Three DeFi Startups Tokenizing Real World Assets To Watch For

The Nikkei in Japan added 11% overnight making up most of the losses from Monday. And the S&P started down 4% and ended down 3% on Monday. On Tuesday, the S&P opens at 5203, up 0.33%.

We are looking at the crazy crypto markets over the last few days to try to figure out what is going on and what information we can take going forward.

US Treasury BuyBack Program

First, leading into the American trading day, this is how the Nikkei in Japan did. They made up most of the previous day’s losses.

And what are the American markets telling us? 

Well the first thing American markets are telling us is that the US Treasury and the Federal Reserve are going to act. We tweeted a few hours ago from our main Altcoin Buzz X account (@altcoinbuzzio) and we’ve seen from others that the US Treasury announced a $30 billion per month buyback program.

So what does that mean?

First, this amount is double what the original buyback plan was going to be starting in September. So this plan was going into action even before the actions of last week. But the difference is the size. Now instead of the previously announced $15 billion, it will be $30 billion. That IS an effect of the events of the last week.

As you can see in our tweet above from our AB account, the main goal of the buyback program is liquidity support. This means making sure there is enough liquidity in the market for US T bond purchases and sales.

US interest rates have been at a historically high level compared to the near zero interest rate environment we’ve had for the last 10-15 years. What the buyback does is give liquidity to the market by buying back older higher higher-yielding bonds and issuing more lower-yielding bonds as interest rates decline. This means 2 things

  1. The total interest payments the US Government has to make will go down
  2. The US can issue more debt for the same interest payments they have been making

So the buyback program will bring interest rates down. It will also add liquidity to the market. And it will boost investor confidence both that US Treasuries are still a good investment and that the US is managing its debt.

The US Dollar

Like it or not, the US Dollar is still the reserve currency and the primary unit of account worldwide. It’s one of the things that has made stablecoins such a huge success. They are one of the few crypto products with real, true product market fit. And if you are not sure about that, ask someone who lives or has family living in Africa, South Asia, or Latin America and you will see for yourself.

Other than the Japanese Yen as part of unwinding their carry trade in US Dollars, the USD is up against nearly every major currency in the world and all emerging market currencies like Mexican Pesos or Argentina Pesos.

The strength of the USD, which is continuing through all this global and crypto markets mess, means other currencies need more of their home currency to buy dollars. That takes liquidity out of the global system, too. China is affected a lot by this action and its central bank the PBOC is expected to add liquidity to the global markets as well.

Some countries are starting to dump dollars now including Russia and China but we haven’t seen how that will affect the market yet.

The important economy, both globally and for crypto markets, of India just saw the rupee hit a record low against the USD. So there is lots of conflicting news out there. But there is less liquidity for stocks, bonds, real estate, gold, or crypto if you have to use more rupees or pesos to buy dollars to get them.

Recession Fears

The other big fear in the macro environment and crypto markets is recession. Much of the EU has been in recession since last fall. There are conflicting pieces of data as to whether that’s done or not. It’s harder to measure now with August being the huge tourism month for all of Europe, especially along the Mediterranean.

There are fears in the US as well. Recent company layoff announcements have come from:

  • Dell
  • Intel
  • Google
  • Microsoft

And this goes with the long list including Tesla, TikTok, and others that laid off tech workers earlier this year. It’s problematic for 2 big reasons. First, tech jobs are great high-paying jobs. Second, the commercialization of tech is where the US leads the world. So if the US is struggling here, then that’s a big issue.

Some believe the US is in a recession already in terms of declining GDP. The true definition of a recession is 2 successive quarters of declining GDP. But still, a GDP going down is bad. It hurts.

We have no proof yet but things look and feel unstable and shaky. And THAT is the big issue facing crypto markets today.

Disclaimer

The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment and informational purposes only. Any information or strategies are thoughts and opinions relevant to accepted levels of risk tolerance of the writer/reviewers, and their risk tolerance may be different from yours.

We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments, so please do your due diligence.

Copyright Altcoin Buzz Pte Ltd.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.