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 Holds Review Meetings with Grayscale and BlackRock on Bitcoin ETF Applications
On December 19, 2023, the U.S. Securities and Exchange Commission (SEC) engaged in review meetings with Grayscale and BlackRock regarding their respective applications for Bitcoin ETFs. Grayscale's discussion focused on a proposed rule change for NYSE Arca to list and trade shares of its upcoming spot Bitcoin ETF, marking their sixth meeting with the SEC, intensified by recent court decisions mandating the SEC's review of their application. BlackRock's meeting centered on a rule change for Nasdaq to list and trade its iShares Bitcoin Trust. This was BlackRock's fifth meeting with the SEC, where they discussed redemption and creation models for the ETF, recently updating their application to initially use a cash model. The industry anticipates the possibility of a spot Bitcoin ETF approval by January 10, 2024, coinciding with a deadline for the SEC to decide on Ark and 21Shares' application, although approval is not guaranteed.
Ripple Approved as Virtual Asset Service Provider by Central Bank of Ireland
Ripple Markets Ireland Limited, a subsidiary of crypto-payments firm Ripple, has been authorized by the Central Bank of Ireland to operate as a Virtual Asset Service Provider (VASP). This approval enables Ripple to offer certain digital asset services in Ireland and potentially across the European Economic Area once the Markets in Crypto Assets Regulation is implemented in late 2024. Ripple anticipates extending this license to the other 27 European Union states. The company highlights Ireland's regulatory clarity and supportive stance towards the digital assets and fintech industry as key factors in choosing Ireland as its primary EU base. Ripple's registration in Ireland comes amid ongoing legal developments in the United States regarding the classification of XRP tokens.
Global Securities Regulator IOSCO Issues DeFi Policy Recommendations
The International Organization of Securities Commissions (IOSCO), representing regulators of over 95% of global securities markets, issued policy recommendations for decentralized finance (DeFi) following its guidelines on crypto markets. IOSCO's guidance, aimed at its 130 member jurisdictions, addresses the challenge of regulating DeFi which traditionally lacks a central supervisory entity. The organization advises applying existing financial market regulations to DeFi activities and modifying rules where necessary. Key aspects include identifying responsible individuals within DeFi, which could include anyone with control or significant influence over financial products, services, or activities. IOSCO emphasizes that operating as a decentralized autonomous organization (DAO) does not exempt entities from regulatory responsibilities, asserting that all parties offering financial services or engaging in financial activities must adhere to relevant laws, regardless of their organizational structure or technology used.
Trading Desk Insights
Bitcoin has recently encountered a bit of intraday pressure in its trading journey. Fortunately for BTC, it managed to weather the storm when the S&P 500 experienced its most challenging day in the past three months. Presently, BTC finds itself hovering right around a resistance level, indicating a preference for a risk-reward scenario favoring short positions rather than long ones, despite the overall bullish sentiment in the market. Should prices dip below the 42,700 mark, it could serve as an early warning sign of impending short-term pressure, with a potential descent to 40,600 heralding further downside pressure, ultimately targeting the 38,000 level.
In the altcoin arena, there is a diverse range of trading performances. INJ, RNDR, and FET are witnessing profit-taking activities among traders, whereas SOL continues to soar to new yearly highs, gaining an impressive 8% today and over 300% since mid-October. Remarkably, SOL's rally remains unscathed by the SEC's classification of SOL as an unregistered security. Following the FTX collapse, a significant supporter of Solana, the network has experienced substantial growth in monthly active addresses and witnessed the launch of several memecoins, including BONK.
AVAX is also experiencing a substantial upswing, surging by 4% today and a remarkable 400% since mid-October. This impressive performance can be attributed to AVAX's strategic partnership with AWS in January and, more recently, its involvement in a proof-of-concept project with J.P. Morgan and Apollo Global.
The Bitcoin ETF narrative is steadily gaining momentum, resulting in an improvement in the GBTC discount, with the NAV discount hovering at approximately 8%. This represents the lowest discount observed since August 2021.
In the world of equity futures, there was a short-lived bounce on Thursday morning, marking a rebound from the S&P's most challenging day since September. This rebound was facilitated by falling Treasury yields, reigniting the year-end rally. The previous day's session put an end to a nine-day winning streak, while Treasury yields continued their descent from previous highs, with the benchmark 10-year Treasury yield reaching its lowest level since July, hovering below the 3.85% threshold.
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.
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