Weekly Market Update: Crypto Back in Favour

Crypto prices continue their buoyant run this week with BTC breaking US$52k and ETH$2900. No surprises then that VC’s and institutions are back, embracing crypto with gusto it seems. 

There have been a number of reports into the impacts of the spot ETFs on the Bitcoin supply. The TLDR is currently ETFs are gobbling up loads more BTC than the miners are supplying. Altcoins are also benefiting as the capital cycle spills into more speculative assets too. 

Economic news has been relatively slow due to the Lunar New Year break. Having said that,the UK and Japan are now in recession, and in all likelihood so is Germany. And the Commercial property sector continues to be a major worry within banking. 

India continues to shine with it moving closer to toppling China as the leading growth economy going forward.

With the calls for China to respond getting stronger, they delivered their largest ever cut to mortgage lending rates. Elsewhere in Asia, Singapore looks like it has rebounded nicely. 

In Europe, they have revised down this year’s growth forecasts as they get to grips with higher-for-longer interest rates and some of their major economies are really struggling. 

Across the ditch, Australian unemployment is edging up while in New Zealand, RBNZ Governor Orr’s speech last week emphasised the RBNZ’s battle to reduce core inflation.

With immigration running very hot, returning Core Inflation to the 2% band will be very challenging as housing and rent makes up a large part of core inflation measures.

With asset prices consolidating somewhat this week, the market sentiment has cooled slightly from last week’s highs, having said that we still remain in greed territory. 

Highlights this week: 

• This week marks our 3rd in a row where the majority of the top 30 assets were posting positive gains. 
• Looking at our trading flows we have returned to our normal ratio of buy/sells. Volume is definitely up.
• At the time of writing BTC and ETH were up 6% and 13% respectively, BNB was up 9% whilst SOL gave up some of last week’s gains to be down 4%.
• WorldCoin (WLD) went on an absolute tear this week, up 136%. In the large cap space, Fetch.ai (FET) was up 39%. 
• Solana was our biggest loser, down 4%, closely followed by ARB and AVAX, down 3.5%. 

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

Highlights from the crypto space

If you have been wondering what impact the Bitcoin ETFs are having on demand and supply dynamics well people have started to research it.

Bitmex research shows us how many BTC are being bought by the ETFs per day. And Blockware put this handy infometric together. 🚀

So in summary, the ETFs are gobbling up an average of 3500 BTC per day while miners add around 900 BTC per day to supply, and in April that will fall to 450. 

Plan B is of the view that the halving is not priced in yet either. 

In other ETF news, Greyscale defended their fee structure. I’m being told it might make sense for people to stay in the fund because of tax concerns, which adds weight to Greyscale’s position.

Another part of the DCG group, Genesis, which is the bankrupt lender, has gotten approval to sell its GBTC holdings.

Other notable highlights from the crypto space:

• Metamask reports that monthly active users is at an all time high, 30m. That’s up 55% in 4 months. 🐂
• Peter Thiel’s Founder’s Fund is again purchasing crypto. CNBC is reporting that VC’s are piling back into crypto. 
• Robinhood reported $43m in revenue from its crypto activities. 
• Revolut is seeking trialists for a full crypto exchange. 
• The big banks and their lobbying groups are asking the SEC to change a rule to let them custody Bitcoin. 
• Japan is looking to change rules to allow VC’s and Hedge funds to hold crypto assets. That is bullish for web3 companies in the region
• Ripple is trying to purchase a US based custodian to help it expand its US operations. 
• Former Binance CEO, CZ, has had his sentencing delayed to April. 
• Fed Chair Jerome Powell has urged the US to come up with a stablecoin regulatory framework. You might have seen RBNZ governor Orr made some crypto comments too, but it didn’t go too well. 
• Chainalysis reports that illicit transactions on blockchains have declined 29% in 2023, with a noticeable shift in tactics towards bridges. 
• In a sign of the buoyant market, Coinbase revenues for Q4 are up …41% – Appeconomy broke it down here.

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 … 

The Financial Times is pointing that the scale of the commercial real estate problem with bad debts now larger than bank reserves. 

🌎 Macro news TLDR: …India continues to shine

U.S. economic news

This week’s unemployment data showed less people on unemployment, while retail sales for January were down 0.8%.

Another indicator of underlying inflation, PPI (wholesale inflation) was up 0.3% in January, this was considerably higher than the 0.1% expected.

The CME Fed watch tool, which is a market prediction on rate movements, is unchanged this week. 

Meanwhile in Europe….

Industrial production in December was up 2.6% across the EU which was unexpectedly good news. The EU has revised down its growth forecasts for 2024 to 0.9%.

Inflation forecasts are also down. In concert, France revised its 2024 GDP down to 1%. 

UK inflation held steady at 4% in January which was actually better than the 4.2% forecast. Core inflation was also flat at 5.1%.

Following this, GDP data for Q4 2023 came out at -0.3%, as this is the second quarter of declines they are officially in a recession. 

And in Asia Pacific…

According to index company MSCI, India is fast catching up with China on a stock market basis.

Chinese Premier Li called on the state council to undertake ‘pragmatic and forceful‘ action to boost the economy.

In response the PBOC slashed mortgage reference rates by 25bps. This is the largest ever reduction in the reference rate. 

Japan slid into recession posting negative 0.4% GDP growth for the final quarter of the year. It looks like it’s all based on domestic demand drivers.

The BoJ is now in a bind and pivoting to tighter monetary policy while in recession looks unlikely. Singapore’s exports were way up in January. And Thailand’s GDP came in below forecast. 

Australian unemployment increased to 4.1% in January, and the RBA minutes showed the strongly considered another rate hike in February.

In New Zealand, RBNZ Governor Orr’s speech on inflation highlighted that the RBNZ is focusing on Core inflation and it’s going to take time to get it under control. Higher for longer, all over again. 

Adding to the inflation challenge, immigration is still running at very high levels, with Stats NZ reporting an annual net gain of 126 000 people.

On the good news front, our PMI’s are improving, particularly services, which rebounded into expansion in January. While the latest global dairy trade auction was up again. 

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

Stay tuned for the next update.

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