December 20, 2023

Markets Insights

Economic Calendar

Next FOMC meeting: Jan 31st 2024

  • Probability of a 25bps ease → 12%
  • Probability of a 0bps hike → 88%

The News Room

Tidal Investments and 7RCC to Launch Unique Spot Bitcoin ETF with Carbon Credit Futures

Tidal Investments, in collaboration with 7RCC, aims to launch a unique spot Bitcoin ETF that combines Bitcoin with carbon credit futures contracts. This proposed fund, designed to address environmental concerns related to Bitcoin mining, would allocate approximately 80% to Bitcoin and 20% to carbon credit futures, tracking the Vinter Bitcoin Carbon Credits Index. This blend aims to offer Bitcoin exposure with an environmentally responsible approach by offsetting carbon emissions. The fund could attract younger, sustainability-focused investors, although carbon credit futures have recently seen a decline in popularity and performance. Despite the tepid interest in carbon credit futures, Bitcoin has seen a significant rally in 2023. With the SEC's decision on various spot Bitcoin ETF proposals imminent, this ETF's unique environmental focus could potentially carve out a niche in the market, especially among investors concerned about the environmental impact of Bitcoin mining.

PwC Report: Over 40 Countries Progressing Towards Comprehensive Crypto Regulations

PriceWaterhouseCoopers' recent report reveals that over 40 countries are actively advancing in developing crypto-focused regulations and legislation, indicating a global shift towards broader cryptocurrency adoption. The report identifies 42 countries engaging in various initiatives across four key areas: stablecoin regulation, travel rule compliance, licensing and listing guidance, and crypto framework development. However, the extent of engagement varies, with only 23 countries, such as Japan, the Bahamas, and several EU states, actively involved in all focus areas. In contrast, countries like Uganda, India, and Brazil are more selective, focusing on one or two areas, suggesting a cautious stance towards crypto. The Financial Action Task Force's travel rule is the most discussed topic, while stablecoin regulation is the least addressed, with countries like India and Brazil not considering stablecoin legislation in 2023. Turkey stands out as the only nation not progressing in any crypto-related initiatives. Despite these advancements, PwC emphasizes the ongoing need for further work in global digital asset regulation.

Marathon Digital Expands Mining Capacity with $178.6 Million Acquisition of Facilities in Texas and Nebraska

Marathon Digital, a leading Florida-based Bitcoin miner, is set to significantly expand its mining capacity and operational control through the $178.6 million acquisition of two mining facilities in Texas and Nebraska from Generate Capital affiliates. This move will shift the company from predominantly third-party hosted mining capacity to owning 45% of its 584 megawatts capacity. The acquisition is part of Marathon's strategy to vertically integrate, diversify its portfolio of mining technologies and assets, and reduce Bitcoin production costs by about 30%. Currently North America’s largest miner by hash rate, Marathon Digital aims to double its hash rate to approximately 50 EH/s within the next 18 to 24 months, in anticipation of the next Bitcoin halving event. This expansion mirrors the broader industry trend of significant growth and acquisition, as seen with Riot Platforms and Bitfarms, and aligns with Marathon’s ongoing global expansion and diversification of mining methods, including recent setups in Abu Dhabi and Paraguay.

Trading Desk Insights

Since Monday morning, Bitcoin has experienced a noteworthy 9% resurgence, surging to its highest level since December 10th, reaching approximately 44,200 USD. BTCUSDT broke above a short term resistance level on the 4H timeframe. If prices break above the yearly high of 44,700, we might witness additional momentum pushing prices higher towards 45,750 and possibly 48,000. If prices break below 42,700, we might observe a retracement towards the midpoint of the recent trading range, around 41,800 USD, and potentially even reaching the lower boundary at approximately 40,600 USD.

Lots of activity in the derivative space as the open interest for BTC options on the CME reached a record high yesterday at $2.1 billion with a skew of 65/35 towards calls vs puts.

Traders have exhibited a recent preference for cryptocurrencies like SOL and AVAX over ETH due to their more cost-effective transaction fees and faster transaction processing speeds. Solana transactions, for instance, incur a negligible cost of less than $0.01 and are processed within seconds, whereas Ethereum transactions can cost around $15 and may take up to a minute to complete. This preference has led to a substantial increase in transactional activity on both Solana and Avalanche networks, with activity more than doubling over the past month. Additionally, there has been a notable rise in the number of active wallets and new users on these platforms.

On Monday, BlackRock submitted a revised proposal for a spot BTC ETF with the intention of gaining regulatory approval, increasing the likelihood of becoming the first such ETF approved in the United States.

In a recent development, the bankrupt crypto lender Genesis successfully secured a bid preventing its parent company, Co Digital Currency Group (DCG), from selling or reducing its ownership stake in the company until Chapter 11 proceedings are concluded. Should DCG's ownership stake fall below 80%, Genesis could potentially forfeit valuable benefits related to approximately $700 million worth of "federal net operating loss carryforwards."

On Wednesday, the stock market saw a subdued opening as savvy investors decided to lock in gains after a remarkable run of success. The market had been on a winning streak, with the S&P 500 tantalizingly​​ close, just 1.2% away, from reaching its record high closing level last achieved in January 2022. Impressively, the S&P 500 has surged by 4.4% this month alone and has posted an impressive 24.2% gain year-to-date. Meanwhile, the Nasdaq has shown even more remarkable performance, with a 5.5% increase in December and an astonishing 43.4% gain for the entire year of 2023, setting it on course for its best year since 2020.

This upturn is attributed to optimism surrounding the prospect of a smooth economic transition, often referred to as a "soft landing scenario."

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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