It's getting worse

Welcome to The Daily Moon. China’s rigid crypto policy has claimed another victim. Internet giant Tencent has shut down one of its two NFT platforms. The government has banned buyers from selling NFTs after purchase, so there’s no room to make a profit. The other platform is on its last legs. 

It was a mixed bag for the markets, with Bitcoin and Ethereum recovering from their slide following the US inflation numbers. But Nasdaq stayed shaky on fears of a fall in consumer spending. Back home, Sensex and Nifty were flat on sell-offs in IT and bank stocks. 

All Signs Point Down?

The crypto winter is far from over, no matter what people tell you. US inflation is at a four-decade high, electricity prices are soaring and crypto is not immune. Bitcoin prices fell 4.2% to $19,200 within minutes of the inflation data release. There was a slight relief when the global oil price fell. But the real relief is still a way away.

Isn’t it an inflation hedge?We told you about Bitcoin’s conflicting price forecasts. Till the time inflation was under control, it was believed that Bitcoin was an inflation hedge due to its zooming prices. But now that inflation is at a multi-decade high and crypto is sliding, this perception is falling flat. Experts believe that inconsistent regulatory policies and over-leveraged crypto lenders are stumbling blocks. Crypto lender Celsius is the latest to file for bankruptcy. 

It’s a free fall The impact is visible right away. BTC has tanked below $20,000. Investments are slumping, with just $15 million worth of crypto inflows in the week ended July 10.  

Investors are pressing the exit button. Over $200 million worth of BTC was immediately liquidated in the aftermath of the inflation figures.  

Other crypto assets aren't doing any better. Ethereum has seen $460 million worth of outflows since January 1. But to be fair, it is in a better position due to improvement in sentiment over The Merge. Ether-based funds reported inflows of $7.6 million for the week ended July 10, while Bitcoin funds reported outflows of $1.7 million.

Readying for jumbo hikes The US Fed will announce its rate decision on July 27. A 1% increase in interest rates is on the cards. This is a double whammy for crypto, as inflation is already eating into people’s disposable, investable income. Conventional interest-paying assets such as bonds could become more popular than digital assets such as Bitcoin and Ethereum.

IAMAI’s Goodbye To Crypto

The Internet and Mobile Association of India (IAMAI) is distancing itself from crypto. IAMAI will dismantle its crypto body, Blockchain and Crypto Council (BACC). With regulators such as Sebi and RBI expressing apprehensions about crypto, the industry group now faces an untimely collapse. IAMAI said that it was “forced” to dissolve BACC due to regulatory uncertainty.

What went wrong? Set up in 2017, the council had representatives from all major crypto exchanges operating in India. But lately, IAMAI was reportedly having disagreements with exchanges. This came amidst RBI terming crypto as “clear danger”. And now the internet association wants to err on the side of caution.

Now, what?Breaking up the crypto’s sole body means that the industry will lose its advocacy arm. With allegations of code-of-conduct violations by member companies, IAMAI didn’t want to be involved. This coupled with restrictive TDS and tax on unrealised gains hints at some bad times ahead for crypto traders in India. 

Inflation Spooks Stocks

At 9.1% in June, US inflation is at a 41-year high. Indian markets didn’t take too kindly to this data. Indices Sensex and Nifty ended in red, while the Bank Nifty saw a 176-point slide. 

What’s bothering them?Extreme price volatilities in the US affect India too. The US Fed hiked interest rates by 0.75% in June to cool-off inflation. This is a signal to its Indian counterpart, RBI, that aggressive policy rates will continue. India will also likely have steeper rate hikes, meaning higher EMIs. 

Bank stocks saw a heightened selloff pressure. IT stocks fell too because these companies have a large client base in the US. 

Is stability due?There are rising fears of an even-bigger rate hike by the FOMC in July. A ripple effect of this decision will be felt across the world, leading to recession worries. RBI has already shifted focus on withdrawal from an accommodative stance. Brace for more rate increases, for now. 

STEPN’s Bull Run 

On the brink of a ban in China, STEPN’s books bring some cheer. The move-to-earn gaming platform clocked $122.5 million in profits. It’s using some of the capital reserves to improve its product features and hire people. 

Regaining some strengthSTEPN faced troubles following a Chinese crackdown on the app. It will halt services in China, a country that accounts for 5% of its user base, on July 15. With that, the gaming platform is turning its attention to tweaking its offerings for its ~3 million users. 

STEPN is enhancing its platform security to prevent DDOS attacks. It is also investing in newer anti-cheat systems to identify “bad actors”. 

FYI STEPN offers crypto tokens to users for walking and running outdoors. Some users tried to trick the system by using multiple devices and/or bots to earn higher rewards. Now they are being weeded out. 

Meanwhile, STEPN is also spending $6 million to burn and revive its GMT token’s nosediving value. 

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