February 6, 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

South Korea Engages with U.S. SEC on Spot Bitcoin ETFs in Move Towards Regulatory Alignment

Head of South Korea's Financial Supervisory Service (FSS) Lee Bok-hyun announced ongoing discussions with the U.S. Securities and Exchange Commission (SEC) focusing on spot Bitcoin exchange-traded funds (ETFs), among other virtual asset issues. This dialogue, highlighted during Lee's recent meeting with SEC Chairman Gary Gensler, aims to strengthen regulatory cooperation between the two agencies, especially after the U.S. approved spot Bitcoin ETFs for the first time following years of financial sector attempts. The meetings between Lee and Gensler, initiated in January, mark a significant step towards international regulatory alignment on cryptocurrency and spot Bitcoin ETFs, reflecting the global financial regulators' deliberation on adopting similar measures.

Genesis Seeks to Sell $1.6 Billion in Crypto Assets Amid Bankruptcy Proceedings

Bankrupt crypto lender Genesis has requested a U.S. judge's approval to sell over $1.6 billion in Bitcoin (BTC), Ether (ETH), and Ethereum Classic (ETC) assets held in Grayscale’s trust products, potentially adding significant selling pressure on Bitcoin. This follows the January sale of over $1 billion in GBTC holdings by the bankrupt exchange FTX, which coincided with a Bitcoin price drop. Genesis' assets include nearly $1.4 billion in the Grayscale Bitcoin Trust (now a spot ETF), $165 million in the Grayscale Ethereum Trust, and $38 million in the Grayscale Ethereum Classic Trust. Part of the GBTC shares was collateral for the Gemini Earn program, with Genesis seeking an additional 31 million GBTC shares pledged but not transferred to Gemini. Genesis' largest creditor is Gemini, with over 100,000 users affected by the bankruptcy, owed between $1 billion and $10 billion. Genesis also owes over $3.5 billion to its top 50 creditors, including Cumberland, Mirana, MoonAlpha Finance, and VanEck’s New Finance Income Fund.

GoDaddy and Ethereum Name Service Collaborate to Bridge Traditional Domains with Blockchain

Ethereum Name Service (ENS) has joined forces with GoDaddy to enable users to connect their traditional domain names with ENS's blockchain-based names, merging the conventional DNS protocol with blockchain technology. This partnership, requiring no extra fees or technical knowledge from users, grants GoDaddy's 20 million users access to ENS blockchain features, such as receiving cryptocurrency payments directly. ENS, a leading naming protocol in crypto, allows for easy-to-remember names to be linked with Ethereum addresses, similar to DNS's function for website URLs. GoDaddy's collaboration will make receiving crypto payments simpler by linking users' domains (e.g., .com) to ENS-compatible wallets. Nick Johnson, ENS's founder, stated that this partnership aims to blend the DNS's familiarity with blockchain's innovative potential, overcoming previous challenges like high gas fees by deploying new smart contracts for free DNS to ENS domain linking. ENS continues to integrate with the traditional web, including supporting domains that operate like standard internet domains.

Trading Desk Insights

Bitcoin is currently trading in a relatively narrow range, oscillating between $44,000 and $41,500, lacking a definitive trend. Given the signs of exhaustion in the previous uptrend, there is a higher likelihood of a downward move. However, a surge in ETF flows could potentially trigger a breakout above $44,000, propelling Bitcoin prices towards the $47,000 level.

Turning our attention to ETF flows, the market experienced another day of substantial inflows, totaling $68.1 million. BlackRock witnessed an increase in inflows, while Fidelity saw a decline in its inflow volume. Encouragingly for the market, outflows from Grayscale's crypto products continue to dwindle, marking the second lowest outflow day on record.

Furthermore, it's worth noting that BlackRock's BTC spot ETF, identified as $IBIT, has climbed to a prominent position, ranking among the top 5 in year-to-date flows. This achievement signifies that it has attracted more capital than 99.98% of ETFs in the market, underlining its growing investor interest.

In an exciting development, Ethereum Name Service (ENS) has entered into a strategic partnership with GoDaddy, a renowned domain registrar with a vast user base. This collaboration aims to bridge the gap between traditional domains and the emerging blockchain ecosystem, setting a new standard for integrating Web2 and Web3 technologies. Remarkably, this feature will be accessible to over 20 million GoDaddy users seamlessly, eliminating any barriers to adoption.

Lastly, there is news of ongoing efforts by Solana engineers to address a network outage. The team is diligently working on deploying a new version that will enable validators to upgrade their systems, thus ensuring the network's stability and reliability.

In the broader market context, equity futures are holding steady near the flatline on Tuesday. This follows a recent sell-off driven by rising bond yields and concerns that the Federal Reserve may not implement as aggressive rate cuts as anticipated by Wall Street. Federal Reserve Chair Jerome Powell's recent remarks, aired on "60 Minutes," suggested that a rate cut at the central bank's March meeting is unlikely. Consequently, the 10-year Treasury yield surged approximately 13 points on Monday, reaching 4.16%. Additionally, fresh economic data releases contributed to the upward momentum in yields.

Investors should keep an eye on several central bank speakers scheduled to deliver comments throughout the week, as these remarks could have a significant impact on market dynamics.

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