Weekly Market Update: Institutional Interest Skyrockets

The continued performance of Bitcoin has led to a spike in institutional interest in the futures market, signalling the potential for market growth. 

Tether announced its Q2 results and is now bigger than many banks and countries! A sign of great product market fit. DeFi provider Curve suffered an exploit and there was plenty of memecoin action on Base’s layer 2 this week.

Globally, oil prices are picking up as the OPEC+ reduces production and the global economy shows signs of improved strength and stability. There was more good news in Europe with inflation trending in the right direction. 

Both the Fed and the ECB delivered rate hikes as expected. Japan surprised markets by announcing changes to its yield curve controls. While China’s attempts to stimulate growth have focussed mainly on its property sector and haven’t moved the needle yet.

Across Asia, there has been GDP growth in many core economies signalling a potential turnaround. In Australia the RBA delivered another surprise by holding its OCR at 4.1% to allow it more time to assess the impact of previous rises. 

The sentiment in the crypto market has remained steady in neutral territory as the markets meander sideways showing a unusually lack of volatility.

Trend highlights this week: 

• The lack of volatility means we have an even spread of gains and losses in the top 30 assets this week.
• BTC and ETH had a very quiet week, both flat at the time of writing. 
• UNI and MKR were the best performing major assets, up 15% on last week. MKR is up 50% in the last 2 weeks thanks to its token buyback initiative and for the second week in a row is our biggest gainer of the week. 
• Synthetix network (SNX) was our biggest loser of the week, down 12%.  

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

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Highlights from the crypto space

New Institutional interest skyrocketed in Q2 with record volumes entering into the ETH and BTC CME futures market.

Contrary to this, and probably a sign of how much of a lagging indicator they are, Sequoia capital is reducing its VC funds allocated to Crypto.

Charlie Biliello reports on the YTD returns for assets. Bitcoin leads the pack😎

Kaiko research into the Altcoin surge of last week shows that it was more extreme outside the US, as Altcoin dominance hit a 4-month-high after the Ripple ruling. 

In a signal that the SEC will appeal the Ripple decisions, they have stated in another lawsuit that the case was ‘wrongly decided’. 

A House bill on crypto regulation passed its first reading in the US Senate.

The FT reported that the SEC asked Coinbase to delist every asset except for Bitcoin as it claimed they were all securities. Coinbase then refuted that article. 

Issuer of USDT, Tether reported a staggering Q2 profit of US$850m, TLDR; they are doing better than some banks.

President Putin has said yes to the planned CBDC or digital Ruble. 

Worldcoin mainnet went live with the $WLD token doing pretty well due to constrained supply. Worldcoin, introduced by the creators of OpenAI, has sparked plenty of controversy due to its plan to become a biometrics-driven financial rail (read Vitalik’s long piece here). Rumours are that there are already Telegram black markets for accounts. 

Binance US has signalled it will challenge its CFTC lawsuit. They are also withdrawing from 3 European markets due to their inability to get licences. In better news, Binance announced it is re-entering Japan via an acquisition.

Other notable highlights from the crypto space:

• The Avalanche foundation has allocated $50 million towards initiatives that allow for real world asset tokenisation on its chain.
• Memecoin activity on Coinbase’ new layer 2 base has picked up massively with some massive rises followed by inevitable falls. Be careful out there.
• Italy’s central bank is working with Polygon and Fireblocks to help create a play pen for institutions who want to dabble in tokenised assets. 
• A Fidelity investments paper from 2020 has resurfaced.. The key line “investing in bitcoin today is akin to investing in Facebook when it had 50 million users” 💥
• Crypto.com got a licence from the Netherlands central bank to operate as a crypto service provider.
• A small subset of Curve pools has been hacked, the damage appears to be minimal.
• Threshold DAO has announced it has successfully bridged BTC and ETH.

That’s the summary of the crypto world, so now let’s look at other macroeconomic news and developments from around the globe.

Starting off with global news 

The IMF has lifted its global GDP forecast for 2023 from 2.8% to 3% driven mainly by emerging economies growing better than expected.

🌎 Macro news TLDR: … European Inflation has turned

The International Energy Agency is reporting that oil stocks are starting to fall and demand is outpacing supply, just as OPEC+ wanted. Brent Crude is at a 3-month-high and forecast to go higher.

U.S. economic news

As widely expected, the US Fed raised its funds rate by 0.25% to 5.25. More focus was on the commentary around any further rate rises which Chair Powell said would be decided by the data on a meeting by meeting basis.

This week Meta (Facebook) and Alphabet (Google) both put out quarterly results ahead of market expectations, which is seen as a sign of an improving economy. 

The US housing market may have bottomed as it experienced its 3rd straight month of increased sales. US consumer confidence is ticking upwards due to the continued strength of their job market as well as the fall in inflation.

Probably with good cause, as US Q2 GDP was 0.6% above estimates at 2.4%! While PCE (an alternative measure of inflation) came in at 3.8%, core PCE at 4.1%. 

And in Europe….

The ECB raised interest rates by 0.25% to 3.75%. While the rise was widely expected, the signalling of a possible pause in September was unexpected.

Gross domestic product in the eurozone expanded by 0.3% in the second quarter, above expectations of 0.2%. Unaudited inflation measures show that it continues to fall across the block and is trending to 5.3%.

And in APAC…

China’s politburo signalled more support for its troubled property sector, but held off any major stimulus. China’s PMI for July was up slighting to 49.3, still contracting but trending in the right direction. 

In a leading indicator, Japan’s population continues to fall at an alarming rate. The Bank of Japan surprised markets on Friday by announcing the introduction of more ‘flexibility’ into its years long Yield Curve Controls which appears to signal that it might become more hawkish. 

South Korea’s GDP for Q2 exceeded expectations at 0.6%. Taiwan’s economy expanded in Q2, up 7.2% or 1.5% on last year. 

Australia put out its quarterly CPI figures with Q2 coming in at 0.8%, 6% annualised. This was lower than the 6.2% many expected. Services inflation actually went up to 6.3% and will be giving the RBA reason for concern.

In Sydney, house prices are up 5.3% in Q2 driven by rampant demand. This is just 3% off the March 2022 peak.  Meanwhile the RBA again surprised markets by holding its official cash rate steady at 4.1%.

Statistics New Zealand put out the Household cost of living index this week showing a 7.2% annual increase in costs. The biggest drivers? Interest costs and fresh food. Another key indicator, the cost of building a new house is up 9.5% on last year.

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

Stay tuned for the next update.

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