Markets Insights
Economic Calendar
Next FOMC meeting: Dec 13th 2023
- Probability of a 25bps ease → 0%
- Probability of a 0bps hike → 100%
The News Room
Singapore Plots ‘Live’ Wholesale CBDC Pilot for Next Year
The Monetary Authority of Singapore (MAS) has declared its intention to issue a "live" central bank digital currency (CBDC), partnering with local banks for domestic payment settlements using a wholesale CBDC as a common settlement asset. This initiative will allow retail customers to engage in transactions with merchants using tokenized bank liabilities, which merchants can then credit with their respective banks. This marks a significant progression from MAS's prior CBDC explorations, which were confined to simulated test environments. The initiative is part of Project Orchid, under which MAS will conduct four trials focusing on tokenized bank liabilities, wallet interoperability, supplier financing, and institutional payment controls.
Notably, J.P. Morgan is investigating payment controls to enable institutional clients to transfer deposit tokens outside of their direct customer base within a trusted ecosystem, and Amazon, in partnership with HSBC, is exploring the use of tokenized payables to enhance liquidity for merchants. MAS has also released a Project Orchid blueprint outlining the technological infrastructure required for a CBDC system. This announcement aligns with recent remarks from the International Monetary Fund's Kristalina Georgieva, who advocated for the replacement of cash with CBDCs and encouraged central banks to persist in their research and development of CBDCs.
Fidelity Follows BlackRock with Ethereum ETF Filing Amid Growing Interest in Crypto ETFs
Fidelity Investments has submitted a filing for an Ethereum-based exchange-traded fund (ETF), following in the footsteps of BlackRock, which made a similar move earlier this month. The proposed Fidelity Ethereum Fund, if approved by the U.S. Securities and Exchange Commission (SEC), would provide a more accessible investment vehicle for Ether (ETH), Ethereum's native cryptocurrency. The listing exchange for the ETF would be a platform owned by Cboe Global Markets. Both Fidelity and BlackRock are also awaiting SEC decisions on their proposed Bitcoin ETFs. The introduction of ETFs tracking major cryptocurrencies like BTC and ETH could potentially draw a significant influx of new investment into the crypto market, leveraging the convenience of traditional brokerage accounts and the marketing power of prominent financial institutions.
Global Standards Setter for Securities Regulation Publishes Crypto Markets Policy Recommendations
The International Organization of Securities Commissions (IOSCO) has responded to the crypto industry's feedback by rejecting the call for a unique regulatory framework for stablecoins, citing similarities in risks with traditional financial markets. Instead, IOSCO emphasizes the need for stablecoin regulations to be in line with established principles for securities market regulation. Moreover, the organization has agreed to demands for increased accountability from financial influencers, suggesting that regulatory bodies should ensure that crypto promotions are transparent about risks and any promotional agreements. This stance aligns with IOSCO’s broader objective of coordinating a global regulatory response to the challenges posed by crypto asset service providers.
Trading Desk Insights
Stock futures are displaying minimal fluctuations as the shortened Thanksgiving holiday week starts. U.S. markets are slated for closure on Thursday in observance of Thanksgiving, with Friday also slated for abbreviated trading hours. It's worth noting that trading activity surrounding the Thanksgiving holiday has exhibited volatility in recent times, yet it's essential to underscore that November consistently registers as the S&P 500's most robust performing month. Wall Street is riding the momentum from the prior week, with the S&P 500 concluding the week 2.2% higher, and the Nasdaq securing a 2.4% gain, marking its most favorable performance since June.
OpenAI, the pioneering entity behind ChatGPT that significantly propelled artificial intelligence to the forefront last year, disclosed a noteworthy leadership change on Friday. The organization announced the departure of its CEO, Sam Altman. Following this development, Microsoft shares experienced an uptick of more than 1% after revealing that former OpenAI chief Sam Altman would assume a prominent role at the technology behemoth, spearheading a newly-established AI research team. On the horizon, we have Nvidia, set to report earnings on Tuesday. This event bears significance, as Nvidia has emerged as the year's top-performing stock, delivering an extraordinary surge of over 200%.
Turning our attention to the realm of cryptocurrencies, Bitcoin's recent price action has commanded significant attention, despite a decrease in trading volume. Notably, prices rebounded from the 20-day moving average, hovering around the 35,600 mark, surging to a peak of 38,000 before undergoing a subsequent retracement. The Relative Strength Index (RSI) maintains support from an ascending trend line, advocating for further upside.
Shifting gears to ETF developments, both 21Shares and ARK have made adjustments to their Bitcoin ETF spot filing while disclosing an 80 basis bps fee structure. These updates bear a positive connotation, indicating active engagement with the Securities and Exchange Commission (SEC) to optimize the likelihood of approval.
In parallel news, the landscape of digital asset investment products has been witnessing consistent inflows, with the past week alone recording a substantial $176 million influx. This marks the eighth consecutive week of positive inflows, elevating the year-to-date tally to an impressive $1.32 billion. Of particular note is the increasing share of Exchange-Traded Products (ETPs) in the overall crypto trading volumes, currently averaging 11%, significantly surpassing the long-term historical average of 3.4%.
Finally, in a noteworthy development, Santander bank has introduced Bitcoin and Ethereum trading services for its clientele in Switzerland, further solidifying the integration of cryptocurrencies into the financial landscape.
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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