January 9, 2024

Markets Insights

Economic Calendar

Next FOMC meeting: Jan 31st 2024

  • Probability of a 25bps ease → 5%
  • Probability of a 0bps hike → 95%

The News Room

SEC Rapidly Engages with Bitcoin ETF Issuers on Fees Ahead of January Deadline

The U.S. Securities and Exchange Commission (SEC) rapidly responded with comments to several prospective issuers of Bitcoin exchange-traded funds (ETFs) shortly after these companies submitted amended S-1 forms detailing their proposed product fees. This unusual same-day feedback, focusing on minor details, indicates active engagement from the SEC and is not expected to delay potential approvals. Key players like BlackRock, Grayscale, and Fidelity are among those aiming to launch spot Bitcoin ETFs in the U.S. The anticipation for approvals is heightened as the SEC faces a January 10, 2024, deadline for an application by Ark and 21 Shares. Recent amended filings, including those by Nasdaq, NYSE Arca, and Cboe BZX, align with discussions with SEC officials, fueling optimism for the approval of these ETFs. Successful approval would enable traditional financial institutions and retail investors to gain exposure to Bitcoin without direct interaction with new financial structures, marking a significant shift in regulated financial products related to cryptocurrencies.

VanEck Buys 1,640 BTC for $72.5M to Seed ETF

VanEck is intensifying competition in the spot Bitcoin ETF arena by injecting a significant $72.5 million into its proposed fund, as revealed in its amended S-1 filing on January 8. This move positions VanEck at the forefront among asset managers, overshadowing BlackRock and Fidelity's more modest seed investments of $10 million and $20 million, respectively. VanEck's investment, translating to 1,640 Bitcoin, indicates a robust commitment to lead in this new market. Furthermore, Bitwise's disclosure of Pantera Capital's potential $200 million backing underscores the escalating competitive dynamics among ETF providers. These developments, coupled with a spectrum of fee structures varying from zero to 1.5%, reflect each firm's tactic to attract investors in a market that is progressively validating cryptocurrencies. While the approval of these ETFs by the SEC is not certain, the proactive steps by these major financial players signal a growing anticipation for a breakthrough in mainstream crypto investment.

CFTC Technology Advisory Committee Recommends Collaborative Approach to DeFi Regulation

The Commodity Futures Trading Commission's Technology Advisory Committee voted to submit a comprehensive report on decentralized finance (DeFi) to the commission, advocating for a collaborative effort between the government and industry to understand and responsibly develop DeFi. This report, regarded as the first significant governmental advisory committee analysis on DeFi, includes recommendations for policymakers to enhance their knowledge of DeFi, improve enforcement effectiveness, and review current regulatory frameworks. The report's suggestions, while not legally binding, represent a substantial step in shaping DeFi policy, marking a pivot from the focus primarily on centralized crypto exchanges to considering the unique aspects of DeFi. This move aligns with global efforts to regulate DeFi, as exemplified by the International Organization of Securities Commissions' recent recommendations. The report aims to serve as an informative guide for policymakers as they explore regulatory approaches to this emerging sector.

Trading Desk Insights

Bitcoin and Ethereum faced intraday pressure but managed to bounce back, reclaiming levels around $47,000 and $2,285 respectively. Notably, the ETHBTC pair continued its downward trajectory, hitting a 32-month low, marking a stark underperformance of ETH against BTC by over 33% since the year began.

Over the past week, no altcoin has surpassed Bitcoin in performance. However, in the last 30 days, SOL and BNB have notably outperformed BTC, boasting gains of 27% and 18% respectively.

CME Bitcoin futures open interest surged to an all-time high, indicating a growing interest in hedging strategies among investors opting for regulated platforms like CME over offshore exchanges.

Bitcoin's decoupling from Nasdaq began mid-2023, coinciding with the frenzy surrounding the BTC spot ETF. This shift has led to a recent breakdown in the 40-day correlation between the two, highlighting Bitcoin's potential role as a portfolio diversifier.

The SEC swiftly responded to the latest BTC filings just before the Wednesday deadline, coinciding with issuers detailing their fee structures, hinting at regulatory engagement in the space.

On Tuesday, U.S. stocks resumed their 2024 struggles, particularly impacting tech stocks that experienced significant movements.

Later this week, investors will keenly analyze crucial inflation reports—Thursday's release of the December consumer price index and Friday's producer price index—to gauge potential Federal Reserve rate cut strategies moving forward.

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.

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