion in assets in only two months as users withdrew their money amid a worsening crypto market trust crisis.

The withdrawals occurred between November 4 and January 4; coinciding with the demise of rival exchange FTX and the arrest of its ex-CEO Sam Bankman-Fried.

It was also previously reported by the data firm Nansen that $3 billion were pulled out in one day during the month of December. Binance CEO CZ replied to the report shared and said that billion-dollar exchanges are just a part of the course. “This has happened before; We have net withdrawals on some days and net deposits on others. For us, it’s business as usual”, he added. Binance also produced a proof of reserves report on December 7, showing it is 97% centralized. However, the fear index in crypto dropped to 21 in November and is still fluctuating below 30, indicating an ongoing trust issue in the crypto market.

US CPI Will Help Determine the Amount of the Next Fed Rate Increase

The Labor Department will release the Consumer Price Index for December on Thursday. Analysts anticipate it will confirm November’s favorable trend of declining inflation, with a YoY rate of 6.7% compared to 7.1% in November. The core rate excluding food and energy is expected to be 5.6% yearly, down from 6%.

The main question will be whether the Fed will stick to another 50-basis-point increase in interest rates or decrease to a quarter-point increase.

The core CPI, also known as the core consumer price index excluding food and energy, is anticipated to have increased by 0.3% in December. However, labor reports released on Friday have shown some indications of a slowdown in the job market.

The rise in Non-Farm Payrolls for December was 223,000, above estimates of 200,000. The unemployment rate decreased to 3.5%, 0.2 percentage points below expectations. On the other hand, the pay rise and wage increase came lower than anticipated, suggesting that inflation pressures may be easing in the economy. The average hourly wage climbed by 4.6% from a year ago and by 0.3% for the month. Estimates for the growth were 0.4% and 5%, respectively.

Fed fund futures show investors and traders believe a 25-basis point hike is the most likely result of the Fed’s meeting in February. Following four straight 75 basis point increases in interest rates last year, the Fed increased rates by 50 basis points last month. Still, it stated it was likely to continue tightening its monetary policy by keeping rates high to control inflation and reach the 2% target.

US Oil Inventories Show an Unexpected Increase.

Oil prices fell on Wednesday, January 11, giving up their gains in the previous trading session after data revealed an unexpected increase in US crude and fuel inventories. The surprising increase raised concerns about a decrease in fuel demand.

West Texas Intermediate crude spots fell 0.8% to $74.74 a barrel in the early trading hours before increasing to $75.75 mid-day, while Brent crude spots fell 0.8% to $79.72 a barrel before rising to $80.54 mid-day.

Data from the American Petroleum Institute have shown that US crude stockpiles jumped 14.9 million barrels last week. Heating oil and jet fuel rose by about 1.1 million barrels.

Gold Records New 8-Months High

Gold prices are narrowly moving as investors refrain from attempting prominent positions ahead of the US CPI data announcement tomorrow. Prices settled in spot transactions at $ 1883.30 an ounce at the time of writing, hovering around its 8-months high today at $1886.82.

Gold is considered a haven and a hedge against inflation. Still, the metal is susceptible to higher interest rates, which increases the opportunity cost of holding the non-interest-bearing precious metal.

As for other precious metals, silver increased in spot transactions by 0.1% to $23.63 an ounce.

Platinum fell 0.5% to $1,075.11 an ounce.

Palladium fell 0.4% to $1,774.13 an ounce.

Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances, or needs.

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Daily Market Brief 22-11-22
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