Weekly Market Update: Grayscale mass exodus affects markets

It looks like the combination of over-hyped expectations and a large exodus of funds unlocked in Grayscale’s ETF has weighed on the market price this week.

According to Bloomberg ETF analysts the Spot ETF’s have done exceptionally well, however expectations were way out there…” buy the hype sell the news” is a recurring pattern in all markets. 

Outside of the ETF news, there has been plenty going on in the crypto space. Some Mt Gox creditors have been paid out after 10 years, while bankrupt players like FTX and Celsius continue to adversely affect markets by selling assets. 

In spite of all this, Blockworks have put out a piece of research indicating that BTC is tracking ahead of where it was relative to other halving cycles. Call that bullish. 

In Global news, the Middle East volatility is starting to have major impacts on some goods trade and with the apparent spreading of the conflict, it is hard to see how this gets resolved quickly. 

In the US, consumer spending was up in December, and unemployment has dipped. Economists are all scratching their heads about that market at the moment. In Europe, the UK appears to be going backwards with inflation up and retail sales well down, however there was a glimmer of good news out of Germany finally. 

In Asia, China missed their annual GDP target and their government owned banks have started to prop up the Yuan. It’s not looking great longer term either as they continue to shrink their population.

Elsewhere, CPI across the region is trending down with Japan, Hong Kong and Malaysia all posting declines. In Australia their labour market looks like it is softening.

In New Zealand prices are falling for food and housing, while our massive immigration bubble continues on and Services has followed manufacturing into a recession. Most importantly for New Zealand Q4 CPI declined and continues to track under the RBNZ forecasts. 

The Crypto market sentiment has retracted from greed to neutral in the last week.

Highlights this week: 

• Despite the price action this week, trading volumes remain elevated particularly for BTC as the market tries to guess what will happen next. 
• The majority of top 30 coins are down around 8-15% this week, essentially highlighting how correlated the market is to BTC. 
• At the time of writing BTC was down 9% while ETH gave up all the previous week’s gains to be down 14%. 
• iExec RLC was our best performing asset this week, up 39% off the back of its integrated development environment announcement. 
• Our biggest loser this week was Optimism (OP) down 23%. 

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

Highlights from the crypto space

Coinshares reports that the sector had a record $17.5bn in institutional trading volumes last week. As a benchmark, we’ve been averaging $2bn per week. Coinshares have also acquired US ETF issuer Valkyrie. 

Now that the dust has settled a little on the ETF launches, it’s logical to ask did the BTC ETF hype live up to expectations…..the senior ETF analyst at Bloomberg thinks so. 

The Bitcoin ETF buzz has given us a new term, the $GBTC Gouge. Coined because of massive outflows as formally trapped investors flee to liquid products.

The mass exodus from Grayscale’s BTC trust is being blamed for this week’s price decline. Lastly, the SEC has delayed its decision on the ETH ETF applications. Decisions are now expected in May.

Other notable highlights from around the crypt space:

• There are growing reports that some Mt Gox creditors are receiving payouts from the 2014 hack. 
• Coin Centre rebuffed Senator Warren’s crypto bill as being unworkable. 
• Remember Celsius? They are still pestering the community and apparently unstaking their $1.6bn in ETH to pay creditors. 
• Pantera Capital put out its predictions for the year ahead which makes some good reading. 
• Venezuela is phasing out its Petro backed government issued PETRO coin after 5 years of operation. 
• With 93 days to go, Blockworks is reporting that the Bitcoin price is tracking ahead of the past 2 halvings. You do you.

• Chainlink has partnered with Circle to allow for cross chain transfers. 
• The EU has provisionally passed new rules to combat money laundering in Crypto.

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.

Related: Learn more about Bitcoin halving.

What is going on in the world of Finance … 

The Middle East is looking increasingly unstable. Pakistan and Iran have gone tit for tat, Hezbollah and Israel are still going at it and the US and Houthies are continuing to bomb each other. In response, Ocean shipping rates are skyrocketing. 

🌎 Macro news TLDR: …the Fed blinked, the ECB held the line

U.S. economic news

US Retail sales for December came in at a very healthy 0.6%, their consumers seem to be doing ok. Industrial production also ticked up. Claims for unemployment fell last week to the lowest levels since September 2022. 

The US congress passed a stop gap measure to extend government funding until March. The Federal Reserve’s reverse repo facility looks to be drying up and this is leading to calls for more a more accommodating Fed funds rate. 

Meanwhile in Europe….

UK inflation increased in December, defying expectations that they had CPI tamed. This will push any rate cuts out. 

Adding to the challenges, December Retail Sales in the UK were awful, suffering their biggest drop in 3 years. 

Germany’s economic expectations continue to creep up, so maybe, just maybe, they have turned the corner. 

And in Asia Pacific…

China’s population declined for the second year in a row. Their demographic challenges are enormous and so far measures to increase child bearing aren’t having any impact. 

China’s 2023 annual GDP was 5.2% below the forecasted 5.3% and well below the target of 5.5%. Economists are politically calling the recovery shaky. In response China’s banks are dumping USD to prop up the Yuan. 

Japan’s CPI was 2.6% for the year to December 2023, with core CPI even lower at 2.3%. CPI is trending down in Malaysia and Hong Kong too.

Australia shed 65,000 jobs in December, most from full time roles. Stats NZ had a busy week. First, reporting that its food price index fell to its lowest level since December 2021.

It also put out the November immigration data which continues to show large population increases from immigration. REINZ reports that house prices fell 1.1% across NZ, with Auckland being the biggest loser, down 2.2% compared to November.

Services PMI fell significantly in December to 48.8. Looks like we got our recession. Finally Q4 CPI data came out plus 0.5% for the quarter or 4.7% annualised. 

Both under the RBNZ forecast of 0.8% for the quarter and 5% over the year. The concern will be around the Non-Tradable (domestic) inflation which continues to run hot at 5.9% annualised, above the RBNZ number of 5.7%. 

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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