August 11, 2023

Markets Insights

Next FOMC meeting: Sept 20th 2023.

  • Probability of a 0bps hike → 88.5%
  • Probability of a 25bps hike → 11.5%

The News Room

Hut 8 Mining Seeks to Acquire Assets from Validus Power Amidst Insolvency

Hut 8 Mining, a prominent North American crypto miner, is poised to acquire assets from the energy supplier Validus Power Corp., which is facing insolvency. This development follows a dispute that began in late 2022 when Hut 8 sued Validus for allegedly not fulfilling their power delivery agreement of 100MW to Hut 8's Ontario facility. Amid this, Validus's assets are now overseen by a court-appointed receiver.

As part of an agreement with Macquarie Equipment Finance, Hut 8 might submit a "stalking horse bid" that could resolve the litigation. If successful, Hut 8's acquisition would incorporate assets pivotal for power generation, potentially optimizing their mining operations. This strategy showcases miners like Hut 8 diversifying by leveraging opportunities with distressed entities in the sector.

Crypto Derivatives Market Shows Promising Growth Amid Spot Liquidity Challenges

In its Q2 2023 report, Genesis Trading highlighted a budding growth in the crypto derivatives market, driven by challenges in spot market liquidity. The firm noted significant developments, such as Deribit's surge in option contracts traded in a single day and a 25% uptick in options volumes at the Chicago Mercantile Exchange. Yet, for the first half of 2023, the volume of the burgeoning options market made up only 10% of the underlying spot volume.

Drawing parallels with the traditional finance world where equity options' notional volume surpassed that of underlying equities, there appears to be significant room for the crypto options market to expand. The quarter also observed mainstream financial entities embracing the cryptocurrency realm, suggesting a trend toward broader adoption and legitimacy. The vast potential capital in U.S. pension funds, 401(k) plans, and hedge funds could further spur growth in the crypto sector.

Bank of England Establishes Academic Advisory Group for Potential Digital Pound

The Bank of England (BoE) is forming an academic advisory group to provide insights into the development of its potential central bank digital currency (CBDC), dubbed the "digital pound." While the UK has not yet committed to launching a CBDC, recent consultations suggest a digital pound could be essential in the future. The new advisory group aims to foster interdisciplinary discussions on CBDC design and operation, although it won't hold decision-making powers. UK Finance Minister Jeremy Hunt highlighted the potential of a BoE-backed digital pound as a trusted and user-friendly payment method.

Trading Desk Insights

Equity futures started trading in negative territory on Friday morning. The release of the core PPI dragged the loss further down as the inflation figure reached +0.3%, beating estimates of 0.2%. Following the release of the report, the US Dollar Index gained some strength, thus placing pressure on risk assets as a whole.

Following the release of slightly higher-than-anticipated producer prices, the US 2-year and 10-year treasury yields experienced an uptick.

As we approach the close of the trading week, the S&P 500 is poised for a modest 0.2% decline, while the Nasdaq is set for a more pronounced 1.2% pullback. Notably, this positions both indices for their second consecutive week in the red.

Moving on with the cryptocurrency market, BTCUSDT on an intraday basis continues to trade sideways within the falling broadening wedge pattern capping prices in the short term. Every rally has been shorted so far towards the high volume price range of $29,000 and $29,500. However, there are two bullish elements so far: First, the fact that prices on Aug 8th broke above the previous high of Aug 2nd, the first time since the yearly high posted on July 13th. Second, prices are still trading above their 20-day moving average but are very close from breaking it to the downside.

This just in: The SEC has extended its review on the Bitcoin ETF application from Ark 21Shares. The regulator is currently reviewing over a dozen spot bitcoin and ether future ETF applications. The approval of a spot Bitcoin ETF would open the door for millions of crypto curious investors to securely invest in BTC which would most likely start a new bull run.

In other news, Circle announced that they have $1 billion in cash to remain competitive despite their declining market share.

Economic calendar:


  • China CPI at 9:30pm EST


  • GBP, EUR & US 10-year bond auction


  • China new loans + money supply
  • US CPI
  • US Federal Budget Balance


  • US PPI
  • US consumer sentiment and inflation expectations

Technical Charts

Altcoin Watch

Altcoin season may very well be around the corner.

Let’s look at the market cap of cryptocurrencies minus USDT, USDC and WBTC. This might not reflect the exact value of altcoins but it is very close.

We are noticing the formation of a potential inverse Head-and-Shoulders pattern that has been in play since the month of May. If prices break above the neckline of this pattern, it would signal the start of altcoin season, in other terms, a period of outperformance of altcoins relative to BTC and ETH.

A break above $287 billion would confirm the breakout and might send altcoins to a market cap of $400 billion. The pattern would be invalidated if the market cap breaks below $180 billion.


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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