10 Reasons Why The Markets Are Bleeding 🩸 🩸 🩸
Dear Investors,
Welcome to this week’s edition of the Myth of Money!
This week, I have some very special and exciting news… 👀
“Myth Of Money” Book - Now on Pre-Sale 🤓
As many of you know, making financial education accessible has always been a passion of mine, and I’ve always offered it for free!
After a year of hard work, I'm excited to announce that my new book, published by Wiley Publishing, will be officially available on October 1st!
This book is a thrilling blend of personal stories from the financial world, coupled with clear explanations of how things really work—from investment banking and stocks to venture capital, macroeconomics, and cryptocurrencies.
How can you support?
For individuals the book is available for sale on Amazon!
If you pre-order and leave a review, I will add you to my personal Telegram group, where I share exclusive investment tips and tricks! Just email me a screenshot of both the pre-order and review, along with your Telegram ID.
For bulk orders, we offer discounts if you order 10 or more copies for your business or educational institution. Additionally, we are setting up a donation program for corporations interested in donating books to schools. If this interests you, please reach out to me directly!
Why Are Markets Bleeding?🩸 🩸 🩸
Now back to business.
The markets took a complete nose dive this week, both across traditional finance and crypto. Bitcoin’s attempt at a rally earlier this week was thwarted by all these ongoing market challenges. Following a brief rise, BTC dropped nearly 15% to a low of $57,400.
Many of us were unexpectadly left “holding the bag” so to speak. So what contributed here?
Macroeconomic factors:
The Federal Reserve opted to keep interest rates unchanged at 5.25-5.50%.
Fed Chair Jerome Powell's commented on a potential September rate cut—suggesting that such a move could be "on the table.” The possibility of a rate cut in September is being heavily anticipated, with markets pricing in an 87% chance according to CME Group data. But we’ve been wrong before.
On Friday, the U.S. jobs report revealed a disappointing 114,000 new jobs in July, falling short of the anticipated 185,000. Still, it’s not all bad news. With unemployment climbing to 4.3%—above the Fed's earlier projection of 4.1%—and hourly wage growth stagnating at 0.2% month-over-month, there are growing concerns about the cooling job market. Despite these figures, the U.S. economy shows resilience. Inflation, which soared to over 9% in 2022, has moderated to 2.5% thanks to the Fed's aggressive rate hikes, bringing it just above Powell’s 2% target.
The PCE index, the Fed’s preferred inflation measure, aligned with expectations, showing a 0.1% rise in June and a 2.5% year-over-year increase. Core PCE, excluding food and energy, rose 0.2% month-over-month and 2.6% year-over-year. Despite these numbers setting up a likely rate cut, initial jobless claims fell more than anticipated, complicating the Fed’s decision. With 235,000 new claims filed last week, below the 245,000 forecast, the data might skew due to seasonal factors but adds to the Fed's dilemma.
Federal Reserve also says it does not expect it will be appropriate to lower rates until it has gained greater confidence inflation is moving sustainably toward 2%. It is likely the market is starting to adjust to he possibility of prolonged higher rates.
Stock Market Woes:
Microsoft, Tesla, and Apple all reported disappointing figures. Microsoft’s revenue missed expectations, Tesla’s profit margins hit a five-year low, and Apple’s iPhone sales fell to their lowest in nearly four years.
Amazon’s second-quarter results also spooked investors, as the e-commerce giant dropped 8.8% after missing revenue estimates and issuing a disappointing forecast. Although Alphabet beat earnings estimates thanks to its growing AI segment, its stock still faced a decline.
Yesterday, it was reported that Warren Buffett’s Berkshire Hathaway dumps $75.5 billion worth of stock as it halves Apple stake by nearly 50%
The bearish sentiment was further exacerbated by the Nikkei’s (the Japanese stock index) significant drop, which followed a minor rate hike by the Bank of Japan.
Analysts are also starting to discuss the “Carry Trade”:
TL;DR: The Japanese yen carry trade is a financial strategy where investors borrow Japanese yen at low-interest rates to invest in higher-yielding assets in other currencies. This strategy is based on the fact that Japan has historically had very low-interest rates, sometimes even negative. The goal is to earn the difference between the low borrowing cost in Japan and the higher returns on the invested assets.
As Japan seeks to tighten its monetary policy, investors will be forced to withdraw from U.S.-based investments to unwind the trade, leading to a sell-off of U.S.-based stocks.
WWIII Fears:
Bitcoin Volatility Index has soared to multi-month highs as geopolitical tensions in the Middle East boiled over. As the conflict continues, is seems a change in presidency cannot come soon enough.
This week, Israel conducted targeted assassinations of Ismail Haniyeh and other key terrorist leaders in Tehran, Iran. In response, the U.S. deployed fighter jets to support Israel in case of possible retaliation.
Following a Hezbollah rocket attack on a soccer practice field in Lebanon that killed 12 Israeli children last week, many are fleeing Lebanon, fearing an all-out Israel-Lebanon war.
Finally, the markets seem to be anticipating a potential Kamala Harris presidential victory, as polls appear to be tied (47/48 in favor of Trump), factoring in the possible geopolitical and macroeconomic repercussions.
This Week By the Numbers 📈
🏦 Economics
U.S. national debt reaches all-time high of $35 trillion
Bank of England cuts interest rates by 0.25% to 5%
Nikkei fell 6% on Aug. 1, biggest single-day drop since 1987
🏅Stocks & Commodities
On Friday, spot price of gold exceeded $2,500 for the first time in history
Coinbase Q2 revenue hits $1.4B, net income drops to $36M
Microstrategy posts $123M net loss in Q2, increases Bitcoin holdings to 226,500 BTC
Morgan Stanley tells 15,000 wealth advisors they can pitch bitcoin ETFs in a first for a big bank
Intel stock plunges as company announces cost-cutting plan to slash jobs, suspend dividend
🚀 Crypto
Michael Saylor's MicroStrategy to raise $2 billion to purchase more Bitcoin
Compound Agrees To Distribute 30% Of Reserves To COMP Stakers To End Alleged Governance Attack
U.S. government moves $2B in Bitcoin seized from Silk Road to unidentified wallet
Tether reports record $5.2B profit for first half of 2024
$600M XRP token release brings August crypto unlocks to $1.5B
Genesis Trading moved $1.5B in BTC and ETH, likely to repay creditors
Wyoming Republic Senator U.S. Senator Cynthia Lummis introduced her Strategic Bitcoin Reserve bill, where “Strategic Bitcoin Reserve” program would set out to purchase 1 million BTC over a five-year period, capping the spending at 200,000 BTC per year
🌐 Tech and Trends
Instagram creators can now make AI doppelgangers to chat with followers
Telegram unveils browser, mini app store, and support for decentralized TON Sites
👟 Pop Culture and Politics
Presidential candidate RFK Jr: "I put most of my wealth into Bitcoin"
Trump's limited-edition Bitcoin sneakers (1,000 pairs at $499) now on eBay for $2,500
Top Stories 🗞️
Artists Sue The SEC to Get it to Say NFTs Are Not Securities
Two artists are suing the Securities and Exchange Commission (SEC) to push the agency to declare that the non-fungible tokens (NFTs) linked to their creations are not securities. “Plaintiffs thus seek a declaratory judgment that their proposed NFT projects do not violate U.S. securities laws—i.e., that they would not be engaging in the offer and sale of securities by merely publicly offering and selling their art as NFTs, attaching royalties to the NFTs, and/or marketing the NFTs and their personal artistic endeavors to the public,” the lawsuit says. The lawsuit argues that an artist selling NFTs is not meaningfully different from an artist selling different mediums of art, and so NFTs should not constitute investment contracts. The outcome may have lasting effects, providing clarity for NFT artists,and also providing an avenue for a larger group of creators who may have held back from tokenizing their creations because of the regulatory risk.
Palau Pioneers Digital Residency IDs on Solana Blockchain
The Pacific island nation of Palau is expanding its collaboration with the decentralized identity protocol RNS.ID by introducing digital residency IDs (DIDs) on the Solana blockchain. This development was announced by RNS.ID on Twitter, marking a significant milestone as Palau becomes the first sovereign nation to issue legal identities on Solana. Palau initiated its digital residency program in 2022, allowing global citizens to obtain residency without the requirement of physical presence. The nation issued its first Legal DID on Ethereum in September 2023, with Ethereum co-founder Vitalik Buterin present for the event. Through the RNS.ID platform, users can apply for a Palau digital residence card for $248. These residencies offer benefits such as visa extensions up to 180 days and anonymity for using cryptocurrency exchanges that might otherwise be inaccessible due to geographic restrictions.
Terra Founder Do Kwon Will Be Extradited to South Korea—Court Says It's Final
The August 1 ruling marks the conclusion of a protracted legal saga involving multiple appeals and judicial reversals. The Appellate Court confirmed the June 28 decision of the Higher Court in Podgorica, which granted the extradition request from South Korea while rejecting a concurrent request from the United States. The court’s ruling is based on the provisions of Montenegro's Law on International Legal Assistance in Criminal Matters. The case against Do Kwon has garnered international attention due to the collapse of Terraform Labs and its associated cryptocurrencies, TerraUSD and Luna, in May 2022. The fallout from this event reverberated through the crypto industry and led to multiple investigations and legal actions across several jurisdictions.
California DMV Puts 42M Car Titles on the Avalanche Network in Digitization Push
California's Department of Motor Vehicles (DMV) digitized 42 million of car titles on the Avalanche (AVAX) network as part of development to modernize the state's title transfer process with software development firm Oxhead Alpha. Users will soon be able to claim their digital titles via the DMV's application, track and manage them without getting to the office, according to an Avalanche blog post. The time to transfer vehicle titles drops to a few minutes using blockchain rails in the backend from two weeks via the traditional process, a DMV spokesperson said in an email.
Russia Passes Bill to Legalize Crypto to Dodge International Sanctions
Russian lawmakers voted to legalize cryptocurrencies for international settlements in an apparent effort to dodge sanctions imposed by Western countries. Reuters reports that the law is expected to take effect in September and that first crypto transactions could take place before the year ends. Russian crypto analyst Ani Aslanyan told Bloomberg that he expects crypto participation to remain limited to large- and mid-size companies, due to the difficulty of fulfilling the conditions of the new legislation. Ahead of passage, Aslanyan told Bloomberg he expects countries like the U.S. to increase their scrutiny of Russian crypto activity in light of the new bill.
Thank you for reading this week’s edition of the Myth of Money.🚀
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Until next week,
Tatiana Koffman
About the Author: Tatiana Koffman
Hi there and thanks for reading! If you stumble upon my newsletter, you will notice that I write about money, economics, and technology. I hold a JD/MBA and spent my career in Capital Markets working across Mergers & Acquisitions, Derivatives, Venture Capital, and Cryptocurrencies. I write to make financial topics more accessible and create equal opportunity for the next generation of investors. Currently working as a proud General Partner at Moonwalker Capital.
(More about me 👉 here).