April 9, 2024

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Next FOMC meeting: May 1st 2024

  • Probability of a 25bps ease → 1%
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Metaplanet Stock Soars 90% on $6.56M Bitcoin Investment with Sora Ventures and Industry Titans

Metaplanet (3350), transitioning from a budget hotel operator to a Web3 software developer, saw its stock surge by nearly 90% after announcing a $6.56 million investment in Bitcoin, in collaboration with Sora Ventures and notable investors like Mark Yusko of Morgan Creek Capital. This move aims to reduce the company's dependence on the Japanese Yen, which has suffered due to Japan's prolonged low-interest-rate environment. By integrating Bitcoin into its treasury, Metaplanet seeks to leverage Bitcoin as an inflation hedge, a macroeconomic resilience tool, and for long-term capital appreciation, drawing inspiration from MicroStrategy's approach to Bitcoin investment. This initiative offers Japanese investors a pathway to crypto exposure while navigating the country's stringent tax regulations on unrealized crypto gains, highlighted by Jason Fang of Sora Ventures. This strategy comes as Japan makes regulatory adjustments, exempting tokens issued by crypto startups from stringent tax rules.

Chinese Mutual Funds Eye Q2 Launch for Bitcoin ETFs in Hong Kong Amid Regulatory Optimism

Leading Chinese mutual funds are venturing into Bitcoin ETFs through their Hong Kong subsidiaries, anticipating regulatory approval to launch in Q2, reflecting a significant shift towards crypto investment post-China's 2021 ban on Bitcoin and crypto activities. Jiashi Fund and Southern Fund's subsidiaries are spearheading this initiative, with Jiashi aiming to introduce a Bitcoin spot ETF and Huaxia Fund collaborating with custodian HashKey. This strategic move utilizes Hong Kong's regulatory framework to broaden investment horizons into digital assets, showcasing the city-state's growing role as a crypto-friendly jurisdiction. Southern Fund's subsidiary previously launched Asia’s first crypto ETFs, highlighting Hong Kong’s emerging market for Bitcoin and Ethereum futures ETFs. Bitcoin ETFs have seen strong performance, particularly Southern Fund’s futures Bitcoin ETF, which surged 134% in value in 2023 amid Bitcoin's price ascent and its market cap exceeding $1.3 trillion, signaling increasing confidence among mutual funds in the potential of spot Bitcoin ETFs within a supportive Hong Kong regulatory landscape.

Stablecoin Adoption Surges in Payments Sector, Challenging Traditional Systems

The stablecoin market is experiencing significant growth, with adoption expanding beyond the crypto trading ecosystem to include cross-border settlements by payments companies, fintech firms, and consumer platforms, according to a Bernstein research report. The stablecoin supply is currently valued at $150 billion, predominantly held by Tether (USDT) and USD Coin (USDC), which account for 75% and 22% of the market, respectively. The first quarter of 2024 saw an annualized value transfer of $6.8 trillion on the blockchain, matching the 2022 high. Notable signs of adoption include Paypal, Visa, Singapore's Grab, and Latin America's Mercado Libre incorporating stablecoins into their operations. Despite Solana leading in blockchain payments and piloting projects with Visa and Shopify, the report questions its ability to enter mainstream payments due to scalability challenges. Achieving consumer payment scalability would necessitate a 15-20 fold increase from the current throughput of approximately 700 transactions per second (TPS) to match traditional payment networks' 10,000+ TPS, a milestone general-purpose blockchains have yet to reach.

Trading Desk Insights

Bitcoin made a notable leap out of a symmetrical triangle formation in the early hours of Monday, yet encountered a downturn by the afternoon. This pullback seemed temporary, anticipated to find support at the breakout zone. However, as Nvidia's downturn weighed heavily on Nasdaq, Bitcoin was inevitably pulled down in its wake. We're currently witnessing a rebound at the $68,600 mark, but a dip below this could signal a move towards the $67,000 or even the $66,000 thresholds.

On the ETF front, the market absorbed a significant outflow, marking the heftiest withdrawal since March 20th, totaling $223.8 million, with Grayscale experiencing continued sell-offs amounting to $303.3 million.

Amidst this, there's a growing consensus among spot BTC ETF issuers that the SEC's approval for an ETH ETF appears dim. Van Eck pointed out the stark silence from regulators post-application feedback, contrasting sharply with the buzz preceding Bitcoin ETF approvals, indicating a less hopeful outlook for Ethereum's ETF prospects.

The crypto market also observed a decline in the percentage of Bitcoin's circulating supply that has been stagnant for at least a year, dropping to its lowest since October 2022, from 70% to 65.8% over three months. This trend suggests increased profit-taking amidst a bullish market, historically aligning with the initiation of market peaks as dormant supplies start circulating again.

In broader financial news, stock futures saw an uptick as the market anticipates crucial inflation data. The anticipation has pushed the 10-year Treasury yield above 4.4%, with eyes set on the upcoming consumer price index report and the Federal Reserve’s latest meeting minutes for deeper insights into inflation trends and monetary policy impacts.

Nvidia's 3% drop has cast a shadow over Nasdaq and subsequently Bitcoin, highlighting the interconnected nature of tech stocks and cryptocurrency markets.

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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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