Weekly Market Update: ETF Misinformation Leads to Spike

Lots of action on the spot BTC EFT front. The big (real) news was that the SEC won’t challenge the court’s ruling on the Greyscale application. TLDR; The odds of getting a spot BTC ETF are getting higher.

Sadly, there was some misinformation about the Blackrock ETF being approved, which excited the market, but it was short lived and prices fell with Blackrock denying it.

In a now established trend, there was plenty of institutional activity in the crypto space. Outside of that, long term holders of BTC are now at near record levels. 

In the macro news, there were positive updates in the inflation space with most economies reporting good CPI data. It could be argued that even the small miss on the US CPI was…well a small miss.

Yields are still way up, as is government borrowing, and in response a lot of the US Fed committee have pointedly started saying that the end is nigh on rate rises.

However, everyone’s attention is now on the risks posed by the potential threats to the middle east due to the Israel-Gaza conflict.The flow through to oil pricing affects us all. 

The IMF has reduced its global growth forecast citing increased global risks (read war) and China as the major reasons.

China is showing signs that certain parts of its economy are turning around, however their massive property sector remains a significant risk. India’s inflation is coming down and locally New Zealand’s immigration volumes are red hot, and we had some good news on the CPI front. 

Despite some wild inter-week oscillations, the crypto market sentiment has remained steady in neutral territory and is basically unchanged over the week.

Trend highlights this week: 

• This week has been generally positive for the top 30 assets with majority posting moderate gains. 
• BTC was up 4%, while ETH was unchanged.. 
• SOL and OKB had solid weeks both up 8-9%. Conversely UNI and DOT were down 6%. 
• Stacks (STX) was our biggest gainer of the week, up 10%. 
• THORChain’s (RUNE) wild ride continues, down 9%.

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

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Highlights from the crypto space

The SEC will not appeal the court’s decision that it was unjust to reject Grayscale’s ETF application. Bloomberg has raised their chances of getting a Spot Bitcoin ETF to 90%. January 10 is shaping up as the big day. 

On Monday a rumour came out that the Blackrock ETF had been approved. BTC spiked 7% immediately afterwards, but Blackrock subsequently denied this and all that price gain was given up. This won’t help the SEC market manipulation concerns. 

Ark Invest’s Bitcoin monthly report shows that long term Bitcoin holders are at their highest level since 2010. 

A number of global exchanges like Coinbase, Binance and OKX are partnering with local players to remain FCA compliant in the UK market.

The FCA came out a day later blocking Binance’s partner from promoting crypto. 🤷

Other notable highlights from around the crypto space:

• Coinbase has some serious concerns about the IRS’ tax plans and the amount of personal data they will have. 
• The CFCT has charged the Ex CEO of Voyager with fraud because they hid the true state of their finances from customers. 
• Base and Optimism, which Base is a derivative of, have struck a deal. 
• The owners of Bitfinex are making a $150m share buy back to beef up its control. The shares targeted were ones provided to customers affected by the 2016 hack. 
• Blackrock and Barclays bank used JP Morgan’s blockchain (yes they have their own) to tokenise a money market fund which allows for more efficient collateralized settlement. First Abu Dhabi bank followed suit.
• Genesis has halted trading after it was ordered by a court to pay FTX $175m. While the headline is alarming, Genesis is pretty happy about it considering the size of the $3.5bn claim. Staying with FTX estate, they have staked 5.5m ( 10%) of their SOL holdings which should help with dumping fears. 
• Ex-Partners at war; SBF’s ex girlfriend is testifying against him in his trial and saying he directed her to commit the crimes.
• Uniswap V4 has included a hook for KYC. This is dividing the community who see it as a road to regulatory whitelisting. 
• Uniswap has also stated they will charge a 0.15% swap fee if you use their front end. 
• Australia’s reserve bank deputy governor said at a recent event that Australians could save $1-4bn annually on transaction costs if the Australian financial system incorporated tokenisation. The Australian treasury also put out a proposal for regulating custodians. 
• Finally, Coinshares reports a big jump of inflows into institutional funds in the last week.

And that sums up the major updates from around the crypto space. Moving on, we’ll take a closer look at other macroeconomic developments from around the globe.

Starting off with global news 

The IMF has trimmed its 2024 global growth forecast from 3% to 2.9% citing fresh risks (Gaza) and sluggish China growth as the reasons.

Brent Crude pricing rose 6% on Friday after Israel started ground raids on Gaza, its now at $90 per barrel. 

Argentina’s central bank raised their interest rates to 133% (that is not a typo), and that is still below inflation which is 138%. 

🌎 Macro news TLDR: … Oil heading up on Gaza news. 

U.S. economic news

US producer prices (PPI) for September came in higher than expected at 0.5%. PPI is running 2.2% annualised.

Seen as a measure of wholesale inflation, it’s an indicator that the economy is still quite hot. The UAW strike against the car production companies appears to be escalating. 

The minutes of the Fed FOMC September meeting are out. They show various opinions on future rate rises, but near unity on rates being higher for longer.

Markets responded positively straight afterwards. Note all of this was pre Gaza, and the tone of the Fed officials is much more watch and see in the last week. 

Last week the CPI print for September came out slightly hotter than expected at 3.7%, 3.6% was the expected number. Core CPI was on target at 4.1%. 

The market got the jitters on that hotter than expected number and the pundits are now saying there’s a 30% chance of another rate rise in December. 

And in Europe….

The UK reported modest GDP growth in August of 0.2%, but the signs of an economic slowdown are evident. 

The German Chancellor surprisingly extended a welcome invitation to the UK to strengthen trade. 

And in Asia Pacific…

India’s mercantilism continues, with the world’s 2nd largest exporter of sugar looking to restrict export supply.

India’s CPI inflation dropped to 5% in September, down from 6.8% in August. Taiwan posted some export growth finally, up 3.4% in September. Singapore left the interest rates unchanged. 

China’s birth rate tumbled 10% last year (wow!) despite government efforts to support parents. 

“China will get old before it gets Rich”- talk about demographic problems. China’s exports appear to have bottomed out and there are signs of a modest recovery. And finally China’s CPI was flat in August. 

Statistics New Zealand put out the August immigration showed another net gain in August with an annual gain of over 110, 000.

August 2023 was up 28% on pre-Covid Levels. Some good news on food pricing, as prices fell in September by 0.4% and are running at 8% annualised. 

Some even better news on the CPI front this week with headline inflation coming in at 5.6% annualised, or 1.8% for the quarter.

This is down from 6% in June and the forecast was for 5.8%. Domestic (non tradable inflation) was 6.3% driven by housing (mainly RATES!!!). Tradable inflation was 4.7% driven by fuel (no surprise) and cars. 

That’s a wrap for this week. Thanks for reading!

Stay tuned for the next update.

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