March 1, 2024

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Next FOMC meeting: Mar 20th 2024

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The News Room

Merrill Lynch and Wells Fargo to Offer Bitcoin ETFs, Expanding Crypto Access on Wall Street

Two Wall Street giants, Bank of America’s Merrill Lynch and Wells Fargo, are set to offer spot Bitcoin exchange-traded funds (ETFs) on their brokerage platforms, a move that could significantly increase buying power in the Bitcoin ETF market, Bloomberg reports. This development follows the January launch of 10 ETFs and speculation on when major U.S. brokerages would allow their clients access to these funds. Merrill Lynch and Wells Fargo have already been providing access to Bitcoin ETFs to clients upon request, and their formal entry, along with Morgan Stanley's potential involvement, marks a significant step towards mainstream financial institutions embracing Bitcoin ETFs. This could lead to a surge in demand, building on the already high trading volumes seen since the ETFs' debut, with a record $7.7 billion worth traded on a single day in January.

House Committee Challenges SEC Rule Impacting Crypto Custody by Banks

The House Financial Services Committee has moved forward with a resolution to counteract the SEC's Staff Accounting Bulletin No. 121 (SAB 121), which mandates financial institutions holding crypto assets for clients to list these holdings as liabilities, potentially deterring banks from offering digital asset custody due to the significant impact on their balance sheets and regulatory obligations. This resolution, spearheaded by Reps. Mike Flood and Wiley Nickel, aims to maintain the traditional off-balance sheet treatment for custodial assets and has passed the committee vote 31-20, indicating bipartisan support for addressing regulatory challenges in the crypto industry. The measure, which underscores concerns about the broader implications of SAB 121 on banks' ability to participate in the crypto market and the custody of recently approved spot Bitcoin ETFs, will need approval from the full House and the Senate to be enacted. Concurrently, the committee unanimously approved a bill enhancing the U.S. Secret Service's authority in tackling digital asset-related crimes, highlighting the legislative focus on refining regulatory clarity and enforcement mechanisms in the crypto space.

Hong Kong Attracts 22 Crypto Firms for Retail Trading Licenses, Aiming to Become Regional Hub

Hong Kong is advancing its ambition to become a regional cryptocurrency hub, evidenced by the receipt of license applications from 22 crypto firms seeking to offer retail trading services. Among the applicants are notable names such as OKX, Bybit, Bullish,, Huobi HK, Matrixport HK, Gate.HK, and HKVAEX, linked to Binance. This move follows the city's Securities and Futures Commission (SFC) officially initiating a licensing regime last year, with HashKey and OSL already securing their licenses. Unlicensed platforms must halt operations by the end of March. Furthermore, Hong Kong is set to regulate stablecoin issuance, with the financial secretary announcing plans for a regulatory sandbox for stablecoin issuers and efforts to enhance cross-border payment efficiency through the expansion of the e-CNY pilot. This development underscores Hong Kong's comprehensive approach to embracing and regulating the crypto sector, aiming for a balanced framework that ensures innovation alongside investor protection.

Trading Desk Insights

Bitcoin staged a robust rally throughout February, surging by nearly 45% reaching $64,000. This marks its most impressive performance since December 2020 and extends its streak of monthly gains to six. However, caution is warranted for short-term traders as Bitcoin's Relative Strength Index (RSI) signals overbought conditions, hinting at the possibility of a temporary price correction.

In contrast, ETF inflows dwindled to $92.4 million yesterday, marking the lowest level since February 6th. Meanwhile, Grayscale witnessed a significant uptick in outflows, totaling $598.9 million, the second-highest figure since the approval of ETFs. Continued outflow growth could exert additional pressure on Bitcoin's price dynamics.

Memecoins are experiencing notable surges in value on elevated trading volumes. DOGE and SHIB have surged by 66% in February, while BONK and FLOKI have skyrocketed by 135% and 160%, respectively. Leading the pack are WIF and PEPE, both boasting gains of 340% during the same period.

Examining daily transaction activity on Ethereum layer-2 scaling solutions such as Arbitrum, Optimism, and Base since March 2021 reveals a remarkable 91% surge in activity this year. Ethereum's upcoming Dencun upgrade, scheduled for this month, will introduce blob-carrying transactions, enhancing scalability and reducing transaction costs for layer-2 offerings.

Trading platform Robinhood's collaboration with layer 2 Arbitrum is set to roll out swaps for users in the coming months. Arbitrum stands out in the decentralized finance (DeFi) total value locked (TVL) landscape among Ethereum's layer 2 solutions, boasting approximately $3.2 billion.

Stock futures remained stagnant on Friday following the conclusion of the market's fourth consecutive winning month and Nasdaq's attainment of its first closing record since November 2021.

In a notable development, Elon Musk has filed a lawsuit against Microsoft-backed OpenAI and its CEO, Sam Altman, among others, alleging a departure from the company's founding mission to develop artificial intelligence for the broader benefit of humanity.

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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.

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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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