The Rate Cut Cycle Has Begun!

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📅 Today

🔍️ Market Outlook For The Week

• Overall Bias - Cautious 🙏 

• Post FOMC, BTC is re-testing the bull-market support band at $62,700, trying to break resistance.

• This is a crucial price level. If BTC gets rejected here, further downside can be expected.

• Historically, Q4 has been the best performing quarter for BTC, so we can expect some bullish momentum due to seasonality.

• For the bulls, a breakout above $67,400 will take BTC to new all-time highs

• It is wise to not take any new leveraged positions till BTC closes above $67,400, and just DCA in spot instead.

The Rate Cut Cycle Begins ❗️ 

The Federal Reserve has cut interest rates by 50 basis points in their first rate cut since March 2020. The summary of the FOMC meeting can be found below :

• Fed believes that the economy is "strong overall"

  Fed has "growing confidence" that strength in labor market can be maintained

• Consumer spending has "remained resilient"

• Inflation has eased but "remains above 2% target"

• Labor market is now less tight than before pandemic

• Fed is moving to a "neutral stance" but "not on any preset course

This is only the THIRD time in recent history that the Fed has started rate cuts with a 50 bps cut. Last 2 times the Fed’s first cut was 50+ bps:

• Jan 3, 2001

- S&P 500 fell ~39% next 448 days

- Unemployment rose another 2.1%

- Lead to a Recession

• Sep 18, 2007

- S&P 500 fell ~54% next 372 days

- Unemployment rose another 5.3%

- ,Lead to a Recession

The Fed says they will still move "meeting-by-meeting."

However, they are clearly signaling that they believe inflation is heading to 2%. Historically, the market has rallied in the short term, but recession has always followed. Stay cautious, stay alert and do not overexpose capital to the market!

Tether Reports $5.2 Billion in H1 Profits ❗️ 

Tether reports a record-breaking $5.2B profit for the first half of 2024, the highest ever for the firm.

With $97.6B in US Treasuries, they now rank among the top global holders of US debt, surpassing nations like Germany and Australia.

Tether is now the third-largest purchaser of three-month US Treasurys after the United Kingdom and the Cayman Islands.

They also hold approximately 75,354 BTC, worth $4.67 billion at the time of writing.

📕 Educational

Introduction :

Founded in 2022, Hyperliquid is a decentralized perpetuals exchange built on its own Layer 1 blockchain.

Mythbuster: Despite being mistakenly referred to as an L3 or an application on Arbitrum due to its use of an Arbitrum bridge for deposits, Hyperliquid operates independently on its own L1 blockchain.

Starting out as a perp dex, the team now has a much bigger vision in mind. The platform aims to host all of finance on chain in order to become the “on chain” Binance, and seems to be well on it’s way to do so. For this,

• Spot market has been added

• EVM compatibility is coming

• An entire ecosystem of dApps are building on it’s L1

Market Potential :

All of this means that Hyperliquid is operating at the intersection of perpetual dexes & parallelized EVM’s, both of which have incredibly high growth potential.

The market cap of parallelized EVM’s currently stands $1 billion, as per CoinGecko. Many more chains such as Monad, etc are yet to go live, so this market cap should grow quickly.

While Hyperliquid dominates on chain trading and facilitates significantly more trading volume than all of its competitors, there is still a long way to go before reaching Binance:

Binance facilitates between $40 and $60 billion in trading volume on an average day from its futures trading alone. With this in mind, the total addressable market for an on chain Binance competitor like Hyperliquid is huge.

At present, Hyperliquid’s derivatives market share as compared to Binance is just 2.2%. This highlights the immense growth potential for the project.

Team & Funding :

Jeff Yan is the founder of Hyperliquid, who started his career in high frequency trading at Hudson River Trading.

The team has not received any external VC funding.

The core team likely has less than 10 contributors.

The team has not profited from any of the trading activity on the platform. This means that their only form of compensation will likely be vested tokens, which means their incentives would be aligned with long-term holders.

Key Stats :

• Volume Dominance : 50% of total volume of on-chain perps market

• Cumulative Trading volume : $300 billion

• Total Users : 1,74,000

• Live Tokens : 133

• TVL : $696 mil

Infrastructure Moats :

Native Oracle Solution : Hyperliquid has opted for a custom oracle solution rather than partnering with established providers like Chainlink or Pyth. This allows for more transparency without the need for 3rd party solutions.

No Market Makers : Hyperliquid does not have any direct deals with any market makers, however, there are still plenty of market makers on the platform who also interact with the platform and offer liquidity to users.

HLP Vault : The HLP vault handles market-making, liquidations, and earns trading fees. Community members can provide liquidity and share in its gains or losses. With $228M TVL, it has generated $36M in profits, offering a unique market maker-like experience by simple copy trading.

Great UI : The platform offers unparalleled UI for trading, almost at par with top CEXES. This is important because intuitive interfaces are generally an important factor for enhancing user stickiness. ****

Deep Liquidity : Traditional AMM, RFQ, and Oracle-based solutions have issues such as front-running attacks, low liquidity, and poor transparency. Hyperliquid proposes an order book-based solution to improve liquidity and transparency while reducing trading costs.

Fully on-chain : Compared to other DEXs or order-books that might have their matching engines off chain, Hyperliquid has everything on chain in a transparent way.

HyperEVM :

While Hyperliquid already has network of its own — the Hyperliquid L1 — it’s purpose built for trading perpetuals, and isn’t arbitrarily programmable in the same way an EVM would be.

To address this shortcoming, the platform has unveiled their plans for an EVM layer to complement their existing L1, called the HyperEVM.

This will be an EVM-equivalent network like Base or Arbitrum, which means it would be compatible with Ethereum smart contracts and tooling like wallets right out of the box, making it simple for Ethereum applications to launch on the chain.

Both, the Hyperliquid EVM and L1 will co-exist. The Hyperliquid L1 will continue to support core trading activity, while the EVM will act as a separate layer for building auxiliary dApps, where ultra-high performance isn’t always needed, with a native bridge enabling value exchange between both.

The HyperEVM is rumored to launch by the end of the year, with several apps already building on the testnet.

Conclusion :

As regulatory scrutiny on centralized exchanges intensifies globally, decentralized perp trading platforms are emerging as a natural alternative. In this regard, platforms like Hyperliquid are well positioned to see steady growth in user adoption as more & more nations restrict the use of CEXES.

With an ability to handle 100k orders per second already, Hyperliquid seems ready to scale and handle this growth.

Exciting times ahead, to say the least!

📊 Stat of the day

📈 Chart of the day

Rationale & Confluences :

• Daily horizontal support

• Daily discount zone

• Bullish RSI divergence

• Break of $0.5473 can be an entry, with upside till $0.5962 (+9%)

• Wait for 1H candle close with high volumes before entering the trade

• Source : Cointraction

🤣 Meme of the day

That concludes our update for today!

We appreciate you joining us for the latest news. Our aim is to provide the best in class insights and highlights that keep you well-informed and ready. Remember to follow us on Instagram for additional updates and giveaways. Until then, see you next time!

Disclaimer : None of the content shared in the newsletter is financial advise. Always do your own research and analysis before investing.