April 5, 2024

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Next FOMC meeting: May 1st 2024

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The News Room

Major Financial Firms Named as Authorized Participants for BlackRock's iShares Bitcoin ETF

Goldman Sachs, alongside UBS Securities, Citigroup Global Markets, Citadel Securities, and ABN AMRO Clearing USA, has been named as an authorized participant for BlackRock’s iShares Bitcoin Trust (IBIT), a move indicative of increasing traditional finance interest in the spot Bitcoin ETF sector. Authorized participants play a crucial role in the creation and redemption of ETF shares, ensuring liquidity and price accuracy. This development reflects a growing acceptance of Bitcoin ETFs by major financial institutions, as noted by Bloomberg Intelligence analyst Eric Balchunas. Since its launch on January 11, alongside nine other funds, IBIT has attracted significant interest, securing over $14 billion in net inflows, almost double that of its nearest competitor, highlighting the growing collaboration between traditional finance and the cryptocurrency market.

Bitcoin Exchange Reserves Hit Record Low as Investors Withdraw 90,700 BTC, Indicating Long-Term Holding Trend

Bitcoin exchange reserves have hit an all-time low, with over 90,700 Bitcoin withdrawn from major exchanges in the last month, as per CryptoQuant data, signaling a trend towards long-term holding. This outflow, a continuation of a multi-year trend, could be influenced by factors like Bitcoin's price rise, the approval of spot Bitcoin ETFs, and anticipation of the Bitcoin halving event. Glassnode reports a shift of Bitcoin from long-term to short-term holders, with short-term holder supply absorbing about 1.121 million Bitcoin from long-term holder distribution. Economic indicators from the U.S. and a strong dollar, driven by an unexpected increase in U.S. manufacturing activity, might be affecting Bitcoin's performance, with analysts suggesting that the strong dollar and upcoming U.S. economic data could influence Bitcoin's future price movements.

Sony Bank Initiates Polygon-Based Stablecoin Test for Enhanced Gaming and Sports Transactions

Sony Bank, the banking arm of the Japanese gaming and entertainment conglomerate, is testing the issuance of its own stablecoin on the Polygon blockchain, aiming to leverage the benefits of lower payment and remittance fees to enhance its gaming and sports intellectual properties. The proof-of-concept, managed by Belgian blockchain firm SettleMint, will explore legal implications of transferring a Japanese yen-backed stablecoin, with the trial expected to last several months. This move is part of Sony Group's broader foray into Web3 development, including a patent for NFT usage in gaming and collaboration with Startale Labs for a public blockchain network. The initiative aligns with Japan's regulatory framework for stablecoins, introduced to ensure user protection and guarantee redemption at face value, sparking interest from other firms in exploring stablecoin issuance in Japan's economy.

Trading Desk Insights

Bitcoin is currently navigating through a symmetrical triangle formation, hovering without a definitive direction. After a bounce from the triangle's lower edge near $64,500, the momentum is expected to propel us toward a recent peak of $72,000. With the ETF market witnessing solid inflows and the looming supply shock anticipated by the market, a breakout above this pattern, leading to new all-time highs, seems likely in the near term.

In terms of ETF movements, the scene remains bullish with net inflows hitting $213.4 million, while Grayscale's outflows were comparatively modest at $79.3 million.

The ETH/BTC ratio, an indicator often associated with altcoin market leadership when on the rise, is teasing recent low levels. This underperformance by ETH could hint at a growing cautious sentiment and a dampening enthusiasm for altcoins.

March saw a remarkable surge in trading volumes, with spot trading on centralized exchanges jumping 108% to $2.94 trillion – the highest since May 2021 and marking the sixth consecutive monthly rise. Derivatives trading volumes also soared by 86.5% to a record $6.18 trillion, though their share of the total crypto market dipped slightly to 67.8% from February's 70.1%, the lowest since December 2022.

In the broader financial market, equity futures edged up slightly following a significant drop in the S&P 500, marking its largest one-day decline since February 13th. All eyes were on the jobs data, which significantly surpassed expectations and highlighted a robust and enduring labor market. The reported increase of 303,000 nonfarm payrolls in March, outstripping the 212,000 forecast, and a dip in the unemployment rate to 3.8% underscore the market's resilience but also complicate the prospects for rate cuts.

Neel Kashkari's comments on inflation and rate adjustments underscore a cautious stance towards easing monetary policy, especially without clear indications of inflation stabilizing. Although Kashkari’s influence in the Federal Open Market Committee is noted, his voting power won't come into play until 2026. Meanwhile, Fed Chair Jerome Powell's remarks earlier in the week reflect a careful approach to interest rate decisions, with the Fed taking its time to assess inflation trends fully, keeping the timeline for any potential rate cuts uncertain.

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