February 5, 2024

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Next FOMC meeting: Mar 20th 2024

  • Probability of a 25bps ease → 16%
  • Probability of a 0bps hike → 84%

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The News Room

Marathon Digital Pays $13.5M to Hut 8 for Full Control Over Texas and Nebraska Mining Sites

Marathon Digital has finalized an agreement to pay Hut 8 a $13.5 million termination fee, enabling Marathon to assume full operational control over its recently acquired Bitcoin mining sites in Granbury, Texas, and Kearney, Nebraska, by April 30. Hut 8, which took over management of these sites following a merger with USBTC last year, will continue offering managed services and conducting self-mining until the transition. The transition follows Marathon's purchase of the sites from Generate Capital for $178.6 million on January 16, despite Hut 8's existing management under a service agreement with Generate Capital that was still valid for over four years at $1.2 million per month. The termination of this contract on January 30 allows Marathon to lower its operating costs and enhance Bitcoin production efficiency. Marathon's Chairman and CEO, Fred Thiel, expressed anticipation for leveraging operational expertise to fully benefit from owning these sites, aiming for improved operational and economic outcomes.

FTX Seeks to Sell $1.4 Billion Stake in AI Firm Anthropic Amid Bankruptcy Proceedings

FTX, the bankrupt cryptocurrency exchange, is moving to liquidate its most substantial illiquid asset, an 8% stake in the AI startup Anthropic, following a $500 million investment by the exchange's former CEO, Sam Bankman-Fried, in October 2021. Under the leadership of CEO John Ray III, FTX has petitioned for judicial approval to sell this stake, concurrently proposing to expedite the process for a decision at the bankruptcy court's forthcoming hearing on February 22, with objections due by February 15. While the sought price for the Anthropic shares remains undisclosed to foster competitive bidding, the startup's valuation reportedly reached $18 billion in December 2023, potentially valuing FTX's share at approximately $1.4 billion. This sale represents a significant opportunity for FTX to fulfill its obligations to customers and creditors, as the firm anticipates having sufficient funds to settle all claims in full.

El Salvador's President Bukele Claims Second Term Victory, Continues Pro-Bitcoin Agenda

Nayib Bukele, El Salvador's pro-Bitcoin president, announced his victory in the 2024 presidential election on Sunday, claiming over 85% of the votes and at least 58 out of 60 Assembly deputies, prior to the official results from the electoral body. This win, supported by CID Gallup's exit poll indicating 87% voter support, positions Bukele to continue his presidency until 2029, furthering his Bitcoin advocacy. Bukele's administration, recognized for its significant reduction in gang crime, plans to uphold Bitcoin as legal tender, a policy initiated in September 2021 that marked El Salvador as the first country to adopt Bitcoin officially. Since the adoption, El Salvador has accumulated a Bitcoin portfolio worth $131 million, yielding a $3.6 million profit as of early December last year. Additionally, the country launched the “Freedom Visa” program in December, offering residency or citizenship to applicants investing $1 million in Bitcoin or USDT, aiming to attract up to 1,000 applicants annually.

Trading Desk Insights

Bitcoin traders were initially looking to sell their positions due to the prevailing weakness in the Chinese markets. However, a ray of hope emerged as BTCUSD found support around the $42,000 mark, and the buying pressure intensified, pushing the price back up to approximately $43,500. A noteworthy development was the substantial increase in open interest, which surged by 7%, reaching approximately $775 million.

Shifting our attention to the Bitcoin ETF market, Friday saw net inflows of $80.1 million, but on the flip side, there were significant outflows in the Grayscale Bitcoin Trust (GBTC), totaling $145 million. GBTC's trading volume reached a remarkable $338 million, nearly rivaling the combined volumes of industry giants BlackRock and Fidelity, which stand at approximately $400 million. The decreasing GBTC outflows offer a more favorable environment for Bitcoin's price dynamics.

In a separate development, Genesis has petitioned the bankruptcy court to approve the sale of GBTC shares valued at $1.4 billion. This move could potentially exert pressure on Bitcoin's short-term price performance.

Meanwhile, the altcoin market is showing notable strength today. Chainlink (LINK) continues its ascent, posting a 7% gain and nearly reaching the $20 mark after breaking out of a three-month trading range established in November. Additionally, SUI has surged by an impressive 10%, achieving a yearly high as the Total Value Locked (TVL) crossed the $500 million mark on Sunday, a substantial increase from its starting point at $200 million earlier in the year.

Turning our attention to the broader financial landscape, equity futures are displaying mixed performance on this Monday morning. U.S. Federal Reserve Chair Jerome Powell's recent statements have dashed hopes for imminent interest rate cuts. In a 60 Minutes interview on Sunday, Powell conveyed the Fed's stance on monetary policy:
- “We want to see more evidence that inflation is moving sustainably down to 2%”
- “Our confidence is rising. We just want some more confidence before we take that very important step of beginning to cut interest rates.”

In China, the CSI 1000 index has experienced an 8% decline today and has witnessed a staggering 30% drop in the first month of 2024. This comes despite numerous stimulus measures and a short selling ban implemented by some Chinese brokerages. Notably, last week, China's largest property developer, Evergrande, received a court order for liquidation in Hong Kong.

In precious metals, UBS predicts that Gold prices will reach $2,200 in 2024, with Silver poised to outperform the market.

Lastly, traders will closely monitor developments in the Middle East, as the U.S. initiated airstrikes in Iraq and Syria on Friday, potentially impacting geopolitical dynamics and market sentiment.

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