Markets Insights
Economic Calendar
Next FOMC meeting: Dec 13th 2023
- Probability of a 0bps hike → 90%
- Probability of a 25bps hike → 10%
The News Room
BlackRock Plans to Launch Ethereum ETF, Nasdaq Filing Reveals
BlackRock, the world's largest asset manager, is increasing its involvement in cryptocurrencies by planning to launch an Ethereum-based ETF. The proposed ETF, which requires regulatory approval, was disclosed in a Nasdaq filing. This venture builds on BlackRock's previous efforts to create a Bitcoin ETF, indicating a broader embrace of digital assets by the firm. BlackRock's CEO Larry Fink, who previously expressed skepticism about cryptocurrencies, has become an advocate. The Ethereum ETF will involve Coinbase as the custodian and an unnamed entity to manage the cash holdings. A critical aspect of the filing is a market-surveillance agreement aimed at addressing potential SEC concerns about market manipulation. BlackRock's move into Ethereum ETFs follows the establishment of Ether futures ETFs, suggesting a growing acceptance and institutionalization of cryptocurrency investments.
Nomura Launches Ethereum Fund for Institutional Investors
Nomura Holdings, Japan's premier investment bank, is launching a new Ethereum-based fund targeting institutional investors through its subsidiary, Laser Digital Asset Management. This "Laser Digital Ethereum Adoption Fund SP" is a follow-up to their previously released Bitcoin fund and will focus on long-only spot positions in Ethereum, with a yield-enhancement strategy through ETH staking. Managed within a segregated portfolio company in the Cayman Islands, the fund has partnered with Komainu for custody services, aligning with regulatory standards from the U.K. Financial Conduct Authority and Dubai's Virtual Asset Regulatory Authority. This initiative reflects Nomura's belief in Ethereum as a key player in the digitalization of the economy and a significant trend in the web3 economy, offering institutional investors a secure and regulated investment avenue into digital assets.
UBS to Offer Crypto-Linked ETFs to Select Clients in Hong Kong
UBS Group has begun offering select clients the ability to trade crypto-linked exchange-traded funds (ETFs) in Hong Kong, following in the footsteps of HSBC. Wealthy clients of UBS will have access to three futures ETFs authorized by Hong Kong’s Securities and Futures Commission, including Samsung Bitcoin Futures Active, CSOP Bitcoin Futures, and CSOP Ether Futures ETFs. This move comes as Hong Kong considers allowing retail investors direct access to cryptocurrency spot ETFs, indicating a growing interest in crypto investments and the use of innovative technologies in the financial sector. The SFC has also expanded the range of investors eligible for crypto ETFs, subjecting them to a knowledge test to assess their understanding of virtual assets. With Hong Kong's official launch of a crypto licensing regime, licensed exchanges like HashKey and OSL can now offer retail trading services.
Trading Desk Insights
Stocks edged higher on Friday, with investors closely monitoring Treasury yields following the S&P 500’s break of its eight-day winning streak. The S&P 500 dipped 0.8% on Thursday, halting its longest rally since 2021, while the Nasdaq Composite dropped 0.9%, ending its nine-day streak of gains, the longest in two years.
Federal Reserve Chair Jerome Powell asserted the Fed's commitment to aligning policy with their 2% inflation target, admitting a lack of confidence in having already achieved this balance. He emphasized the need for caution, noting the narrowing gap between the risks of overacting and underacting. Thursday also saw a Treasury auction with lukewarm demand, resulting in elevated yields.
From an economic standpoint, the Michigan 1-year inflation expectations unexpectedly rose to 4.4%, surpassing the predicted 4%, and the 5-year forecast climbed to 3.2%, against estimates of 3%. This has exerted some intraday pressure on risk assets.
In the cryptocurrency market, Bitcoin maintained its upward trajectory, hitting a session high of 37,450, despite a 57% drop in volume to $38.7 billion. A breakthrough above the $38,000 mark could potentially drive prices towards the $40,000 level.
In a significant development in the crypto exchange landscape, the CME Group has overtaken Binance as the world's largest Bitcoin futures exchange, a change that underscores the increasing institutional interest in Bitcoin. Predominantly utilized by major traditional financial institutions, CME's open interest on Thursday reached $4.07 billion, accounting for 24.7% of the global Bitcoin futures market, surpassing Binance's $3.8 billion.
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