December 12, 2023

Markets Insights

Economic Calendar

Next FOMC meeting: Dec 13th 2023

  • Probability of a 0bps hike → 98%
  • Probability of a 25bps hike → 2%

The News Room

World’s First Bitcoin Bonds Receive Regulatory Approval in El Salvador

El Salvador's anticipated Bitcoin bonds, known as "Volcano bonds”, have moved closer to issuance with regulatory approval for a Q1 2024 release. Announced by the country’s National Bitcoin Office and confirmed by President Nayib Bukele, these bonds aim to raise $1 billion to support a renewable energy-powered Bitcoin mining industry utilizing the country's volcanic energy. Originally planned for March 2022, the issuance faced delays until the digital assets bill was passed in January 2021. The bonds, reflecting El Salvador's commitment to Bitcoin after declaring it legal tender, will be offered on Bitfinex Securities. This development follows El Salvador's recent launch of the "Freedom VISA" program, granting residency to investors of at least $1 million in Bitcoin or Tether (USDT), marking another significant stride in the country's Bitcoin-focused economic strategy.

Taiwan Completes Wholesale CBDC Technical Study, Central Bank Official Says

Taiwan's central bank, the Central Bank of the Republic of China, has completed a technical study on a wholesale central bank digital currency (CBDC), as reported by Deputy Governor Chu Mei-lie. In her speech on December 7, Chu emphasized the bank's next steps, which involve conducting surveys to gather public, government, industry, and academic feedback to refine the design of a CBDC platform. This initiative aligns with global trends where jurisdictions are exploring CBDCs for interbank and retail payments, encouraged by support from the Bank for International Settlements. Chu highlighted the potential of CBDCs to act as a foundation for the tokenization of traditional financial institutions, which are increasingly interested in digitizing real-world assets. However, she also cautioned about the possible risks these innovations pose to financial stability, consumer protection, anti-money laundering efforts, and market integrity, suggesting that financial supervision agencies need to consider appropriate regulatory responses to the evolving landscape of tokenization.

DTCC Finalizes $50 Million Acquisition of Blockchain Firm Securrency for Institutional DeFi Push

The Depository Trust and Clearing Corporation (DTCC) has finalized its $50 million acquisition of Securrency, a blockchain-based financial technology firm. Announced in October, this move aligns with DTCC’s strategy to enhance its use of blockchain technology for institutional on-chain asset management and tokenization. DTCC, a major player in financial market infrastructure handling trillions in securities transactions, aims to develop a robust digital infrastructure for institutional DeFi. The acquisition will bolster DTCC's ongoing blockchain initiatives, with expectations to create a comprehensive post-trade platform for a variety of digital asset products. DTCC Digital Assets, the newly formed entity from this acquisition, will be led by Nadine Chakar. This development is part of a wider trend in traditional finance firms increasingly engaging in blockchain and crypto segments, as seen in recent activities by firms such as JPMorgan and Deutsche Bank.

Trading Desk Insights

Recently, BTC experienced a significant 7.5% decline, marking its most substantial intraday drop since mid-August. Despite this recent downward pressure, Bitcoin has still managed to register an impressive gain of over 150% for the year. Crypto-related stocks like MARA and RIOT also took a hit, with double-digit drops observed yesterday, coinciding with a broader negative trend in the crypto market. If prices breach recent lows, there is a distinct possibility of entering a vacuum gap, exerting additional downward pressure on BTC, potentially driving it toward the $38,500 mark.

In the realm of digital asset investment products, there was an 11th consecutive week of inflows totaling $43 million. Notably, there was a significant increase in short position inflows, attributed to recent price appreciation and perceived downside risks. Europe led the inflows with $43 million, while the United States followed with $14 million, half of which went into short positions. Meanwhile, Hong Kong and Brazil experienced outflows of $8 million and $4.6 million, respectively. The realm of blockchain equities witnessed record-breaking weekly inflows, reaching an impressive $126 million.

Turning our attention to the world of altcoins, there has been a resurgence. Tokens like ATOM surged by 20%, FTM by 7%, and MATIC by 3%. Despite the market pressure witnessed on Monday, RNDR managed to conclude the day on a positive note, surging past yearly highs this morning and reaching its highest level since January 2022.

In the stock market, Tuesday saw minimal changes as Wall Street carefully analyzed another set of inflation data, seeking clues regarding the Federal Reserve's potential monetary policy adjustments.

The consumer price index (CPI) for November recorded a YoY increase of 3.1%, in line with expectations, and a 0.1% MoM increase, slightly exceeding forecasts of remaining flat.

Traders are now eagerly awaiting the Federal Reserve's interest rate decision scheduled for Wednesday at 2 p.m. ET. While the prevailing sentiment on Wall Street anticipates the central bank maintaining current interest rates, market participants will scrutinize the economic projections and Chair Jerome Powell's commentary for any indications regarding the timing of potential rate cuts.

Technical Charts


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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