February 09, 2024 | Read Online

Year of the Bitcoin: Lunar New Year Rally

Plus JPM Finds Traders Skeptical on Crypto

The Breakdown First Five - Friday, February 9, 2024

Welcome back to The Breakdown First Five — the 5 most interesting and/or important stories in bitcoin, crypto, and markets to start your day.

Year of the Bitcoin: Lunar New Year Rally

5. China Deflates

China’s economy is in the grip of a brutal deflation. Producer prices have fallen for 16 months in a row while consumer prices just recorded their largest annualized decline since 2009. A glut of commodities, plummeting pork prices and systemic real estate collapse have all taken a share of the blame. Government interventions have already begun but without export growth the problem will be tricky to repair.

Brad Setser @Brad_Setser

The way China exports deflation is by exporting more goods and thus producers who don't match the lower China price lose market share.

the RMB and weak domestic demand say "but China" -- creating a powerful force opposing "near shoring," "decoupling" and the like

Feb 8, 2024

317 Likes 99 Retweets 20 Replies

4. Kwon Appeal Successful

Do Kwon’s appeal has been accepted in Montenegro, setting aside his extradition order. The court said the original finding was “incomprehensible” and lacked clear reasoning. The decision on whether to extradite Kwon to either the US or South Korea will now be returned for a fresh hearing. Nothing about the appeal would stop the court from coming to the same conclusion all over again.

Inner City Press @innercitypress

Crypto contradictions: In Do Kwon case Montenegro appeals court decision today (translated below) cites "the appeal of the defendant's defense attorneys" - but SEC said it relied in Do Kwon CONSENTING to extradition in OK-ing delay of SDNY Terraform trial. Hmm

Inner City Press @innercitypress

CRYPTO COURT CHAOS: Do Kwon Extradition Is "Stopped" for Appeal After He Got Delay of Terraform Trial to March - But did he consent? Story: More here on X for subscribers twitter.com/innercitypress… and @SubstackInc here

Feb 8, 2024

12 Likes 2 Retweets 0 Replies

3. Senators Condemn “Unconscionable” SEC

A group of Senators including Lummis and Vance have blasted the SEC’s litigation strategy of misleading the court. Last year, the SEC obtained a restraining order against Debt Box on false pretenses and were threatened with sanctions by the Judge. The Senators say this was “unethical” and undermines trust in the agency, calling the SEC’s plan to retrain lawyers on basic legal ethics not “proportionate to the very serious allegations.”

Austin Campbell @CampbellJAustin

I am glad this is being taken up by our elected officials; I have a lot of sympathy for many of our regulators, but perjury to obtain a TRO that destroyed businesses and lives is the behavior of criminals.

If agencies want trust, they have to earn it.

Senator Vance Press Office @SenVancePress

🚨NEW: Senator @JDVance1, colleagues express concern over crypto case in which SEC admitted to misleading statements: ‘Trust is undermined’

“It is unconscionable that any federal agency…could operate in such an unethical and unprofessional manner.”

Feb 8, 2024

69 Likes 17 Retweets 3 Replies

2. JPM: Institutional Traders Out on Crypto

According to JPM’s annual survey the institutional traders aren’t coming. 78% of survey respondents had no plans to trade crypto over the next 5 years, while only 9% were currently active in crypto markets. Most didn’t even believe that blockchains would change trading anymore with 61% pivoting to AI as the revolutionary trading tech. Although the traders are out, RIAs and broker dealers seem to be accelerating plans to offer the Bitcoin ETFs.

matthew sigel, recovering CFA @matthew_sigel

Spoke to top 10 US bank doing due diligence on #Bitcoin ETFs. He had initially expected approval from board after 1-2 quarters of trading. Due to high customer demand, those plans were accelerated to ASAP 🚀

Feb 8, 2024

79 Likes 13 Retweets 11 Replies

1. Year of the Bitcoin

Tomorrow is Chinese New Year and the year of the dragon has already delivered confidence to Bitcoin markets. According to 10x Research, the Lunar New Year festival is a bullish time for Bitcoin, regardless of which animal symbolizes the year ahead. Bitcoin has rallied an average of 11% in the two weeks surrounding the festival, beginning 3 days ahead of red envelopes being handed out. The rally which started on Wednesday would line up perfectly, already up 7.5%.