Rise of PEPE amidst rising funds rate
MEME coin and Market top
Macro Stuff
In recent financial news, the funds rate has been increased for the 10th time in this cycle, reaching 5.25%, the highest level since September 2007.
The market is currently predicting a pause at the next meeting, with a 96% probability.
The market anticipates the first rate hike occurring in September of this year, which seems reasonable to me, given the current situation with regional banks.
There came a news that further signals a tight job market, which can keep FED on a hawkish path longer than expected.
Source: Fox Business
Meanwhile, jobless claims have plateaued.
Equity Stuff
The banking crisis remains a dominant factor in the headlines following First Republic's failure and subsequent acquisition by JPMorgan.
This is the CNBC headline.
First Republic's stock has plummeted to almost nothing. It has been delisted from Nasdaq, removed from the S&P 500 index, and is now trading at $0.34 on the OTC market. The stock has experienced a staggering 99.84% drop since its November 2021 highs.
With all due respect, LUNA has performed much better than these regional banking stocks. There are some interesting projects being built on Terra such as $whale, $roar and $prism etc.
An intriguing dichotomy exists: no one goes to jail for bank runs on American regional banks, yet a bank run on a crypto project (such as $LUNA) could potentially result in a 40-year prison sentence.
Back to regional banks, coming from a Crypto background one of many understandings I’ve taken to heart from macro analysts was that FED pivots during “financial event”, which is often referred to as something being broken in financial market.
Having unrealized loss on their books does not necessarily mean “bankruptcy”. However, it can be used to spread fear among folks and initiate bank run forcing banks to sell these securities at a loss and go into receivership.
What I have suspected at first and am to some degree certain of is that market is engineering a situation that forces FED to pivot.
Recipe is this:
Identify banks with significant unrealized losses and exposure to MBS and CRE.
Start short selling
Price declines can signal issues, prompting depositors to seek safe havens, in this case, turning to the too-big-to-fail banks.
Bob Elliott appears to further support my point with his customary expert view on the matter:
https://twitter.com/BobEUnlimited/status/1654251278216708097
MEME SZN:
Another meme coin season is upon us. This time, it's not dogs but frog$ taking the spotlight.
PEPE, a frog meme popularized by the Pepe the Frog cartoon in 2005, is now leading the altcoin season with its remarkable price action. According to CoinGecko, $PEPE has experienced a 62x increase over the past 18 days.
An interesting observation below is that the rise of meme tokens usually coincides with market tops.
This is it for now.
gal2