Weekly Market Update: BTC Hitting ATH Around the World

After a relatively flat week crypto prices roared back, led initially by ETH, which hit its highest price in 92 weeks, and then followed by BTC.  

Catalysts for this seem fairly obvious… ETFs baby!  The noise surrounding the ETH ETF continues to grow. The market’s conclusion, drawn from the success of the BTC ETFs, is to dive into ETH.

The BTC ETFs continue to post incredible numbers on inflows and adoption and are literally sucking money out of other ETFs, particularly Gold.   

A quick round up of the other crypto highlights include the proposed Reddit IPO, Panterra capital putting out their crypto opinions and another L1 chain, Avalanche, having an outage.

In wider economic news, the strength of India’s economic run continues with some exceptional PMI numbers out. And Japan is, (finally) having a golden age after nearly 35 years.  

In the US, the FOMC minutes reiterated that the Fed is waiting for more data points before they start rate cuts. Accordingly expectations of when rate cuts are going to happen are sliding out into later 2024. 

In Europe, services are recovering but manufacturing remains extremely challenged. Industrial giant Germany appears to be feeling the brunt of this and has confirmed they are in a recession.  

Locally, all eyes were on today’s monetary policy statement from Governor Orr. Given the slew of bad news highlighting an extremely soft retail sector, combined with growing mortgage distress, the expectations were for the rates to be held steady with a hawkish tone to hose any hope from the speculators. Thankfully this is what Governor Orr delivered. 

With the run in asset prices this week, market sentiment has increased from last week to a position of extreme greed.

Highlights this week: 

• We are now in a month-long trend of assets posting positive price gains. 
• Our buy sell flows indicate that price targets have been hit for some assets as sell volume is up, particularly for BTC.
• Further analysis shows a healthy increase in swap activity as customers appear to be moving from more volatile coins into stablecoins, particularly NZDD, which is great to see. 
• At the time of writing BTC and ETH were both up 11%,  BNB was up 9% whilst SOL gave up some of last week’s gains to be down 4%.
• Coti (COTI) went on an absolute tear this week, up 142% on the back of its new feature announcements.  In the large cap space, THETA was up 70% as they announced their GPU AI play.  
• Optimism (OP) was our biggest loser, down 6%. 

View all top gainers: Visit the top gainers page to find out more.

Highlights from the crypto space

ETH had a great week, hitting 22 month highs and arguably leading this week’s price rally. 

In concert, FundStrat’s Tommy Lee said on CNBC that Bitcoin could hit US$150k this year due to the current supply dynamics and easing of monetary policy. CNBC is pretty mainstream!

Speaking of all time highs. BTC has already hit ATH’s at 14 nations around the world. Including New Zealand.

The big banks continue to lobby the SEC to relax custody rules so they can play in the ETF space.  Observers have noted a clear change of tone towards BTC from Washington. 

The Bitcoin ETFs are having an impact on Tradfi products too, Gold ETFs are the big loser.

Carson group, a $30bn RIA in the US, has announced approval to buy into the Spot ETF’s… this is the much vaunted second wave.

Kaiko has done an excellent piece of research on the ETF wallets, tracking time of day flows.  Almost all trading is done in US hours and Tuesday clearly stands out.

They also report that ETH and BTC liquidity have improved materially, that means market makers are back.

Staying in ETF news, in preparation for its own ETF boom, Hong Kong is issuing guidance on custody arrangements.

Other notable highlights from the crypto space:

• The UK thinks it can get laws for stablecoins and staking approved in the next 6 months.
• Coinbase wrote to the SEC detailing why it should approve the spot ETH ETF.  
• USDC issuer Circle is discontinuing support for the Tron network due to…..its questionable compliance. 
• Panterra Capital dropped their latest newsletter.  They analyse what the BTC price could be post halving.  🚀
• Reddit is preparing for an IPO, and in doing so put a bunch of crypto on its balance sheet.  Punchy play. 
• Avalanche suffered a 5 hour outage over the weekend due to a client bug.  
• A judge has signed off on the $4.3bn Binance plea deal from last year.  The interesting sideline is there is a 5 year supervision period included in the agreement. 

And that wraps up our highlights from around the crypto space. Stay tuned below for other macroeconomic updates from around the world.

What is going on in the world of Finance … 

Container freight prices continue a slow slide downwards, but are still extremely elevated. The red sea tensions are showing no signs of abating either. 

🌎 Macro news TLDR: India continues to shine.

U.S. economic news

The minutes from the FOMC’s last meeting showed general optimism that the policy was working, but a deep sense of unease of starting to cut rates too early.

So, higher for longer. CME Fed watch showed a near immediate shift out of rate cut expectations with it now at a 50% chance in the June window. 

US jobless claims continue to fall, with this week being far under estimates at 200,000. The trend is down. 

We should mention that Congress has until this Friday to sort it’s ‘stuff’ out and avoid a government shutdown. 

Meanwhile in Europe….

European inflation expectations for the coming year are flat at 3.3%. Meanwhile, European consumer sentiment edged up but is still dire at -15.8. 

Services PMI edged up across the block and is now in expansion. Manufacturing, though, is down, led by Germany whose manufacturing PMI was particularly poor, down to 42 from 45 a month earlier. 

German Q4 GDP data confirmed a second quarter of declines, down 0.3% which means they are in recession. 

Finally, Sweden got approval to join Nato. 

And in Asia Pacific…

India’s flash PMI’s for February highlighted just how well they are doing, with its composite index coming in at a very healthy 61.5 (50 is expansion).

Big changes to corporate governance (and a lot of cheap money) has led the Nikkei to a 34 year high. Staying with Japan, they recorded a big drop in its annual trade deficit, driven in part by reduced oil prices.

It also looks like Japan is the major beneficiary of the China-Taiwan tensions as semiconductor companies relocate there and CPI continues to trend down coming in at 2.2%. Indonesia held its rates at 6%, so did the bank of Korea. 

In Australia, wages for the year ended up 4.2%, marginally higher than inflation which is 4.1%. Similar to NZ, public sector wage growth outstriped the private sector.  

The RBNZ Household expectations survey from January, shows that household expectations of inflation are higher for longer… 

What a surprise. The survey also highlighted renewed mortgage stress. Again, shocker.  Another data point to a softening economy, Q4 retail sales were down 1.9%, the 8th quarterly fall in a row. Retail sales were down 4.1% for the year, ouch!

Against this backdrop, the RBNZ decided to hold interest rates at 5.5%, but warned there were limited ability to tolerate upwards inflation. Essentially warning hikes can happen if the market doesn’t deliver.  

That’s a wrap for this week. Hope you had a great holiday and are ready for 2024. 

Stay tuned for the next update.

Did you miss the last weekly update?

Catch-up on the previous market update.