Weekly Market Update: Market Recovers After ETF Hype

Most of the crypto news continues to be dominated by the performance of the BTC ETFs. The TLDR version is that they appear to be performing very well, Grayscale excluded. Grayscale was holding the locked up BTC of the FTX estate, so when it became liquid, they sold. 

Grayscale also appears to be playing a high stake game of betting that their high fees will be offset by tax considerations, apathy and other considerations… meaning not everyone will leave. 

The other notable crypto talking point was the flop at Paypal when they announced they had AI in their stablecoin. The chart was spectacular… even by crypto standards. 

In global news, Middle East tensions continue to rise. It’s already significantly affecting shipping costs, but has yet to filter through into oil, although there was a spike after the US base in Jordan was attacked. 

The US economy appears to be doing pretty well, GDP for Q4 was nothing short of stellar, while one of the Fed’s preferred measures of inflation, PCE, was at 2%. 

The Europeans are in a different place of the cycle, manufacturing is improving but still in contraction, and the ECB held the line on its rates.

In Asia, China continues its battle for growth whilst Japan keeps walking its own path by holding onto its currency curve controls, despite growing calls for action.

Australian business confidence improved and their PMI is trending up. While in New Zealand, our government deficit was less than expected due to higher tax income….but still in deficit, just like all recessions. 

The crypto market sentiment has improved slightly this week and we now sit back in greed territory. 

Highlights this week: 

• The buoyant prices mean we continue to see both rising volumes and users across Easy Crypto, with buy volume skewed toward BTC, ETH and SOL. 
• This week saw a broad based bounce of the top 30 assets with the overwhelming majority up 10-20% on the week.  Crypto baby! 
• At the time of writing BTC was up 10%  with ETH close behind, up 9% and SOL up a healthy 29%. 
• Render (RNDR)  was our best performing asset this week, up 32% 
• Our biggest loser this week was NEM (XEM) down 15%. 

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

Highlights from the crypto space

Everyone loves a villain, it looks like the FTX estate is partially to blame for the large GBTC outflows as they have liquidated over a billion dollars in shares. Here’s another, the SEC has delayed the spot ETH ETF applications. 

Someone has created a Dune Dashboard of the known BTC wallet addresses of the ETF providers. 

Crypto.com research is out saying that the number of crypto owners has increased 34% in 2023.

Kaiko research suggests that Binance’s market share has recovered since it settled with the US DoJ.

Tokenised Real World assets have been spoken about for years. The team at Noble are continuing on with their build out. 

Other notable updates from around the crypto space:

• Solana has released extensions for enterprise use cases. 
• MakerDAO’s loan balance sheet has shifted with crypto backed loans now accounting for more than 50% of their loan book. 
• An A16 partner thinks that Blockchains can save the internet. Probably nothing. 
• The EU is moving to protect its investors and compliant crypto companies from those who have not become MiCA compliant.  
• Paypal has released AI features for its stablecoin $PYPL where you can earn cash back. The CEO may have over sold it.

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 … 

The cost of moving a 40ft shipping container continues to increase due to the issues in the red sea, up another 5% this week alone. Weirdly, to this observer, oil is trading at a relatively placid $76 per barrel. 

Meanwhile in IMF land, they see a world where “ the clouds are beginning to part” and have increased their global growth forecast to 3.1%. 

🌎 Macro news TLDR: PMI’s are showing gains across the globe.

U.S. economic news

The conference board’s Leading Economic Index, which tracks major turning points in the US economy, posted its 21st monthly decline. 

PMI’s are trending the other way with January’s flash composite PMI increasing to 52.3. Despite that, the market was surprised by a blistering Q4 GDP figure of 3.3%, way ahead of the forecast. And a key inflation indicator, Personal Consumption Expenditures (PCE) came in at 2% annualised. Not bad at all. 

Meanwhile in Europe….

Eurozone PMI for January came in at a sluggish 47.9. While this is an improvement on December, the gains are marginal. 

The ECB sat tight and held interest rates at 4%, but the tone was accommodating toward future rate cuts. Given they narrowly avoided a recession in Q4 with GDP at 0.1%, questions will be asked about stimulus sooner rather than later. 

A weak German economy has had dramatic effects on other European countries who were reliant on Germany for trade…. The ripple effect is growing. 

And the EU has reaffirmed its military support for Ukraine. A strong European / Nato position on Ukraine now is seen as important given the dynamics emerging in the upcoming US election. 

And in Asia Pacific…

China’s stock market performance has been exceptionally weak over the last year, and leveraged speculators are only compounding the losses. In response some Chinese are turning to crypto as a better investment.

The PBOC later surprised markets by reducing banks’ capital reserve requirements. In theory this will increase lending, but it also comes with leveraged risk.

Much like the subprime issues of the GFC. Case in point, a Hong Kong court has ordered EverGrande be put into liquidation, this one is gonna hurt. 

Despite declining CPI, the BoJ has retained its’ Yield Curve Controls and ultra low interest rates. Japanese exports were up an impressive 9% in the December year.

Japan’s PMI’s are also up. Taiwan’s exports continue to get hammered, down 16% YoY. South Korea’s Q4 GDP was 2.2%, well up on Q3’s 1.3%. 

Australia’s business confidence has risen to -1 in December. This is an improvement but still their 3rd consecutive negative month. Similarly, their January Flash PMI showed improvement but is still in contraction at 48.1. December’s retail sales were disappointing, down 2.7%. 

In New Zealand, Treasury’s 6 monthly report showed that the tax take, and hence the government deficit, were 1.1% better than forecast for the period ending 30 November 23. 

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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