Markets Insights
Economic Calendar
Next FOMC meeting: Jan 31st 2024
- Probability of a 25bps ease → 15%
- Probability of a 0bps hike → 85%
The News Room
SEC Chair Hints at Reevaluation of Spot Bitcoin ETFs, Citing Recent Court Rulings
SEC Chair Gary Gensler indicated in a CNBC interview that the SEC is reconsidering its stance on spot Bitcoin ETFs, reviewing "between eight and a dozen filings," including a recent addition by Pando. He referenced the SEC's history of denying such proposals but mentioned that the courts in the District of Columbia have influenced a reevaluation. Gensler avoided directly referencing the Grayscale ruling but acknowledged the SEC's adherence to laws and court interpretations. Grayscale achieved a legal victory against the SEC, compelling the regulator to reevaluate its application to convert its Bitcoin Trust (GBTC) into an ETF, a decision the SEC chose not to appeal. Since then, the SEC has resumed discussions with Grayscale, aiming for a collaborative and expedient review process. This development has generated optimism about the approval of a Bitcoin ETF, with other traditional asset managers such as BlackRock also vying for approval. Bloomberg analysts estimate a high chance of approval by January 10 for Ark and 21Shares’ proposal, despite skepticism from some, including former SEC staffer John Reed Stark.
Hacker Pleads Guilty to $12M Solana DeFi Hacks in First Smart Contract Fraud Conviction
Shakeeb Ahmed, a security engineer, has pleaded guilty to exploiting two Solana DeFi apps, resulting in over $12 million in stolen funds. U.S. Attorney Damian Williams announced the conviction, highlighting the rapid response and conviction despite the sophistication of the crime. Ahmed's first attack in July 2022 targeted an unnamed decentralized exchange, generating $9 million through inflated fees. After negotiating with the exchange, he returned most of the stolen funds but kept $1.5 million. His second attack on Nirvana Finance involved manipulating flash loans to profit $3.6 million, leading to Nirvana's shutdown after a failed negotiation. Ahmed attempted to conceal his activities by converting the stolen assets to Monero, using crypto mixers, transferring funds to the Ethereum blockchain, and researching legal defenses and escape options. He has been charged with computer fraud, facing a maximum of five years in prison, with sentencing set for March 2024. Ahmed has agreed to pay $5 million in restitution to his victims.
Rulematch, a Swiss Crypto Exchange for Banks, Goes Live With Spain's BBVA
Switzerland has launched Rulematch, a new cryptocurrency exchange tailored for banks, incorporating Nasdaq's technology and starting with seven major banks and securities firms, including Spain's Banco Bilbao Vizcaya Argentaria (BBVA). Rulematch offers Bitcoin and Ether spot trading against the dollar for institutional participants, utilizing Metaco's crypto custody tech and Nasdaq's risk management features. This platform responds to the growing institutional interest in crypto trading, offering a traditional finance-like experience with an anonymous central-limit-order book, rapid execution times, and integrated post-trade settlement. Backed by Flow Traders, Consensys Mesh, and FiveT Fintech, Rulematch is focusing on jurisdictions meeting OECD and FATF standards. The platform, currently used by BBVA and Germany's DLT Finance, is expanding its client base with rigorous due diligence.
Trading Desk Insights
On an intraday basis, Bitcoin has been capped by a declining trend line since early December, indicating a slowdown in momentum. As long as prices remain below 43,575, we expect further downside towards 41,400 and 40,600 in extension.
Turning our attention to the realm of derivatives, the imminent expiry date of CME contracts is generating anticipation within the trading community. We foresee heightened volatility in both TradFi index futures and crypto-related CME futures. Of particular note is the upcoming expiry on December 29th for CME BTC options. Currently, the CME Group maintains its leading position in BTC futures open interest, boasting a substantial $5.29 billion, closely followed by Binance, with $4.65 billion in open interest.
Solana's smartphone sales have experienced a remarkable surge, attributed to a generous airdrop of 30 million BONK tokens exclusively available to Saga phone owners. According to one of Solana's co-founders, this strategic move has resulted in a tenfold increase in sales and the potential of selling out by year-end. BONK serves as Solana's equivalent to the dog-themed meme coin dogecoin.
In the world of equity futures, the situation is somewhat mixed as we approach Friday morning. The stock market may witness heightened volatility as the S&P 500 and Nasdaq-100 undergo their respective quarterly rebalancing processes. Notably, both the S&P 500 and Nasdaq have demonstrated strong performance this week, with gains of 2.5%. For the S&P 500, this would mark its seventh consecutive weekly gain, its longest winning streak since 2017. Similarly, the Dow is also on track for a nine-week winning streak, its most prolonged run since 2019.
Stock markets experienced a rally during the week, bolstered by the Federal Reserve's acknowledgment on Wednesday that its efforts to combat inflation are beginning to yield results. Moreover, the Fed's indication of three expected interest rate cuts in 2024 has positively influenced investor sentiment. However, the situation across the Atlantic presents a contrasting narrative, with both the Bank of England and the European Central Bank pushing back against market expectations for rate cuts on Thursday.
Technical Charts
Disclaimer
This research is for informational use only. This is not investment advice. Other than disclosures relating to Secure Digital Markets this research is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. The information, opinions, estimates, and forecasts contained herein are as of the date hereof and are subject to change without prior notification. We seek to update our research as appropriate.
Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation. The price of crypto assets may rise or fall because of changes in the broad market or changes in a company's financial condition, sometimes rapidly or unpredictably. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments. We and our affiliates, officers, directors, and employees, excluding equity and credit analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives, if any, referred to in this research.
The information on which the analysis is based has been obtained from sources believed to be reliable such as, for example, the company’s financial statements filed with a regulator, company website, company white paper, pitchbook and any other sources. While Secure Digital Markets has obtained data, statistics, and information from sources it believes to be reliable, it does not perform an audit or seek independent verification of any of the data, statistics, and information it receives.
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Crypto and/or digital currencies involve substantial risk, are speculative in nature and may not perform as expected. Many digital currency platforms are not subject to regulatory supervision, unlike regulated exchanges. Some platforms may commingle customer assets in shared accounts and provide inadequate custody, which may affect whether or how investors can withdraw their currency and/or subject them to money laundering. Digital currencies may be vulnerable to hacks and cyber fraud as well as significant volatility and price swings.
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