January 24, 2024

Markets Insights

Economic Calendar

Next FOMC meeting: Jan 31st 2024

Probability of a 25bps ease → 3%

Probability of a 0bps hike → 97%

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The News Room

Crypto Custodian BitGo Receives Investment from Cash Handling Firm Brink’s

Brink's, a veteran cash handling company renowned for its secure transport services has ventured into the cryptocurrency domain with a strategic investment in BitGo, a cryptocurrency custody specialist. While the financial specifics of the deal remain undisclosed, this move marks a significant step for Brink's in aligning with the evolving landscape of digital asset security. The collaboration leverages Brink's extensive global network for the safekeeping of digital assets, catering to the growing institutional demand for robust custody solutions. BitGo's expertise in digital asset custody combined with Brink's longstanding experience in secure logistics, particularly in key markets like Asia Pacific and EMEA, creates a synergistic relationship aimed at enhancing security protocols for digital assets. This partnership builds on Brink's previous involvement in the digital asset space through its 2022 collaboration with Metaco, a Swiss crypto custody firm, signaling its increasing commitment to the digital asset industry and the broader financial sector's shift towards the tokenization of various assets.

HashKey Capital Launches Three Crypto Indices with FTSE Russell

HashKey Capital, a crypto investment firm, in collaboration with FTSE Russell, a London Stock Exchange subsidiary, has launched three new indices to track the performance of crypto assets. These indices are aimed at investors looking to incorporate crypto exposure into their portfolios. The indices include the FTSE Custom Digital Asset Top 20 Index, which tracks the top 20 cryptocurrencies by market capitalization; the FTSE Custom Digital Asset Infrastructure Index, focusing on assets foundational to the industry; and the FTSE Custom Digital Asset Application Index, which monitors crypto assets with application functionalities. Deng Chao, the managing director of HashKey Capital, highlighted the growing investor demand for diversification in their portfolios beyond established cryptocurrencies. These indices, reflecting HashKey Capital's dedication to innovative client solutions, will be accessible on the FTSE Russell website from January 24. This announcement follows HashKey Group’s recent successful Series A financing round, raising nearly $100 million at a pre-money valuation exceeding $1.2 billion.

Crypto Lender Nexo Seeking $3B in Damages From Bulgaria

Cryptocurrency lender Nexo has filed a substantial arbitration claim against the Republic of Bulgaria, demanding $3 billion in damages. This legal action arises from what Nexo describes as unjust and politically motivated actions by Bulgaria, including aggressive criminal investigations that the company alleges were baseless. The Bulgarian Prosecutor’s Office had previously closed an investigation into Nexo for alleged money laundering, citing a lack of evidence. Nexo contends that these investigations have severely harmed its brand and reputation, leading to significant business losses, including the derailment of a potential initial public offering (IPO) in the U.S. The claim has been officially submitted to the International Centre for Settlement of Investment Disputes (ICSID) in Washington, D.C., indicating the escalating legal conflict in the context of increased regulatory scrutiny on crypto-related activities, especially following the collapse of FTX and other crypto firms in 2022.

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Trading Desk Insights

Bitcoin is staging a recovery from the recent support zone near $38,000 and has the potential to reach highs of $41,000 and even $42,000. While certain altcoins show signs of rebounding, clear confirmation is yet to emerge.

As per K33 research findings, the newly introduced spot ETFs took merely seven trading days to accumulate over 100,000 BTC in holdings. BlackRock swiftly climbed to become the third-largest BTC investment vehicle globally in just seven days while Fidelity has also entered the top 4.

Analyzing recent outflows, non-U.S. BTC ETPs experienced a slowdown in outflows over the past week. Both Europe and Canada witnessed significant outflows post-launch, but the pace has notably decreased, resulting in modest daily net outflows.

In a noteworthy development, Mt. Gox is progressing towards compensating victims of the 2014 hack. Former customers have reported receiving emails seeking confirmation of identity and account details. The exchange managed to recover approximately 20% of the stolen funds, equivalent to around 850,000 BTC, currently valued at $33 billion. Some customers reported receiving payouts in yen to their Paypal accounts in December. Depending on the repayment plan, this could exert pressure on Bitcoin’s price action.

Meanwhile, Nasdaq futures, tied to technology, recorded gains following Netflix's report of reaching a new record in fourth-quarter subscriber counts. Netflix shares surged over 10% in premarket trading, adding more than 13 million subscribers, bringing the total count to an all-time high of 260.8 million.

Tesla's performance is eagerly awaited after the market close.

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Crypto Charts

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Macro Charts

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Disclaimer

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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.

Unless otherwise provided in a separate agreement, Secure Digital Markets does not represent that the report contents meet all of the presentation and/or disclosure standards applicable in the jurisdiction the recipient is located. Secure Digital Markets and their officers, directors and employees shall not be responsible or liable for any trading decisions, damages or other losses resulting from, or related to, the information, data, analyses, or opinions within the report.

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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