Casey Wagner


<p>Ottawa acted against the constitution when it froze bitcoin and other assets in an attempt to end 2022 anti-government protests, a federal judge ruled Tuesday. The Canadian government will appeal the decision, Finance Minister Chrystia Freeland said.&nbsp;</p>



<p>Prime Minister Justin Trudeau invoked the 1988 Emergencies Act in February 2022 for the first time in the country’s history in an effort to clear the “Freedom Convoy” and <a href="https://blockworks.co/news/crypto-payments-firms-face-new-restrictions-under-canadas-blockade-crackdown">block financial support to the protesters</a>.&nbsp;</p>



<p>In a decision released Tuesday after three days of arguments in court last April, Justice Richard Mosley said Trudeau’s administration acted outside their authority.&nbsp;</p>



<p>&#8220;I have concluded that the decision to issue the Proclamation does not bear the hallmarks of reasonableness — justification, transparency and intelligibility — and was not justified in relation to the relevant factual and legal constraints that were required to be taken into consideration,&#8221; Mosley wrote.</p>



<p>In a Feb. 15, 2022 statement, Trudeau said the Emergencies Act was his only option as the country had reached a point &#8220;where there is a national emergency arising from threats to Canada&#8217;s security.&#8221;</p>



<p>Truckers and their supporters descended upon Ottawa in 2022 to protest <a href="https://blockworks.co/tag/covid-19">Covid vaccine</a> requirements and other public health policies, blocking a key US-Canada trade route in the process. Donations to the cause poured in from all over the world, particularly in bitcoin after crowdfunding platforms including GoFundMe and GiveSendGo shut down contribution pages.&nbsp;</p>



<p>By late February, protesters had received around 20 bitcoins, at the time equal to about $1 million, through donations via crypto platform Tally. The Ontario Provincial Police and Royal Canadian Mounted Police sanctioned more than 30 crypto wallets it said were tied to the crowdfunding efforts.&nbsp;</p>



<p>Freeland said Tuesday after the decision that the administration stands by their actions.&nbsp;</p>



<p>&#8220;We respect very much Canada&#8217;s independent judiciary. However, we do not agree with this decision, and respectfully, we will be appealing it,&#8221; she said. &#8220;I was convinced at the time it was the right thing to do, it was the necessary thing to do. I remain and we remain convinced of that.&#8221;</p>



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</ul>


Bitcoin donation freeze was unlawful, Canada judge rules

James Cirrone


<p>Ethereum co-founder Vitalik Buterin and Polygon co-founder Sandeep Nailwal have joined forces to support additional Covid-19 research projects through Nailwal&#8217;s Crypto Relief fund. In pursuit of this objective, Buterin has been awarded a generous $90 million grant by Nailwal on Thursday.</p>



<p>Crypto Relief was started by Nailwal in April 2021 after India experienced its second Covid-19 wave. Buterin is perhaps the largest contributor to the fund, <a href="https://twitter.com/sandeepnailwal/status/1392562768692252673">donating</a> $1 billion worth of shiba inu (<a href="https://blockworks.co/price/shib">SHIB</a>) in May 2021.&nbsp;</p>



<p>The fund has since disbursed hundreds of millions of dollars, most of that money being from Buterin. In January 2022, the fund gave a $100 million grant to Buterin so he could put that money toward his preferred projects.</p>



<p>Crypto Relief is now doubling down, with Nailwal announcing he’s giving Buterin 90 million USDC from his original SHIB donation. Buterin said he’ll also kick in $10 million of his own money.&nbsp;</p>



<p>Nailwal took to Twitter on Thursday to let people in on Buterin’s humanitarian side and to express his approval of the “moonshot” projects Buterin has funded in an effort to prevent future pandemics.</p>



<p>“[Buterin] feels for the problems of the world, problems of the poor and the underprivileged,” Nailwal wrote. “I am very happy with some of the projects he and his team has funded and some of them need some more push to reach their final completion.”</p>



<p>One of Buterin’s research focuses will be on long Covid, which he says has “the most salient risks” going forward.&nbsp;</p>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">The most salient risks from Covid today are the very high number of people experiencing very-long-term symptoms (aka <a href="https://twitter.com/hashtag/LongCovid?src=hash&amp;ref_src=twsrc%5Etfw">#LongCovid</a>), and so Long Covid research continues to be a primary focus.</p>&mdash; vitalik.eth (@VitalikButerin) <a href="https://twitter.com/VitalikButerin/status/1666860085375643676?ref_src=twsrc%5Etfw">June 8, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<p>He added that studies of samples of wastewater have led him to the conclusion that “viral persistence” is a “deep cause of Long Covid.”</p>



<p>Buterin also wants to figure out how to improve air filtration and ventilation in buildings around the world, should there be another pandemic. </p>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">A particular focus is on indoor air quality. <a href="https://twitter.com/hashtag/CovidIsAirborne?src=hash&amp;ref_src=twsrc%5Etfw">#CovidIsAirborne</a>, so a focus on airborne transmission is a necessary part of a long-term solution to both Covid and many other pandemics. This includes improving ventilation, HEPA filtering, and experimental tech like UVC irradiation.</p>&mdash; vitalik.eth (@VitalikButerin) <a href="https://twitter.com/VitalikButerin/status/1666860083043524608?ref_src=twsrc%5Etfw">June 8, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<p>Buterin ended his Twitter thread stating that pandemics will continue to be a risk throughout the 21st century, something humans will have to grapple with, he said.</p>



<p>“Pandemics beyond Covid continue to be a large risk in the 21st century. We look forward to continuing our efforts to better live with airborne viruses and eventually live without them,” he wrote.&nbsp;</p>



<p>He continued, “And we can stop airborne pathogens with clean air the same way that we stopped cholera over 100 years ago with clean water.”</p>



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<p><strong>Get the news in your inbox. Explore Blockworks newsletters:</strong></p>



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<li><a href="https://blockworks.co/newsletter/empire"><strong>Empire</strong></a>: Crypto news and analysis to start your day.</li>



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<li><a href="https://blockworks.co/newsletter/lightspeed"><strong>Lightspeed</strong></a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/supply-shock"><strong>Supply Shock</strong></a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>


COVID-19

Buterin, Nailwal double down on funding Covid-19 research

<div id="highlights-block_61b3c1d18206e" class="highlights">
        <ul>
                <li>Inflation rose slightly more than expected in November to 6.8% over the year </li>
                <li>Both gold and bitcoin rose on the news that inflation is rising at the fastest pace since 1982 </li>
            </ul>
    
</div>



<p>Inflation rose at the fastest pace since 1982 in November, the Labor Department reported Friday. The spike has sent investors searching for stores-of-value and some are eyeing bitcoin and gold as a hedge.&nbsp;</p>



<p>The <a href="https://www.bls.gov/news.release/cpi.nr0.htm" target="_blank" rel="noreferrer noopener">Consumer Price Index</a> (CPI) rose 0.8% in the month of November, putting inflation at a 6.8% increase over the year. The data came in slightly higher than analysts had expected. Core CPI, which excludes food and energy, was up 0.5% for the month. </p>



<p>Energy prices have increased 33.3% over the last 12 months, with gasoline prices alone surging 58.1%.&nbsp;</p>



<p>Both five- and 10-year Treasury yields fell on the news. Equities largely remained flat and bitcoin rose as much as 3.7% before paring gains.&nbsp;</p>



<p>“[Investors’] appetite for equities remains undeterred as traders appear to be confident that eventually at some point in the middle of next year a lot of these pricing pressures will fade,” said Edward Moya, senior market analyst at Oanda Corp, in a note Friday.&nbsp;</p>



<p>Treasury yields are often correlated with inflation because higher inflation means lower purchasing power of bond interest. It’s indicative that investors need to be hedging against rising prices, analysts say.&nbsp;</p>



<p>“Declining bond yield – to me, that’s more significant for bitcoin than CPI because CPI is a lagging measure,” said Mike McGlone, senior commodity strategist at Bloomberg.&nbsp;</p>



<p>“Bond yields are a leading indicator, and bond yields declining enhances the value of this store-of-value asset that’s in a nascent period.”&nbsp;</p>



<h3 class="wp-block-heading"><strong>No sign of slowing</strong></h3>



<p>Experts are not anticipating inflation to slow significantly for some time. The Federal Reserve has warned that even when prices do start to fall, which they insist will eventually happen, inflation will likely settle at a level higher than consumers have experienced for the past few decades.&nbsp;</p>



<p>“Our view is that it&#8217;s going to continue to stay hot and sticky through the first quarter,” said Kathy Bostjancic, Oxford Economics chief US financial economist, on a Bloomberg podcast Friday, referring to inflation. “And you&#8217;re not going to really get some reprieve until the second quarter, but even then, it&#8217;s going to remain elevated.”&nbsp;</p>



<h3 class="wp-block-heading"><strong>Gold and bitcoin</strong></h3>



<p>Fed Chairman Jerome Powell <a href="https://cms.blockworks.co/powell-we-can-retire-the-term-transitory-inflation/" target="_blank" rel="noreferrer noopener">pivoted recently</a> and admitted that higher prices are not going to be ‘transitory,’ a term he embraced for months. The trend has investors seeking out stores of value assets, including bitcoin and gold. The precious metal gained slightly following the CPI report. </p>



<p>“Gold is slowly getting its mojo back after a hot inflation report mostly matched estimates,” Moya said. “A lot of the inflation is stickier than anyone wants and that should keep gold’s medium- and long-term outlooks bullish.&nbsp;</p>



<p>A key testing point for gold will be how its price is impacted by Fed rate hikes, Moya said. Once investors know how many hikes to expect, gold will be an asset to watch. In terms of bitcoin, the Fed’s upcoming policy meeting will also be telling.&nbsp;</p>



<p>“Some traders are anticipating a sideways market until the Federal Open Market Committee policy decision on Wednesday, so hesitancy to hold over the weekend might grow,” Moya said. “Hodlers will likely remain unfazed and feel mostly confident as need for inflation hedges will grow given the widespread rising pricing trends.”&nbsp;</p>



<p>As investors and analysts weigh how to interpret Friday’s CPI numbers, others question the accuracy of the gauge, which relies on Bureau of Labor researchers asking stores for prices.&nbsp;</p>



<p>Because the pandemic has impacted consumer spending and behavior, the numbers might not be relatable, some argue. Others point to the history of the measurement, which changed in 1980 to account for substitutions and product quality improvements. For example, it’s inaccurate to compare iPhone prices between years if a new model was released.&nbsp;</p>



<p>“Let&#8217;s remember, if CPI was measured using the original formula in 1980, it would be over 14% year over year,” said Greg Foss, executive director of strategic initiatives at Validus Power Corp. “It was ‘reported’ as 6.8% year over year today and was still the highest print in 39 years.”&nbsp;</p>



<div class="wp-block-image"><figure class="aligncenter"><img decoding="async" src="https://lh4.googleusercontent.com/wRbNg2CUIO2fk98Tfq0i4mC5njw9oy7MC-Y1o-hZYcLQOj7f5Xat2AsbWBbC6OJbn6-0busBtOHxxWVvMfrlOaGB7MZNslcqzUVJOKsd0UJeuZWGfVC8QXW_hEO9EcMly9oadH3x" alt=""/></figure></div>



<p>The Fed’s preferred measure of inflation for policy decisions is the Core personal consumption expenditures price index, which, like Core CPI, also excludes food and energy. The next PCE data release, which will include November’s data, will be released on Dec. 23, 2021. </p>



<hr class="wp-block-separator"/>



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<hr class="wp-block-separator"/>


Bitcoin

Bitcoin Joins Gold as an Inflation Hedge While Inflation Spikes

Morgan Chittum

<div id="highlights-block_60c9fc7f1690b" class="highlights">
        <ul>
                <li>Crypto wallet and wealth manager Abra announced a $55 million Series C funding round on Wednesday</li>
                <li>Bitcoin and ethereum rose as well, advancing around 3% and 6% on-day</li>
            </ul>
    
</div>



<p>The Solana blockchain&#8217;s native token ($SOL) made strong gains, following a Tuesday outage where its network went down for roughly 10 hours. The Solana token shed roughly 16% from its daily open yesterday, but <a href="https://cms.blockworks.co/solana-recovers-after-10-hour-outage/" target="_blank" rel="noreferrer noopener">rallied sharply</a> once the network <a href="https://twitter.com/SolanaStatus/status/1438020110451609603" target="_blank" rel="noreferrer noopener">restart</a> was initiated. The altcoin surged 7% on-day, trading at $158.11, according to Messari.</p>



<p>Bitcoin and ethereum rose as well, advancing around 3% on-day and 6%, as of press time. </p>



<h3 class="wp-block-heading">Crypto</h3>



<ul class="wp-block-list" id="block-1209f037-00c3-4876-ad37-a29ab610c717"><li>Bitcoin is trading around&nbsp;$48,060.91, advancing 2.99% in 24 hours at 4:00 pm ET.</li><li>Ether is trading around $3,560.72, up 6.2% in 24 hours at 4:00 pm ET.</li><li>ETH:BTC is at 0.074, rising 1.59% at 4:00 pm ET.</li></ul>



<h3 class="wp-block-heading">DeFi</h3>



<ul class="wp-block-list"><li>Terra ($LUNA) is trading at $36.75, up 4.1% and trading volume at $839,243,116 in 24 hours.</li><li>Chainlink ($LINK) is trading at $30.45, advancing 3.6% with trading volume at $2,050,265,654 in 24 hours at 4:00 pm ET.</li><li>ETH is 32.2% at 4:00 pm ET. </li></ul>



<h3 class="wp-block-heading">Insight</h3>



<p>“We’re seeing a lot of layer-1 chains out there and they’re all choosing different tradeoffs. These things are not just better than the other,&#8221; Tushar Jain, Managing Partner at Multicoin Capital, said at the Digital Asset Summit in New York City. &#8220;We’re very interested in exploring different parts of these tradeoffs. One of our big bets in this space is an alternative layer-1 called Solana.&#8221;   </p>



<div class="wp-block-image"><figure class="aligncenter size-full"><img loading="lazy" decoding="async" width="720" height="401" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/09/35177B4D-56F1-4218-B363-A40A47CE1995-1.jpeg" alt="" class="wp-image-7968" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/09/35177B4D-56F1-4218-B363-A40A47CE1995-1.jpeg?w=720 720w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/35177B4D-56F1-4218-B363-A40A47CE1995-1.jpeg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/35177B4D-56F1-4218-B363-A40A47CE1995-1.jpeg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/35177B4D-56F1-4218-B363-A40A47CE1995-1.jpeg?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/35177B4D-56F1-4218-B363-A40A47CE1995-1.jpeg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/35177B4D-56F1-4218-B363-A40A47CE1995-1.jpeg?w=80 80w" sizes="auto, (max-width: 720px) 100vw, 720px" /><figcaption>Bitcoin and ethereum trading over the past day. Source:TradingView</figcaption></figure></div>



<h3 class="wp-block-heading">Equities</h3>



<ul class="wp-block-list"><li>The Dow was up 0.68% to 34,814.</li><li>S&amp;P 500 advanced 0.85% to 4,480.</li><li>Nasdaq made gains of 0.82% to 15,161.</li></ul>



<h3 class="wp-block-heading">Commodities</h3>



<ul class="wp-block-list" id="block-d64d70c9-7052-4f1a-8167-3d370fe08354"><li>Brent crude was up to $75.54 per barrel, advancing 2.64%.</li><li>Gold was down -0.7% to $1,794.50.</li></ul>



<h3 class="wp-block-heading">Currencies</h3>



<ul class="wp-block-list"><li>The US dollar fell -0.14%, according to the Bloomberg Dollar Spot Index.</li></ul>



<h3 class="wp-block-heading">Fixed Income</h3>



<ul class="wp-block-list"><li>US 10-year treasury yields 1.304% as of 4:00 pm ET.</li></ul>



<h3 class="wp-block-heading">In other news&#8230;</h3>



<p>Crypto wallet and wealth manager Abra announced Wednesday that it has <a href="https://cms.blockworks.co/crypto-wallet-and-wealth-manager-abra-closes-55m-series-c-round/" target="_blank" rel="noreferrer noopener">closed a $55 million Series C round</a>, and plans to use the funds to expand their global product team.</p>



<p>CEO Bill Barhydt said during the Digital Asset Summit that more funding rounds are probable as the company is&nbsp; “growing like weeds” and has “hundreds of thousands of consumers on the retail side.”&nbsp;</p>



<h3 class="wp-block-heading">We are looking out for</h3>



<ul class="wp-block-list"><li>Quadruple witching day for US markets will be on Friday.</li></ul>



<p>That&#8217;s it for today&#8217;s markets wrap. I&#8217;ll see you back here tomorrow.</p>



<hr class="wp-block-separator"/>



<p><strong>Are you a UK or EU reader that can&#8217;t get enough investor-focused content on digital assets?<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Join us</a>&nbsp;in London on November 15th and 16th for the Digital Asset Summit (DAS) London. Use code ARTICLE for £75 off your ticket.&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Buy it now</a>.</strong></p>



<hr class="wp-block-separator"/>


altcoins

Solana Makes Gains Following Multi-hour Outage: Markets Wrap

<div id="highlights-block_60c9fc7f1690b" class="highlights">
        <ul>
                <li>Immutable, a layer-2 solution, scored $60 million in a Series B funding round</li>
                <li>Uniswap jumped 10% on Tuesday, with a day-high of $25.38, according to Messari</li>
            </ul>
    
</div>



<p>Bitcoin and ethereum made modest gains following <a href="https://cms.blockworks.co/gensler-investors-are-not-protected-when-it-comes-to-crypto/" target="_blank" rel="noreferrer noopener">remarks</a> from SEC Chairman Gary Gensler, who told lawmakers that emerging technologies pose risks to investors. Specifically, Gensler said he was taking a hard look at crypto trading platforms, along with the firms that work with them to execute transactions.</p>



<p>“Frankly, at this time, it’s more like the Wild West or the old world of ‘buyer beware’ that existed before the securities laws were enacted. This asset class is rife with fraud, scams, and abuse in certain applications,” Gensler told the Senate Banking Committee on Tuesday.</p>



<p>Bitcoin rose roughly 3% on-day, trading at $46,605.91, according to Messari. Ethereum was up 2% as well, as of press time.</p>



<p>Elsewhere, Uniswap jumped 10% on-day, with a day-high of $25.38.</p>



<h3 class="wp-block-heading">Crypto</h3>



<ul class="wp-block-list" id="block-1209f037-00c3-4876-ad37-a29ab610c717"><li>Bitcoin is trading around&nbsp;$46,605.91, advancing 2.98% in 24 hours at 4:00 pm ET.</li><li>Ether is trading around $3,352.51, up 1.69% in 24 hours at 4:00 pm ET.</li><li>ETH:BTC is at 0.072, declining -1.41% at 4:00 pm ET.</li></ul>



<h3 class="wp-block-heading">DeFi</h3>



<ul class="wp-block-list"><li>Terra (LUNA) is trading at $35.22, declining -2.4% and trading volume at $900,123,512 in 24 hours.</li><li>Chainlink (LINK) is trading at $29.01, advancing 6.3% with trading volume at $1,583,365,814 in 24 hours at 4:00 pm ET.</li><li>DeFi:ETH is 32.4% at 4:00 pm ET. </li></ul>



<h3 class="wp-block-heading">Insight</h3>



<p>Noelle Acheson, Head of Market Insights at digital prime brokerage Genesis, commented on the evolution of so-called “Ethereum killers&#8221; such as the recent success of Solana and Avalanche. </p>



<p>&#8220;The potential for decentralized applications is enormous, and the more participants developing user-friendly solutions, the stronger the ecosystem will be. Blockchain is not, unlike other network technologies, about winner-takes-all, something the &#8216;Ethereum killer&#8217; conversation overlooks,&#8221; Acheson said in an email to Blockworks. &#8220;These are relatively agile platforms that evolve according to experience and demand. It’s probable that not all will thrive, but given the development of bridges and other connective functionalities, there does not need to be one dominant solution. Smart contract networks can support each other, allowing the market to choose acceptable trade-offs, and leaving the deciding factor of success to the end users.&#8221;</p>



<div class="wp-block-image"><figure class="aligncenter size-full"><img loading="lazy" decoding="async" width="720" height="401" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/09/35177B4D-56F1-4218-B363-A40A47CE1995.jpeg" alt="" class="wp-image-7892" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/09/35177B4D-56F1-4218-B363-A40A47CE1995.jpeg?w=720 720w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/35177B4D-56F1-4218-B363-A40A47CE1995.jpeg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/35177B4D-56F1-4218-B363-A40A47CE1995.jpeg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/35177B4D-56F1-4218-B363-A40A47CE1995.jpeg?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/35177B4D-56F1-4218-B363-A40A47CE1995.jpeg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/35177B4D-56F1-4218-B363-A40A47CE1995.jpeg?w=80 80w" sizes="auto, (max-width: 720px) 100vw, 720px" /><figcaption>Bitcoin and ethereum trading over the past day. Source:TradingView</figcaption></figure></div>



<p>US stocks fell as investors eyed price pressures, the delta virus strain and looming risks of elevated inflation levels. All major Wall Street gauges closed in the red.</p>



<h3 class="wp-block-heading">Equities</h3>



<ul class="wp-block-list"><li>The Dow was down -0.87% to 34,572.</li><li>S&amp;P 500 declined -0.59% to 4,440.</li><li>Nasdaq shed -0.49% to 15,034.</li></ul>



<h3 class="wp-block-heading">Commodities</h3>



<ul class="wp-block-list" id="block-d64d70c9-7052-4f1a-8167-3d370fe08354"><li>Brent crude was up to $73.59 per barrel, advancing 0.11%.</li><li>Gold was up 0.66% to $1,806.2.</li></ul>



<h3 class="wp-block-heading">Currencies</h3>



<ul class="wp-block-list"><li>The US dollar fell -0.04%, according to the Bloomberg Dollar Spot Index.</li></ul>



<h3 class="wp-block-heading">Fixed Income</h3>



<ul class="wp-block-list"><li>US 10-year treasury yields 1.275% as of 4:00 pm ET.</li></ul>



<h3 class="wp-block-heading">In other news&#8230;</h3>



<p>Immutable, a layer-2 solution, scored $60 million in a Series B round on Tuesday. Immutable says this round will be mostly used to expand its global engineering and sales team, along with strengthening key partnerships with gaming companies, Blockworks <a href="https://cms.blockworks.co/layer-2-solution-immutable-closes-60m-series-b-round/" target="_blank" rel="noreferrer noopener">reported.</a> Co-led by BITKRAFT Ventures and King River Capital, the equity round had participation from Alameda Research, Prosus Ventures, Fabric Ventures, Galaxy Interactive, Apex Capital, AirTree Ventures, Reinventure and VaynerFund.&nbsp;</p>



<h3 class="wp-block-heading">We are looking out for</h3>



<ul class="wp-block-list"><li>Quadruple witching day for US markets will be on Friday.</li></ul>



<p>That&#8217;s it for today&#8217;s markets wrap. I&#8217;ll see you back here tomorrow.</p>



<p><strong>Are you a UK or EU reader that can&#8217;t get enough investor-focused content on digital assets?<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Join us</a> in London on November 15th and 16th for the Digital Asset Summit (DAS) London. Use code ARTICLE for £75 off your ticket. <a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Buy it now</a>.</strong></p>


Cryptos Inch Up as Equities Decline: Markets Wrap

<div id="highlights-block_60c9fc7f1690b" class="highlights">
        <ul>
                <li>MicroStrategy has purchased over 5,000 more bitcoins for roughly $243 million</li>
                <li>The leading crypto by market value has shed 11% in the past seven days, its largest single-week drop since May</li>
            </ul>
    
</div>



<p>Major cryptos extend losses on Monday. </p>



<p>Following a string of news which includes <a href="https://cms.blockworks.co/coinbase-wants-to-raise-1-5b-via-debt-offering/" target="_blank" rel="noreferrer noopener">Coinbase’s announcement of their private $1.5 billion debt offering</a>, a <a href="https://cms.blockworks.co/skybridge-partners-with-nax-to-offer-algorand-based-platform/" target="_blank" rel="noreferrer noopener">new partnership</a> between SkyBridge Capital and NAX and more, bitcoin fell 3% on-day. The leading crypto by market value has shed 11% in the past seven days, its largest&nbsp;single-week drop since May.&nbsp;</p>



<p>Ethereum fell 5% as well, according to Messari. </p>



<p>False rumors of Walmart offering customers the option to pay in litecoin emerged on Monday. Following the <a href="https://twitter.com/LTCFoundation/status/1437484869664137221?s=20" target="_blank" rel="noreferrer noopener">fake press announcement</a>, the crypto spiked 30% to $234.85 in the morning. After the retail giant quickly dispelled the rumors, litecoin tumbled back to $180.63, as of press time.  </p>



<p>Solana&#8217;s native token (SOL) took a dive on Monday, falling almost 8% to $163.88. In recent weeks, the altcoin has hit all-time highs of $191.68 with the surge in non-fungible token (NFT) sales. SOL is often used to mint various NFTs such as the Degenerate Ape Academy collection. </p>



<h3 class="wp-block-heading">Crypto</h3>



<ul class="wp-block-list" id="block-1209f037-00c3-4876-ad37-a29ab610c717"><li>Bitcoin is trading around&nbsp;$44,766.44, declining -2.77% in 24 hours at 4:00 pm ET.</li><li>Ether is trading around $3,247.9, down -4.75% in 24 hours at 4:00 pm ET.</li><li>ETH:BTC is at 0.072, declining -2.21% at 4:00 pm ET.</li></ul>



<h3 class="wp-block-heading">DeFi</h3>



<ul class="wp-block-list"><li>Terra (LUNA) is trading at $36.12, declining -8.6% and trading volume at $1,574,384,522 in 24 hours.</li><li>Chainlink (LINK) is trading at $27.24, declining -6.3% with trading volume at $2,171,559,047 in 24 hours at 4:00 pm ET.</li><li>DeFi:ETH is 32% at 4:00 pm ET. </li></ul>



<h3 class="wp-block-heading">Insight</h3>



<p><a href="https://www.clear-block.io/" target="_blank" rel="noreferrer noopener">Clearblock Insights</a> co-founder Cody Ryan weighed in on bitcoin price action for the coming weeks. </p>



<p>&#8220;On-chain data continues to show whales buying heavily into the weakness, with addresses holding [over] 1000 BTC trending towards their highest aggregate holdings since May— a historically bullish indicator,&#8221; Ryan told Blockworks. &#8220;We believe patience will be rewarded here with expectations of a strong Q4 on the horizon, even as continued regulatory uncertainty looms over the markets.&#8221;</p>



<div class="wp-block-image"><figure class="aligncenter size-full"><img loading="lazy" decoding="async" width="785" height="452" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/09/E8E4F14C-842F-4F20-A9EB-5051F5AAB990.jpeg" alt="" class="wp-image-7842" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/09/E8E4F14C-842F-4F20-A9EB-5051F5AAB990.jpeg?w=785 785w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/E8E4F14C-842F-4F20-A9EB-5051F5AAB990.jpeg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/E8E4F14C-842F-4F20-A9EB-5051F5AAB990.jpeg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/E8E4F14C-842F-4F20-A9EB-5051F5AAB990.jpeg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/E8E4F14C-842F-4F20-A9EB-5051F5AAB990.jpeg?w=453 453w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/E8E4F14C-842F-4F20-A9EB-5051F5AAB990.jpeg?w=380 380w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/E8E4F14C-842F-4F20-A9EB-5051F5AAB990.jpeg?w=80 80w" sizes="auto, (max-width: 785px) 100vw, 785px" /><figcaption>                                                   Bitcoin, ethereum and litecoin trading over the past day. Source:TradingView</figcaption></figure></div>



<h3 class="wp-block-heading">Commodities</h3>



<ul class="wp-block-list" id="block-d64d70c9-7052-4f1a-8167-3d370fe08354"><li>Brent crude was up to $73.53 per barrel, advancing 0.84%.</li><li>Gold advanced 0.15 to $1,794.7.</li></ul>



<h3 class="wp-block-heading">Equities</h3>



<ul class="wp-block-list"><li>The Dow advanced 0.67% to 34,839.</li><li>S&amp;P 500 is up 0.17% to 4,466.</li><li>Nasdaq shed -0.15% to 15,095.</li></ul>



<h3 class="wp-block-heading">Currencies</h3>



<ul class="wp-block-list"><li>The US dollar strengthened 0.09%, according to the Bloomberg Dollar Spot Index.</li></ul>



<h3 class="wp-block-heading">Fixed Income</h3>



<ul class="wp-block-list"><li>US 10-year treasury yields 1.328% as of 4:00 pm ET.</li></ul>



<h3 class="wp-block-heading">In other news&#8230;</h3>



<p>MicroStrategy <a href="https://cms.blockworks.co/microstrategy-buys-243m-more-worth-of-bitcoin/" target="_blank" rel="noreferrer noopener">has purchased over 5,000 more bitcoins</a> for roughly $243 million, according to a disclosure filed with the Security Exchange Commission on Monday. The Virginia-based software company now owns 114,042 bitcoins, totaling almost $3.2 billion, CEO Michael Saylor shared in a tweet.</p>



<h3 class="wp-block-heading">We are looking out for</h3>



<ul class="wp-block-list"><li>US consumer-price index data will be released on Tuesday.</li><li>Quadruple witching day for US markets will be on Friday.</li></ul>



<p>That&#8217;s it for today&#8217;s markets wrap. I&#8217;ll see you back here tomorrow.</p>



<p><strong>Are you a UK or EU reader that can&#8217;t get enough investor-focused content on digital assets?<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Join us</a> in London on November 15th and 16th for the Digital Asset Summit (DAS) London. Use code ARTICLE for £75 off your ticket. <a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Buy it now</a>.</strong></p>


Cryptos Extend Losses: Markets Wrap

<div id="highlights-block_60c9fc7f1690b" class="highlights">
        <ul>
                <li>Switzerland’s regulator will allow SIX Digital Exchange to operate a stock exchange and a central securities depository for digital assets</li>
                <li>Terra’s native token (LUNA) jumped almost 40% on-day as major cryptos tumbled</li>
            </ul>
    
</div>



<p>US stocks fall for the week.</p>



<p>Major equities like the S&amp;P 500 and the Dow Jones Industrial Average extended losses for a fifth day in a row, the longest losing streak both indices have had since June. The Dow plunged over 200 points on Friday. Apple Inc. was one of the biggest laggards in the index, shedding over 3% on-day. This was the the tech giant&#8217;s biggest loss in over three months. </p>



<p>Equities may continue volatile trading sessions as investors remain uncertain about US economic growth due to rising Covid-19 cases, an unclear tapering timeline and more.</p>



<h3 class="wp-block-heading">Equities</h3>



<ul class="wp-block-list"><li>The Dow declined -0.57% to 34,680.</li><li>S&amp;P 500 is down -0.56% to 4,468.</li><li>Nasdaq shed -0.68% to 15,144.</li></ul>



<div class="wp-block-image"><figure class="aligncenter size-large is-resized"><img loading="lazy" decoding="async" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Screen-Shot-2021-09-10-at-4.50.39-PM-1024x937.png" alt="" class="wp-image-7788" width="493" height="450" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Screen-Shot-2021-09-10-at-4.50.39-PM-1024x937.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Screen-Shot-2021-09-10-at-4.50.39-PM-1024x937.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Screen-Shot-2021-09-10-at-4.50.39-PM-1024x937.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Screen-Shot-2021-09-10-at-4.50.39-PM-1024x937.png?w=281 281w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Screen-Shot-2021-09-10-at-4.50.39-PM-1024x937.png?w=285 285w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Screen-Shot-2021-09-10-at-4.50.39-PM-1024x937.png?w=239 239w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Screen-Shot-2021-09-10-at-4.50.39-PM-1024x937.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Screen-Shot-2021-09-10-at-4.50.39-PM-1024x937.png?w=1136 1136w" sizes="auto, (max-width: 493px) 100vw, 493px" /><figcaption>Source: The Wall Street Journal</figcaption></figure></div>



<p>Terra’s native token, LUNA, jumped almost 40% on-day as major cryptos tumbled. LUNA is trading at $41.32, according to <a href="https://www.coingecko.com/en/coins/terra-luna" target="_blank" rel="noreferrer noopener">CoinGecko</a>. Despite modest gains the day before, bitcoin and ethereum both declined around 3%, as of press time.&nbsp;</p>



<h3 class="wp-block-heading">Crypto</h3>



<ul class="wp-block-list" id="block-1209f037-00c3-4876-ad37-a29ab610c717"><li>Bitcoin is trading around&nbsp;$45,645.82, declining -2.05% in 24 hours at 4:00 pm ET.</li><li>Ether is trading around $3,323.58, down -3.96% in 24 hours at 4:00 pm ET.</li><li>ETH:BTC is at 0.072, declining -1.98% at 4:00 pm ET.</li></ul>



<h3 class="wp-block-heading">DeFi</h3>



<ul class="wp-block-list"><li>Terra (LUNA) is trading at $41.32, advancing 37.3% and trading volume at $3,717,787,984 in 24 hours.</li><li>Chainlink (LINK) is trading at $26.77, declining -6.7% with trading volume at $1,712,485,842 in 24 hours at 4:00 pm ET.</li><li>DeFi:ETH is 32% at 4:00 pm ET. </li></ul>



<h3 class="wp-block-heading">Insight</h3>



<p><meta charset="utf-8">&#8220;Historically, September isn’t kind to the market for both equities and crypto. Since 2011, there were only three times when BTC had a positive return in September,&#8221; BKCoin Capital&#8217;s Kevin Kang said. &#8220;Since Tuesday, the market has been choppy but there were a number of outperforming outliers, specifically Solana (SOL), continuing to rally and recording all time highs day after day &#8211; reaching $216 yesterday. Solana’s 11,500% return YTD is nothing but impressive.&#8221;</p>



<div class="wp-block-image"><figure class="aligncenter size-full is-resized"><img loading="lazy" decoding="async" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/09/08FBFE36-A7D0-40FE-8FB1-8312FFB126D7.jpeg" alt="" class="wp-image-7786" width="557" height="286" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/09/08FBFE36-A7D0-40FE-8FB1-8312FFB126D7.jpeg?w=817 817w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/08FBFE36-A7D0-40FE-8FB1-8312FFB126D7.jpeg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/08FBFE36-A7D0-40FE-8FB1-8312FFB126D7.jpeg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/08FBFE36-A7D0-40FE-8FB1-8312FFB126D7.jpeg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/08FBFE36-A7D0-40FE-8FB1-8312FFB126D7.jpeg?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/08FBFE36-A7D0-40FE-8FB1-8312FFB126D7.jpeg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/08FBFE36-A7D0-40FE-8FB1-8312FFB126D7.jpeg?w=80 80w" sizes="auto, (max-width: 557px) 100vw, 557px" /><figcaption>Terra (LUNA) trading over the past day Source:TradingView</figcaption></figure></div>



<h3 class="wp-block-heading">Commodities</h3>



<ul class="wp-block-list" id="block-d64d70c9-7052-4f1a-8167-3d370fe08354"><li>Brent crude was up to $72.96 per barrel, advancing 2.1%.</li><li>Gold declined -0.58 to $1,789.5.</li></ul>



<h3 class="wp-block-heading">Currencies</h3>



<ul class="wp-block-list"><li>The US dollar strengthened 0.13%, according to the Bloomberg Dollar Spot Index.</li></ul>



<h3 class="wp-block-heading">Fixed Income</h3>



<ul class="wp-block-list"><li>US 10-year treasury yields 1.343% as of 4:00 pm ET.</li></ul>



<h3 class="wp-block-heading">In other news&#8230;</h3>



<p>Switzerland’s regulator will allow the SIX Digital Exchange to operate a stock exchange and a central securities depository for digital assets, Blockworks <a href="https://cms.blockworks.co/switzerlands-regulator-greenlights-six-digital-exchange/" target="_blank" rel="noreferrer noopener">reported</a> on Friday.</p>



<p>That&#8217;s it for today&#8217;s markets wrap. I&#8217;ll see you back here on Monday.</p>



<p><strong>Are you a UK or EU reader that cant get enough investor-focused content on digital assets?<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Join us</a>&nbsp;in London on November 15th and 16th for the Digital Asset Summit (DAS) London. Use code ARTICLE for £75 off your ticket.&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Buy it now</a>.</strong></p>


US Stocks Extend Losses; LUNA Surges: Markets Wrap

Ben Strack

<div id="highlights-block_610d75edc1f87" class="highlights">
        <ul>
                <li>Unemployment rate down “considerably” from highs seen during Covid-19 outbreak last year, but remains higher than pre-pandemic levels</li>
                <li>Report reinforces the Fed will taper its quantitative easing in the next couple months, markets watcher says</li>
            </ul>
    
</div>



<p>Nonfarm payroll employment rose by 943,000 in July as unemployment fell from 5.9% to 5.4%, the US Bureau of Labor Statistics reported Friday morning.</p>



<p>Notable job gains occurred in leisure and hospitality, in local government, education, and in professional and business services. The total number of unemployed people fell by 782,000 to 8.7 million.</p>



<p>“These measures are down considerably from their highs at the end of the February-April 2020 recession,” the report states. “However, they remain well above their levels prior to the coronavirus pandemic.”</p>



<p>Before Covid-19, in February 2020, the number of unemployed people was at 5.7 million, representing 3.5%, according to the report.</p>



<div class="wp-block-image"><figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="878" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/08/civilian-unemployment-ra-1-1024x878.jpeg" alt="Jobs report chart" class="wp-image-6256" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/08/civilian-unemployment-ra-1-1024x878.jpeg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/08/civilian-unemployment-ra-1-1024x878.jpeg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/08/civilian-unemployment-ra-1-1024x878.jpeg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/08/civilian-unemployment-ra-1-1024x878.jpeg?w=305 305w, https://blockworks-co.imgix.net/wp-content/uploads/2021/08/civilian-unemployment-ra-1-1024x878.jpeg?w=256 256w, https://blockworks-co.imgix.net/wp-content/uploads/2021/08/civilian-unemployment-ra-1-1024x878.jpeg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/08/civilian-unemployment-ra-1-1024x878.jpeg?w=1400 1400w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /></figure></div>



<p>President Joe Biden said in a press conference Friday that his administration was the first in history to add jobs in each of the first six months in office, and the only one to add 4 million jobs in that span.&nbsp;</p>



<p>“Economic growth is the fastest in 40 years,” he said. “Jobs are up, and unemployment is the lowest since the pandemic hit.”&nbsp;&nbsp;&nbsp;</p>



<p>Tom Essaye, founder and president of Sevens Report Research, said the July jobs report reinforces that the Fed will taper its quantitative easing in the next couple of months. The <a href="https://cms.blockworks.co/us-adds-850000-jobs-as-unemployment-upticks-june-jobs-report/" target="_blank" rel="noreferrer noopener">June jobs report</a> originally showed 850,000 jobs added, he noted, a figure that was later revised to nearly 1 million.&nbsp;</p>



<p>“You have two back-to-back months with a million job adds, which really kind of cements the fact that the Fed needs to start reducing QE,” Essaye told Blockworks. “That’s not a problem for markets at this point, because markets have been expecting it. A potential problem arises if we get a few more really good jobs reports because then that would essentially increase the risk the Fed tapers sooner than expected or tapers larger than expected.”</p>



<p>The market currently expects the Fed to acknowledge its potential tapering plan during the <a href="https://www.kansascityfed.org/research/jackson-hole-economic-symposium/" target="_blank" rel="noreferrer noopener">Federal Reserve Bank of Kansas City</a>’s economic policy symposium in Jackson Hole, Wyo., from Aug. 26 to Aug. 28, or at its September meeting, he added. It is expected that the quantitative easing reductions would begin in December at a rate of about $15 billion of tapering per month and end in mid-2022.</p>



<p>“If that gets pulled forward and we see tapering begin in November, or almost more importantly if tapering occurs more quickly … QE is going to end essentially in March or April,” Essaye said. “That could actually be quite a shock to markets and we would almost see a repeat of the 2013 taper tantrum, probably something worse.”</p>



<h3 class="wp-block-heading"><strong>Delta threat still real</strong></h3>



<p>The jobs report comes after Federal Reserve Chairman Jerome Powell <a href="https://cms.blockworks.co/fed-chair-powell-economy-depends-on-covid-path/" target="_blank" rel="noreferrer noopener">said during a meeting last week</a> he expected the Covid impacts weighing on employment growth, such as ongoing fears of the virus and unemployment insurance payments, would wane in the coming months.</p>



<p>Powell added at the time, however, that the Fed would continue to monitor the effect of the slowing pace of Covid vaccinations and the spread of the Delta variant.&nbsp;</p>



<p>Daily new Covid-19 cases reached a six-month high of more than 100,000 in the US, <a href="https://www.reuters.com/world/us/us-covid-19-cases-hit-six-month-high-over-100000-reuters-tally-2021-08-05/" target="_blank" rel="noreferrer noopener">Reuters reported on Thursday</a>.&nbsp;</p>



<p>A total of 165 million Americans are now fully vaccinated, Biden said. As a result, the average job growth over the last three month has been 832,000, he said.&nbsp;</p>



<p>“Even so, my message today is not one of celebration,” the president noted Friday. “It’s one to remind us we’ve got a lot of hard work left to be done both to beat the Delta variant and to continue our advance of economic recovery.&#8221;</p>



<p>In July, 13.2% of employed people teleworked because of the coronavirus pandemic, down from 14.4% in the prior month, the Friday report indicated. A total of 5.2 million people reported that they had been unable to work because their employer closed or lost business due to the pandemic, down from 6.2 million in June.</p>



<h3 class="wp-block-heading"><strong>Market impact?</strong></h3>



<p>In terms of the latest report’s impact on the stock market, Essaye said the job gains were good for financials, industrials and materials stocks. The technology sector, viewed by many as a defensive sector of sorts, often lags when it appears the economy could grow quickly.</p>



<p>The Dow Jones Industrial Average and the S&amp;P 500 had risen 0.6% and 0.8%, respectively, following the release of the jobs report Friday morning, as of Noon eastern time. Meanwhile the Nasdaq Composite Index, which has a heavy weighting in tech, had fallen by 0.5%.</p>


Jobs Rise By 943,000 in July; Unemployment Rate Drops to 5.4%

<div id="highlights-block_60de100fe3120" class="highlights">
        <ul>
                <li>The S&amp;P 500 index opened at record high Thursday and data showed fewer-than-expected weekly jobless claims on the first day of the second half of the year </li>
                <li>Fundstrat Global Advisors managing partner and head of research Tom Lee increased his end-of-year price target and sees the S&amp;P 500 rallying 7%</li>
            </ul>
    
</div>



<p>Investors are waiting anxiously to see if there is more steam left in the rally for the second half of the year.&nbsp;</p>



<p>The S&amp;P 500 index opened at record high Thursday and data showed fewer-than-expected weekly jobless claims. Energy stocks rose with oil and airline and cruise line stocks rose higher as reopening efforts continued.&nbsp;</p>



<p>After 2020’s 3.5% decline, the US economy is expected to grow 6.5% in 2021, according to FactSet.</p>



<p>Fundstrat Global Advisors managing partner and head of research <a href="https://cms.blockworks.co/fundstrats-tom-lee-bitcoin-is-the-last-thing-you-want-to-put-on-your-balance-sheet/" target="_blank" rel="noreferrer noopener">Tom Lee</a> increased his end-of-year price target Wednesday. He sees the S&amp;P 500 rallying 7% by 2022, putting its 2021 gains at 22%. </p>



<p>Lee pointed to other examples of years with a high-performing first half. When gains occur in the first six months, they tend to follow in the next two quarters, he said. With interest rates stable, a cooperative Federal Reserve and continued reopening efforts, the market is poised to go higher.&nbsp;</p>



<h3 class="wp-block-heading"><strong>2H threats</strong></h3>



<p>There are, however, several threats that could derail the rally in the coming months. Nicholas Colas,<em> </em>co-founder of <a href="https://www.datatrekresearch.com/2h-2021-outlook-inflation-sp-upside-taper-tantrums/" target="_blank" rel="noreferrer noopener">DataTrek Research</a>, pointed to a spike in oil prices, Fed policy mistakes and peak corporate earnings growth as the main areas to watch when anticipating market dislocation. </p>



<p>A sustainable 50% to 100% annual increase in oil prices historically precedes a stock market decline, Colas said.&nbsp;</p>



<p>“Oil prices fundamentally drive inflation and big spikes in oil prices always cause recessions,” he wrote in a note on Thursday. “Modestly higher crude prices are helpful to the Fed’s goal of convincing consumers and investors that it is serious about seeing sustainable, cross-cycle 2 percent inflation.”&nbsp;</p>



<p>Rapidly rising oil prices will cause inflation to overshoot the Fed’s preferred 2%, Colas said, and also stress American consumers.&nbsp;</p>



<p>“This would be the proverbial ‘rock and hard place’ spot for the Fed,” Colas said.&nbsp;</p>



<p>Colas pointed to former Fed Chairman Ben Bernanke, who’s May 2013 comments about tapering weakened the bull market. All eyes are on the Fed, and any mis-messaging can have swift and significant impacts on the market.&nbsp;</p>



<p>“While we’re at little risk of overtightening just now, the policy miscommunication issue is very much on the table,” Colas said. “Chair Powell has, thus far, managed the messaging around bond purchase tapering quite well… But there’s no historical playbook for a successful tapering discussion – just a list of ‘don’ts’.”</p>



<h3 class="wp-block-heading"><strong>Corporate earning watch</strong></h3>



<p>Investors also need to keep an eye on corporate earnings growth in the coming months, Colas said. S&amp;P 500 historical earnings show that earnings rise quickly following a recession, then stabilize and grow at a slower rate before crashing in the next economic downturn.&nbsp;</p>



<p>“We’ve seen the first phase, and the S&amp;P’s string of recent new highs says we’re still in it,” Colas said. “But, at some point we hit phase two and markets then wrestle with what the “right” valuation is for that new environment. While these awkward mid-cycle periods are rarely bull market killers, they can make for very low returns&#8230; and valuations are high enough currently that peaking earnings could be a larger risk than before.”&nbsp;</p>



<p>Investors and analysts are eagerly awaiting Friday’s June jobs report, which will help guide predictions about what to expect from the Fed at the next meeting. Experts agree that at this point, the biggest threat to economic recovery remains the virus and the possibility that the Delta variant may lead to additional lockdowns.&nbsp;</p>
