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Weekly Market Update: ETH ETF News Dominates

In this weekly crypto market update we look at the market behaviour post ETH ETF announcements. Stay tuned for other highlights from the crypto space and other macro economic updates from around the world.

Posted May 22, 2024

HUB HVC 22 MAY - ETH ETF news dominates
HUB HVC 22 MAY - ETH ETF news dominates

Last week we wrote that the bottom might be in, this week that call looks like a banging prediction.  

Things appear to have been kicked off by the US CPI reading which posted a small decline and was in line with forecasts. Such are the vagaries of traders.

Anyway, risk assets are back baby! BTC ETF flows, which have been negative for weeks running, turned strongly positive and well… the game was on. 

In ETH ETF news, Bloomberg updated its prediction of a May 23rd approval from 25% to 75%. 

Markets ran hard as traders attempted to front-run the news.  

In wider crypto news, crypto is back in favour with VC’s, maybe because they appear to be capturing more of the upside. There was more movement in the US regulatory space, a couple more arrests and some more institutional announcements. Situation normal 😎. 

In macro news, global commodity prices are beginning to rip. Copper in particular, but also news that Silver, Oil and Zinc are staging comebacks as global growth appears to be back on the cards. The US – China geopolitics soldier on with trade tariffs coming into force. Interesting times.  

Chaos in the Middle East continues in its own special way. The Iranian President has died in a helicopter crash, while the International Criminal Court issued arrest warrants for both Israel and Hamas leaders.  

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In the US, the big news, apparently the only news, was CPI back on track. This was quite a relief for the Fed and apparently the traders who have piled back into equities and other risk assets.

In Europe, GDP and CPI were both good news stories. Rate cuts in June from the ECB are now widely expected. 

In Asia, China Industrial production is up, and they started selling a bunch of US debt. Tit for tat. India’s exports fell as did Japan’s Q1 GDP.  

Locally, Australian unemployment edged up. In New Zealand the RBNZ held OCR steady at 5.5%. While acknowledging elements of the economy had turned, persistent domestic inflation meant they actually discussed a rate rise. The forecast for rate cuts unchanged. 

This week’s crypto market sentiment rebounded strongly into extreme greed territory with most of the gains resulting from yesterday’s action. 

Highlights this week: 

  • Across the top 30 assets, we have experienced a broad recovery in asset prices with most up double digits. 
  • Our buy – sell ratio has returned to the long term average with more active buyers present. ETH was obviously in favour late this week. 
  • Swaps volume showed a strong trend of customers selling SOL for ETH. Layer 1 wars in action. 
  • At the time of writing BTC and ETH were up 13% and 30% respectively. BNB and XRP were both up 7%, while SOL was up 25%.
  • In the majors UNI was our largest gainer up 40% while RSR was our best performing asset up 50%. 
  • Tron (TRX) was our worst performer of the week, down 1.6%.

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

Highlights from the crypto space

Raoul Pal from Global Macro Investor says we are about to enter the crypto summer and “ Banana Zone”.  Previous crypto summers did pretty well  – 2012/2013: +146x, 2016/2017: +30x, 2020/2021: +8x.  NFA. 

Screenshot of LSEG chart of Bitcoin movement across the seasons.

13F disclosures have thrown light on the BTC ETF holders. Bitcoin hating JP Morgan has some, Millennium Management has $2bn, the State of Wisconsin Investment board is a holder. Watch what they do, not what they say. And, only 20% of the ETF volume is institutional. 

Vanguard appointed its new CEO, an ex BlackRocker who launched the Bitcoin ETFs.  Bullish.

Staying with the ETFs for a bit. Love this from Josh

The chances of a spot ETH ETF got down as low as a 10% chance. However, that rapidly changed with reports that the SEC has asked exchanges to update their filings.

Bloomberg increased the odds of approval from 25%-75%. ETH was up 21% on the day, its largest single day move in history…… 

In what can only be called a legendary early call, a Coinbase institutional report into ETH says that it “may yet have the potential to surprise to the upside in the coming months”. 

Other notable highlights:

  • The DoJ arrested two brothers for using an exploit to frontrun MEV to gain $25m. So the frontrunners got out frontrun, but because it was done with a code hack it’s bad…. I think. 
  • Oklahoma passed a bill enshrining your right to self custody. 
  • Mastercard has chosen 5 startups for its digital assets blockchain program. 
  • The US Senate and the House of Representatives voted to allow regulated entities to custody Bitcoin.  Crypto may be becoming an election issue. 
  • OG trader Cobie writes an impressive (and long) blog on new coin releases. 
  • TLDR; that the crack down on ICO’s (which had issues) has meant more value capture to private investors who support projects that launch with nothing but massive FDV (fully diluted valuations). 
  • No surprise then that crypto VC investment is picking up.  Follow the money. 
  • Genesis got approval to repay $3bn to customers in its bankruptcy settlement. It’s not clear what percentage of what is owed this is. 
  • Heads Up, AVAX has a big $380m token unlock this week. 
  • Lido’s backers are supporting an Eigenlayer competitor called Symbiotic
  • got hacked by a former employee, he threatened the company, did a Robinhood style airdrop and then got arrested because he posted some stuff on Instagram. You couldn’t make it up. 

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 … 

Biden and Trump are apparently neck and neck in this year’s presidential race.  

The bullish CPI reading (well, it was a decline) has led to a small increase in oil prices as markets factor in increased demand. 

Copper broke $11,000 for the first time as a squeeze forced the short sellers to buy their way out. 

🌎 Macro news TLDR: …Cooling US CPI invigorates markets.

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U.S. economic news

April’s CPI reading was good news for the markets as it came in right on expectations and more importantly was down on March. Annualised CPI was 3.4% and Core CPI was 3.6%. Markets responded immediately with record closes on the major indices. 

US retail sales were flat month on month. 

Screenshot of US consumer price index month over month

Meanwhile in Europe….

European GDP for Q1 was up 0.3%, which is a good result for them. CPI was unchanged for April across the block.  

Chart of annual rate and monthly rate of euro area

And in Asia Pacific…

Possibly in response to the US tariffs, the second largest buyer of US debt, China, started selling at record levels. 

(A quick PSA, Japan the other major buyer is selling, and when there are no buyers of debt, then the Federal reserve becomes the buyer of last resort. To do that they print money, we call that Quantitative Easing (QE)). 

Industrial production was up in April, but Retail sales fell. The PBoC left rates unchanged. 

Chart of china selling of treasure and US agency debt

Indian exports fell month on month and were only up 0.8% on March last year. Japan’s GDP for Q1 fell 0.5%. Malaysia’s posted great GDP numbers, up 1.4% in Q1. Taiwan’s exports surged 10.8% in April. 

In Australia their wage price index for the year dipped to 4.1%. Unemployment also rose to 4.1% in April, up from 3.9%. 

The overnight Global Dairy Price auction was up 3.3%. The RBNZ monetary policy committee has held the OCR at 5.5%.

While the committee noted that the economy was softer, they insisted that there is more work to be done on inflation, particularly domestic inflation in those areas that don’t feel the impact of monetary policy. In fact, they openly debated increasing the OCR. I mean …what?  

That’s a wrap for this week. 

Stay tuned for the next update.

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Disclaimer: Information is current as at the date of publication. This is general information only and is not intended to be advice. Crypto is volatile, carries risk and the value can go up and down. Past performance is not an indicator of future returns. Please do your own research.

Last updated May 22, 2024

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