Weekly Market Update: Fidelity says Bitcoin is in another universe

Crypto majors held their recent gains and based on the gains we are seeing in some of the altcoins, it is looking like the rotation of capital effect is in full swing.

Bitcoin continues to shine in the media with more legendary investors making positive statements, more institutional research pointing out its benefits and an ongoing decoupling from traditional assets. All this activity is certainly boosting its cause.

Hidden among all that are some interesting product announcements from Coinbase, Metamask and HSBC. Winters are for building. FTX founder and CEO Sam Bankman-Fried was also found guilty of fraud. Shocker.

In the markets, the US, EU, and UK central banks all hit pause on further rate rises. In amongst all the higher for longer talk, market’s detected that this may signal the end of the tightening cycle.

Given the growing evidence of slowdowns in employment and output plus impending recessions, these pauses were widely expected. 

Across the world, Europe might be in a recession, China is starting to throw more stimulus around as its economy remains soft and Japan is offering tax cuts to help with the cost of living. 

Locally Australia is starting to slow, even so the RBA delivered a 25 bps rate hike because their economy is still running too hot, particularly in housing and services.

Meanwhile in New Zealand business confidence is up this month, however so is unemployment and company liquidations. Crazy times. 

Crypto market sentiment has had another stable week with only a slight increase being reported week on week seeing us remaining in greed territory. 

Highlights this week: 

• Looking at our trading volumes, we have seen a noticeable increase in larger orders for Bitcoin. 🚀 ETH volume is trailing slightly but is definitely on the increase. 
• Another solid week with a lot of green, you have to trawl a long way down the market cap list to find an asset that didn’t gain. 
• Layer 1’s had a particularly solid week – XRP was up 13%, ADA 20%, SOL 22%, AVAX 15%.
• At the time of writing BTC was up 2.5%, ETH performed slightly better up 5%.
• PancakeSwap (CAKE) had a monster week, up 80%. Trustwallet (TWT) was close behind at 70%. 
• Our biggest loser this week was again Maker (MKR), down another 5% as the FTX liquidations weigh on it. 

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

Looking for more flexible pricing and trading volume for your high-value crypto trades? Get in touch on our OTC page and learn how we can help.

Highlights from the crypto space

This week in ETF news, Hong Kong is considering a spot Bitcoin ETF to support its position as a crypto Hub. 

Popular Telegram trading bot Unibot had an exploit, apparently the project will make everyone whole.

Legendary investor Stan Drukenmiller said “I don’t own Bitcoin, but I should”. 

Institutional investor inflows to crypto products have been positive for the last 6 weeks.

Kaiko data shows that Bitcoin correlation with Equities has fallen, strengthening its position as a “portfolio diversifier “. The 60-day correlation has fallen from 70% in September 2022 to 19% this week.

Fidelity’s Director of Macro looked at the risk / reward payoff for different assets. The conclusion? Bitcoin is in a different universe 😎. Asymmetric bets people (NFA). 

More reports that the Bitcoin HODL waves are at all time highs.

Other highlights from the crypto space:

• WalletConnect, the glue that connects wallets to Dapps, is blocking IP addresses based on OFAC guidance. Some are pointing out that this isn’t quite the permissionless dream. 
• NFT platform Opensea has laid off 50% of its staff. 
• Metamask has added some privacy preserving alerts to its wallet. 
• Paypal has successfully registered with the UK’s FCA to be a crypto service provider. They have also been subpoenaed by the SEC about its newly launched Stablecoin.
• Coinbase opened up futures trading to US citizens. Coinbase also posted their Q3 numbers which largely beat analysts forecasts, however the decline in trading revenue led to a fall in their share price. 
• Binance’s market share continues to slide and is now below 50%. 
• HSBC is tokenising gold and enabling customers to trade these on its new platform. Sticking with tokenisation.
• AC Milan tokenised their field, owners get points when their 1 sq yard has action on it… what a world we live in. 
• Tether’s (USDT) latest quarterly attestation is available. They have increased their cash and cash equivalents. 
• The UK Treasury has released its final proposals on crypto asset regulation. 
• SBF was found guilty on all 7 charges in the FTX fraud case. FTX has also handed over some data to the FBI. 
• The SEC has gone after the Safemoon team for perpetuating a massive securities fraud. 

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.

What is going on in the world of Finance … 

US aircraft carried out two strikes in Syria linked to Iran’s revolutionary guard. Lebanon based Hezbollah and Israel are exchanging fire too.

It looks like the potential for the Israel conflict to expand remains a strong possibility but it should be noted that both events have happened before.

Oil prices rose after Saudi Arabia and Russia reaffirmed their supply cuts until the end of the year. Brent Crude is at $86 a barrel. Due to lacklustre global demand this is having less impact on prices.

🌎 Macro news TLDR: … Markets bounce on FOMC dovish news, uncertainty over the middle east lingers. 

U.S. economic news

US wage inflation is running above CPI at 4.3% annualised. Manufacturing PMI continues to contract, down from 49 to 46.7 in October. New orders are way down at 45. 

As widely expected, the Fed held the Fed funds rate steady at 5.25-5.5%. The keenly watched speech by Fed President Powell was called mildly dovish by commentators.

While he finished with a dose of higher for longer, markets immediately interpreted this as a shift from a pause to the Fed being done with rate rises. In response the indices immediately made gains.

There are signs unemployment is starting to creep up with jobless claims above expectations this week at 217k.

The closely watched Non Farm payrolls report for September came out at 150k, way below the 180k expected and is the first tangible sign of workforce softening. 

Oh yeah, the threat of another US government shutdown is back on the table as they only kicked the can to the end of November. 

Meanwhile in Europe….

Eurozone GDP was expected to be weak, however flash estimates are showing that they were actually in contraction in Q3, with GDP -0.1%.

Further evidence came out with the Services PMI reading for October retracing to 47.8, its 5th consecting month of contraction. However economic sentiment and employment expectations remain stable. 

Inflation fell strongly in October, coming in at 2.9% vs 4.3% in September, mainly due to a large fall in energy prices. Core Inflation, which excludes energy and food, declined slightly to 4.2% in September. 

The Bank of England held its interest rate at 5.25%, there was talk of higher for longer as well. Markets are seeing this as the end of the tightening cycle. 

The US ratcheted up sanctions against Russia, this time targeting future energy projects and drones being used by the military. They are also cracking down on sanction evaders. 

And in Asia Pacific…

China’s manufacturing sector unexpectedly declined in October with manufacturing PMI falling to 49.5. To many this underscores the need for stimulus. Services PMI is marginally expansionary at 50.4. 

Japan is implementing income tax cuts to help with the cost of living pressures. Their manufacturing PMI was basically unchanged at 48.7 for October.

The PMI story was the same in Malaysia, in response their central bank held rates steady at 3%. Indonesian GDP was 4.9%, which was the slowest growth in a couple of years. 

Australia posted a trade surplus of AU$6.7bn for September, well below the $9.5bn expected. Retail sales are also subdued, up 0.9% month on month.

Australia’s relationship with China looks like it might be thawing too. Bucking the global trend, and probably a reflection of a slow start to tackling inflation, the RBA delivered another 25 bps rate rise, lifting the OCR to 4.35%. 

Here in NZ, the latest figures from Centrex indicate that company liquidations are up 40% year on year with retail and construction particularly badly affected. 

New Zealand business confidence bounced 21 points in October. Inflation expectations are flat. 

Unemployment edged up to 3.9% in Q3 too. 

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

Stay tuned for the next update.

Did you miss the last weekly update?

Catch-up on the previous market update.