March 21, 2024

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Next FOMC meeting: May 1st 2024

  • Probability of a 25bps ease → 10%
  • Probability of a 0bps hike → 90%

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The News Room

Nomura Bank launches Libre on Polygon for On-Chain Tokenization of Alternative Assets

Libre, an institutional Web3 infrastructure platform developed by WebN and Nomura’s digital asset subsidiary Laser Digital, has launched on-chain with a successful cross-chain transaction on Polygon. The platform, aiming to tokenize alternative assets, has already collaborated with notable firms like Brevan Howard and Hamilton Lane to focus on alternative investments. Libre offers investors access to reputable money market funds, such as those managed by BlackRock, and plans to expand its services to include collateralized lending. With a foundation in EVM compatibility, Libre aims to integrate with various Layer 1 and Layer 2 protocols through its Libre Gateway, facilitating access for accredited professional and institutional investors to alternative investments and money market funds. Dr. Avtar Sehra, CEO and founder of Libre, highlighted the platform's commitment to providing access to top-tier alternative investments and upcoming services like collateralized lending, while Colin Butler from Polygon Labs praised the potential of Libre Gateway to revolutionize the global financial system.

Meld Bank Partners with Swarm Markets to Offer Crypto Lending Against Tokenized Real-World Assets

Meld, a crypto-friendly bank, is set to introduce services that allow retail investors to lend and borrow against tokenized real-world assets (RWAs), aiming to facilitate increased investment in bitcoin. Through a collaboration with Swarm Markets, a DeFi platform licensed in Germany, Meld plans to use Swarm's RWA trading platform for these services. This partnership could enable retail investors to leverage traditional assets for crypto investments, broadening access to tokenized RWAs via a regulated banking service. Meld's recent virtual asset service provider (VASP) license in Lithuania underlines its regulatory compliance, potentially simplifying its expansion across the EU. The initiative reflects the growing intersection of traditional finance and cryptocurrency, offering novel investment strategies as the market evolves. Already, 75,000 users have shown interest in Meld's platform, indicating significant market anticipation.

SEC Subpoenas Ethereum Foundation in Examination of PoS Transition, Impacting ETF Approvals

The U.S. Securities and Exchange Commission (SEC) has issued subpoenas to entities associated with the Ethereum Foundation, delving into specifics about their interactions, especially following Ethereum's transition to a proof-of-stake (PoS) model with "The Merge" in September 2022, as reported by Fortune. This action, signaling an in-depth investigation by the SEC, has prompted concerns over the potential classification of Ether as a security, which could impact the approval of spot Ether ETFs. Recent delays by the SEC in deciding on several spot Ether ETF applications, including Van Eck's, which has been postponed until May 23, have led to increased skepticism regarding the likelihood of approval. This scrutiny aligns with SEC chair Gary Gensler's previous statements suggesting that tokens within a PoS system might be classified as securities, based on the premise that profits depend on the efforts of others, intensifying regulatory ambiguity around Ethereum and its foundational organization based in Switzerland.

Trading Desk Insights

In Wednesday's trading session, Bitcoin displayed notable volatility, initially shedding 4% in the early hours before rallying 12% from its session lows in the afternoon. This surge followed the Federal Reserve's announcement, affirming market expectations of three interest rate reductions within the year. The uptick in Bitcoin's value was predominantly driven by spot market transactions, indicative of genuine demand, contrasting with the more speculative nature of futures trading.

ETFs recorded outflows for the third consecutive day, amounting to $261.6 million, with Grayscale experiencing a significant portion of these outflows, totaling $386.6 million.

The discount on the Grayscale Ethereum Trust plummeted to a record low of -20% since November 2023, dampening optimism for the approval of a spot ETF in May.

Dogecoin (DOGE) experienced a robust increase of 26% from the previous day's lows. This surge is attributed to Coinbase Derivatives' recent actions, having submitted certifications to the CFTC within the past two weeks for the listing of U.S. regulated futures for Dogecoin, Litecoin, and Bitcoin Cash.

Following the Federal Reserve's latest policy meeting, stock futures saw an upward trend on Thursday morning. This optimism comes after the three major stock indices reached new highs. Market participants now almost certainly anticipate a start to rate cuts by the Fed in June, with a 70% probability.

The Federal Reserve's decision summary includes:

Maintaining interest rates unchanged for the fifth consecutive meeting.
Continuing anticipation of three rate cuts in 2024, aligning with prior expectations.
An upward revision in GDP projections for 2024 to 2.1% from 1.4% as estimated in the December meeting.
Expectations of a higher core PCE in 2024 at 2.6%, up from 2.4%.
A reduction in the number of expected rate cuts in 2025 and fewer in 2026, with the FOMC's median rate forecast for 2025 adjusted to 3.9% from 3.6%.
The Fed's statement highlighted that inflation has eased yet remains high and ruled out rate cuts until there's "greater confidence" that inflation is trending towards 2%.

Globally, the Bank of England maintained its interest rate at 5.25% but suggested potential rate cuts as inflation declines more rapidly than anticipated. Meanwhile, Turkey's central bank increased its interest rate to 50%, countering previous signals of ending the rate hike cycle.

In additional financial news, X has secured a money transmitter license for payment services across 22 U.S. states. Concurrently, the U.S. Justice Department has initiated a landmark antitrust lawsuit against Apple.

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