Weekly Market Update: The Market Drops on ETF Delay

Late last week, what support we had for the BTC and ETH price faltered on the news that the SEC was going to delay its decision on the numerous ETF applications it is reviewing. 

Onchain data suggests the newest owners of coins saw this as bad news and sold, perhaps they were hoping for a quick gain.

Perversely, this wasn’t a great week for the SEC as it lost some high profile lawsuits and a judge deemed Ether as a commodity. 💪 Equally, there were several high profile institutional announcements, particularly in the payments space. 

On the other hand, zooming out to the wider economy, the trend of retracting PMI’s across economies continues. 

The US job market appears to be gradually softening. A keenly watched inflation indicator trended down while retail spending continues to surprise to the upside. Maybe, just maybe, the goldilocks recession is possible. 

Across the Atlantic, in Europe, some of the major economies like the UK, Germany and France are putting out some pretty dismal numbers from their manufacturing sectors – but there are green shoots happening there too.

In Asia, India’s growth looks to continue its robust year, same in Japan. While China’s problems seem to be embedded and are resisting the government’s efforts at stimulating spending and the wider economy at this time. 

Closer to home Australian CPI continues to trend down and their property market looks like it is feeling the effects of all those interest rate hikes.  In response to international and domestic data, the RBA held it’s rates at 4.1%.

While in New Zealand credit arrears are going up. Surprisingly, business confidence has turned around for August. 

As you would expect after a second week of price dips, the general market sentiment remains in fear territory this week.

Trend highlights this week: 

• The hopium of a quick ETF decision evaporated as the SEC delayed again. The soft hands created too much sell pressure with the result being all of the top 30 assets posting solid weekly losses. 
• BTC and ETH were down 8% and 6% respectively.
• Synthetix Network (SNX) was our best performing asset, up 8% on last week. 
• Bitcoin Cash (BCH) gave up most of last week’s gains to be this week’s biggest loser, ending down 14% this week.

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Highlights from the crypto space

As widely expected, the SEC delayed its decision on all 6 of the Bitcoin spot ETF applications. This rather took the wind out of the market on Friday, with BTC falling 5%. 

A deeper look at the Grayscale SEC ruling found a recurring theme; the SEC did not provide a “coherent explanation” for its rejection of their ETP filing. 

A New York court has dismissed a proposed lawsuit against Uniswap. Most importantly the judge classified Ether (ETH) and Bitcoin (BTC) as “commodities”.

According to Glassnode, long term investors continue to accumulate Bitcoin, with 40% of the total circulating supply dormant for greater than 3 years now.

Crypto influencer Bitboy (Ben Armstrong) has allegedly been removed from the company that holds his name for substance abuse. With over a million followers, this could cause quite a stir.

Blue Chip NFT’s have lost 30-60% of their value relative to ETH since the beginning of the year. 

Bloomberg Intelligence thinks a spot BTC ETF could happen as early as this week, but the odds are better that it will be before year end.

Other notable highlights from the crypto space:

• On the back of the ETF news, Kaiko reports that the average trade size on CEX jumped. 
• Digital Currency Group (DCG) has reached an in-principle deal with Genesis creditors to resolve Genesis’ bankruptcy claims. The plan could result in the recoveries of 70%-90%.
• Mercado Pago, Latin America’s largest fintech, is enabling USDC payments for Chile. 
• Global money rails provider, Swift undertook a cross chain trial with several banks and Chainlink to test how that would work. 
• The world’s 3rd largest asset manager, Fidelity put out an investment thesis for Ether. Even the big guys are wishing up to ETH. 
• Despite a blank ban on crypto assets, a Chinese court has found that they are legal assets and holders have property rights. 😕. It seems the judiciary and state can hold differing views. 
• The Colorado division of motor vehicles will accept crypto payment via PayPal. 
• Instadapp launched a new multisig wallet. The Avocado multisig takes the best of the Avocado wallet, but with some cool multisig features like a unified USDC gas tank that all signers can use to cover gas costs.
• Much hyped decentralised social media platform Friend.tech appears to have lost its shine. 
• X, the company formerly known as Twitter, has obtained a licence required for crypto payments. 
• In a rare move, the SEC put in a secret court filing against Binance. This has many guessing that there may be criminal proceedings coming against the exchange.
• Binance Japan is expanding its number of listed tokens to 100. While globally, Binance is going to stop supporting BUSD in 2024. 
• Robinhood has bought back $600m of its shares that the authorities confiscated from SBF. 
• A deep dive into Gary Gensler’s and the SEC’s court losses makes interesting reading. 
• Australian exchange, Independent Reserve snapped up the domain and assets of Bitcoin.com while prices are depressed.

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 

Further evidence of political instability in Sub-Saharan Africa with another coup, this time in Gabon. It looks like it’s spreading. 

In good news for global food inflation, wheat prices continue to fall and are down 30% this year.

🌎 Macro news TLDR: Declining PMI’s show a softening global economy.

U.S. economic news

US Jobs data looks like it is finally starting to soften, with less jobs available and less people quitting. Consumer confidence was down quite a bit in August, coming in at 106 vs 114 in July.

A restated estimate of Q2 GDP has been revised down to 2.1% from 2.4%. Finally, Personal consumption expenditures (PCE), another core measure of inflation, came in at 3.3% in July, up 0.2%. US Manufacturing PMI rose to 47.6 in August, while positive, it should be noted that this is the 10th straight month of contraction. 

And in Europe….

Eurozone PMI’s for August came in at a slightly improved 43.5. Looking at the country specific data, Germany and France were the deadweights while elsewhere, Ireland and Greece were doing well. Adding to Germany’s woes, their CPI has not moved in 4 months and remains stubbornly at 6.1%. 

UK’s manufacturing PMI continues to trend backwards with August coming in at 43, down 2 points on July.

Finally in the Ukraine, there are rumours that another grain deal might be on the horizon, in the meantime, it seems that strategic posturing in the form of intensification of fighting at key locations is the game plan.

And in Asia Pacific…

India has posted an impressive 7.8% GDP growth for the last year. They did signal growing concerns caused by weather related events. Japanese consumer confidence fell to a 4 month low of 36.1 and Indonesian inflation rose slightly to 3.27% in August. 

In an effort to prop up their property sector, Chinese cities are relaxing mortgage rules. Meanwhile, troubled developer Country Garden warned of a default after posting a big loss. 

China’s manufacturing activity continues to contract and they are at risk of missing their annual growth targets. 

Australia’s monthly CPI reading came in at 4.9%, down from 5.4% a month earlier. Housing and food costs are the primary drivers over there.

Building consents are down 8% on last year and new home loan lending is down 14% on the year. Interest rates are starting to bite. The RBA held the OCR steady at 4.1%, but left the door open to more rate rises. 

In NZ, the building sectors issues look to continue with building consents down 5.2% on last year. They were expected to rise marginally. Credit agency Centrix reports that arrears are growing, up 7.5% on last year. 11.7% of the population are now behind on payments. 

Somewhat perversely, the ANZ business confidence survey for August showed a healthy gain with hopes of a goldilocks recession coming through. 

Equally surprising, New Zealand’s terms of trade for Q2 were positive, sitting at 0.4%. In short, export prices for key items like Dairy and Meat were better than expected.

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

Stay tuned for the next update.

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