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3w ago on

🔍Why did crypto crash?

valuable weekly insights CrunchDAO is a decentralized collective intelligence network of thousands of top engineers competing to solve real-world problems. Check it out here! GM friends. Here’s what I’ll cover today: 🔍 Why did crypto crash? 📊 Crypto chart of the week 🗞️ The latest DeFi news 🔍 Why did crypto crash? The market has been pretty choppy over the past 1-2 weeks. I think most of this weakness comes down to the current macro situation, although a few unfortunate events have also happened within crypto. For example, Ledger , one of the most popular hardware wallet producers, recently discovered that devices sold by certain authorized resellers in Asia contained unauthorized hardware implants. Some of these resellers are believed to have added the implants themselves. Those implants then allowed attackers to see the seed phrases of people who bought them and steal their funds. While the exact amount lost is not confirmed, it’s estimated that a whopping ~$90M was stolen. This incident really sucks because the affected people did everything right in theory: They bought a hardware wallet to self-custody their assets more safely, yet their wallets were still drained. I guess the only lesson here is to buy hardware wallets only from official websites and avoid third-party resellers. But this security breach is certainly a big setback for the entire industry. Moving on to macro, several macro-related developments have also contributed to the recent market weakness in my opinion: US CPI inflation data came in at 3.7% , above expectations - This triggered a correction across all major financial markets, including crypto Many investors panicked because CPI data coming in above expectations makes it more likely that the Fed will raise interest rates again. Another rate hike would make borrowing more expensive and risk-on assets less attractive. The South Korean stock market experienced a major crash - This matters because a lot of South Koreans have significant exposure to crypto, and this stock market crash could have prompted some of them to sell some of their crypto The Russia-Ukraine energy ceasefire failed to hold - Trump’s announcement of an energy ceasefire initially raised hopes of lower oil prices and lower inflation, which would have been bullish for markets. But within hours, the ceasefire broke, ultimately pushing oil prices higher instead of lower. None of these events is catastrophic on its own, but together they’ve created a pretty unfavorable environment for risk assets over the past few days. And I suspect that’s why the market crashed. The good news is that, according to Polymarket, there’s still a 67% probability that the Fed will leave interest rates unchanged in October (instead of hiking them). If the Fed doesn’t hike rates, as many investors now expect, this could provide some relief for crypto and financial markets in general. And I think this is the most likely scenario at this moment. But we still have ~2 weeks to wait for the next FED interest rate decision. In collaboration with CrunchDAO World’s largest decentralized AI competition platform Most forecasting models are developed by siloed teams. CrunchDAO is taking a different approach: It turns machine learning into an open competition, bringing thousands of independent researchers together to build models that address real-world problems. Institutions provide datasets and define the problem, while contributors build models, submit their solutions, and compete for rewards based on the quality of their work. 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Chart of the week Jupiter Lend became the largest money market on Solana Crypto meme of the week 😂 The latest developments in DeFi Papertrade , a 1000x leverage app built on Hyperliquid, went live Chainlink launched a solution that enables DeFi apps to accept 1-click deposits from any blockchain INFINIT announced it will open deposits for APEX MS2 , an institutional-grade trading vault, on Oct. 28 Bybit and Mantle introduced mStocks , an upcoming tokenized equities product backed 1:1 by real stock shares Stacks revealed its plans for the next 3 years , which include launching self-custodial Bitcoin lending and compliant BTC privacy Derive team proposed expanding Derive into US regulated markets Solana network became 2x faster Starknet launched Shadow Accounts for private DeFi interactions Aave launched incentives for its new tokenized stocks market Base launched an Earn & Borrow product for stablecoin yield Pancakeswap proposed cutting CAKE token emissions by 69% Pyth allocated 100% of its DAO revenue to buybacks Plasma partnered with Visa to launch multi-currency stablecoin cards That’s all for this week! Until next time, The DeFi Investor Subscribe now Want to sponsor this newsletter? Please send me a DM on Twitter (X) . I have a sponsorship deck that I can send you.