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The RBA’s battle with inflation: Examining the latest data points

The Australian Bureau of Statistics (ABS) released some important data points last week on the state of inflation and the national accounts. The headline…

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The Australian Bureau of Statistics (ABS) released some important data points last week on the state of inflation and the national accounts. The headline figures did not demonstrate the signs of contraction the reserve bank of Australia (RBA) is trying to achieve, however looking into the underlying causes and effects can provide some clarity and sense of optimism.

Inflation

Inflation rose by 5.2 per cent in the 12 months up to August 2023, according to the latest monthly consumer price index (CPI) indicator. This is slightly higher than the 4.9 per cent reported in July. On a positive note, annual inflation remains well below the 8.4 per cent peak reported in December 2022.

The main contributors to the August annual increase were housing, transport, food and non-alcoholic beverage and insurance and financial services.

It is, however, important to note that the inflation rate is also affected by spikes in volatile items. This reading was greatly affected by the rising cost of fuel, fruit and vegetables and holiday travel. If we exclude these items from the headline CPI reading, we can get a view of the underlying inflation read. By excluding these volatile items from the August monthly CPI indicator, the annual rise of 5.5 per cent in August is lower than the annual rise of 5.8 per cent reported in July. Showing a consistent downward trend.

Monthly CPI Indicator

National accounts

Household wealth was up 2.6 per cent for the June quarter of 2023, the third consecutive rise reported. This is also 3.9 per cent higher than what was reported last year.

The primary driver is the increasing value of property and up lift in house prices this year. Additionally, we are seeing superannuation balances increase off the back of additional super contributions from employers considering the strong labour market conditions.

Despite the improvement seen in households’ balance sheets, there were signs that their budgets were under stress in the June quarter. Household deposit accounts fell by $6 billion dollars. Notably, this is the first quarterly decline since June 2007, during the global financial crisis.

This implies that households are tapping into their cash reserves, in order to offset the rising cost of living. This narrative is consistent with the declining household savings ratio, sitting at its lowest level since 2008.

Despite the headline figures not presenting the picture we want to see, the underlying data is demonstrating a retraction in household spending and slowing rate of inflation. As such, we can confidently say the RBA’s interest rates are continuing to have their desired effect. The speed of the contraction is another story, and whether the RBA is happy with the rate at which inflation is being brought back towards to the 2-3 per cent target range will be proven this afternoon.

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Bitcoin price must break $31K to avoid 2023 ‘bearish fractal’

BTC price needs to recoup some more key levels before ditching longer-term bearish risk, the latest Bitcoin analysis says.
Bitcoin…

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BTC price needs to recoup some more key levels before ditching longer-term bearish risk, the latest Bitcoin analysis says.

Bitcoin (BTC) held above $30,000 at the Oct. 23 Wall Street open as analysis said BTC price strength could cancel its “bearish fractal.”

BTC/USD 1-hour chart. Source: TradingView

BTC price preserves majority of early upside

Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as it hovered near $30,700, still up 2.5% on Oct. 23.

The largest cryptocurrency made snap gains after the Oct. 22 weekly close, stopping just shy of $31,000 in what became its highest levels since July. 

Now, popular trader and analyst Rekt Capital is keen to see the $31,000 level break. 

“Bitcoin has Weekly Closed above the Lower High resistance to confirm the breakout,” he commented alongside the weekly chart.

BTC/USD annotated chart. Source: Rekt Capital/X

Rekt Capital argued that BTC/USD could disregard the bearish chart fractal in play throughout 2023 next. This had involved the two year-to-date highs near $32,000 forming a doubletop formation, with downside due as a result.

Specifically, Bitcoin requires a “breach” of $31,000 in order to do so. 

More encouraging cues came from the True Market Deviation indicator from on-chain analytics firm Glassnode.

As noted by its lead analyst, Checkmate, on Oct. 23, the metric, also known as the Average Active Investor (AVIV) profit ratio, has crossed a key level.

Bitcoin’s True Mean Market price (TMM) — the level that BTC/USD spends exactly 50% above or below — is now below its spot price, at $29,780. 

“Have we now paid our bear market dues?” Checkmate queried, describing TMM as Bitcoin’s “most accurate cost basis model.”

Bitcoin True Market Deviation (AVIV) chart. Source: Checkmate/X

Institutions awaken in “Uptober"

Analyzing the potential drivers of the rally, meanwhile, James Van Straten, research and data analyst at crypto insights firm CryptoSlate, flagged the potential approval of the United States’ first Bitcoin spot-price-based exchange-traded fund (ETF).

Related: BTC price nears 2023 highs — 5 things to know in Bitcoin this week

While not yet awarded the green light, a U.S. spot ETF is being treated as an inevitability after legal battles resulted in regulators losing sway.

“The potential approval of a spot ETF for Bitcoin has spurred a significant increase in bullish inflows in the crypto market,” Van Straten wrote in an update published on Oct. 23.

He noted that Glassnode data shows inflows via over-the-counter (OTC) trading desks spiking since late September.

“In addition, the Purpose Bitcoin ETF, with its holdings of approximately 25,000 Bitcoin, has observed consistent inflow throughout the past month. Even though these inflows might not be termed as ‘large,’ they denote a positive market sentiment,” he continued.

“This uptick in inflows across various platforms indicates an optimistic market response to the potential approval of a Bitcoin ETF, bolstering the overall landscape of digital assets.”
Bitcoin transfers to OTC desk wallets. Source: CryptoSlate/Glassnode

The largest Bitcoin institutional investment vehicle, the Grayscale Bitcoin Trust (GBTC), continues to see a lower discount to the Bitcoin spot price, having already seen its smallest negative margin since December 2021.

This stood at -13.12% as of Oct. 23, per data from monitoring resource CoinGlass.

GBTC premium vs. asset holdings vs. BTC/USD chart (screenshot). Source: CoinGlass

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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California bill aims to cap crypto ATM withdrawals at $1K per day to combat scams

A new legislative investigation found some crypto ATMs charging a premium as high as 33%, while a few ATMs had limits of up to $50,000.

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A new legislative investigation found some crypto ATMs charging a premium as high as 33%, while a few ATMs had limits of up to $50,000. California legislators have proposed a new bill titled “Digital financial asset transaction kiosks,” calling for a cap on crypto ATM withdrawals of $1,000 per day in light of growing scams. Additionally, starting in 2025, the law would limit operators’ fees to $5 or 15% (whichever is higher). The bill, if approved, would come into effect on Jan. 1, 2024. The bill was introduced after legislative members visited a crypto ATM in Sacramento and found markups as high as 33% on some crypto assets compared with their prices on crypto exchanges. On average, a crypto ATM charges fees between 12% and 25%, according to a legislative analysis. Government officials also found ATMs with limits as high as $50,000, prompting them to take regulatory measures to curb such high premiums and withdrawal limits. There are more than 3,200 Bitcoin ATMs in California, according to Coin ATM Radar. Democratic State Senator Monique Limón, who co-authored the proposed legislation, said the “new bill is about ensuring that people who have been frauded in our communities don’t continue to watch our state step aside” when there are real issues happening. Another provision of the bill would require digital financial asset businesses to obtain a license from the California Department of Financial Protection and Innovation by July 2025 Crypto ATMs are a popular way for people to exchange cash for their choice of cryptocurrency but have become a hub for scams and exploits because of the nature of transactions (i.e., hard cash). Unlike bank and wire transfers, each transaction leaves less of a trail. Related: CoinSmart president says crypto taxes are a ‘little bit more favorable’ outside US Some residents have recently been caught up in such scams, where the scammer persuades the victim to go to a nearby crypto ATM and deposit cash for the crypto of their choice. Some of those affected by ATM scams have lauded the bill and said the low transaction limit would give victims time to realize if they are being duped, reported the LA Times. On the other hand, crypto ATM businesses said the new bill would harm the small operators who must pay rent on their ATMs. The operators noted that the bill fails to address the core issue of the fraud and instead takes a punitive path focused on a specific technology. They warned such a move would shudder the industry and hurt consumers while doing nothing to stop bad actors. Magazine: Bitcoin is on a collision course with ‘Net Zero’ promises

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An airline just launched one of the country’s longest domestic flights

The trip from New York’s JFK to Anchorage International Airport will take over seven hours.

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While the title for longest commercial flight in the world will soon be taken over by the 20-hour and 10,576-mile journey between Sydney and London that Australia's Qantas Airways  (QUBSF) - Get Free Report is preparing to launch in 2025, the U.S. is a big country with a number of long-haul domestic flights on its own.

Without even looking at U.S. territories overseas such as Guam or American Samoa, one can spend more than 10 hours in the air and end up only in another state. Some of the longest domestic flights in the U.S. include routes from Boston to Honolulu in Hawaii and Chicago to Alaska's Anchorage.

Related: The World's Longest Flight Is a New Route: Here's Where It Goes

In a move to bring more service from mainland U.S. to Alaska, Alaska Airlines  (ALK) - Get Free Report is about to launch its longest flight yet that is subsequently also one of the longest in the country — the route from New York's JFK to Anchorage International Airport will take over seven hours and cross 3,386 miles.

An Alaska Airlines aircraft.

Image source: Shutterstock

New flight takes travelers to 'land of midnight sun'

The route will debut on June 13, 2024 and take place daily on a Boeing 737-8  (BA) - Get Free Report. The airline recently invested in the plane with the longest capacity in its fleet to be able to serve faraway destinations on the East Coast.

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"We're eager to welcome guests to our great state from the city that never sleeps to the land of the midnight sun on Alaska's new nonstop flight," Jillian Simpson, president and CEO of the Alaska Travel Industry Association, said in a statement. "There's so much to do in Anchorage and in the smaller towns nearby, mapping out your itinerary might be the toughest thing you do before heading west."

The route is part of Alaska Airlines' wider efforts to expand its coverage between Alaska and the mainland U.S. On May 18, it will also launch a nonstop route between Anchorage and San Diego that will take just over six hours and span nearly 2,500 miles. While the airline serves many Californian cities, San Diego's smaller size meant that residents would have previously needed to transfer in Seattle or LA on their way to Alaska.

New routes meant to serve both burgeoning tourist interest and local demand

After adding the new flights, Alaska Airlines expects to have 63 flights a day leaving from Anchorage during the summer of 2024. This is designed to meet the burgeoning traveler interest in the state as well as serve Alaskans who are separated from large American cities by geography.

"Alaskans like to get out," the airline said in announcing the new routes. "Sometimes that might mean hitting all the must-sees in New York City or taking surf lessons in SoCal. We'll make it more convenient for our guests to get there from Anchorage, as well as lots of other places."

For those who are able to make travel plans this far in advance, both the New York and San Diego flights to Anchorage are already available for booking on Alaska Airlines' website. The former starts at $400 each way for mid-week departures, while flying into the state from San Diego will cost from $300.

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