March 27, 2024

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Next FOMC meeting: May 1st 2024

  • Probability of a 25bps ease → 9%
  • Probability of a 0bps hike → 91%

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The News Room

Tether Launches AI Division to Explore Open, Privacy-Focused Innovations

Tether, the stablecoin issuer, has launched a new AI division, Tether Data, aiming to innovate in artificial intelligence with an open, transparent, and privacy-preserving approach. The division is actively recruiting for key positions, including an AI engineer and a head of AI research and development. This move marks Tether's entry into the competitive AI hiring landscape, adding to its existing ventures in energy and education. With USDT maintaining a dominant 70% share of the stablecoin market and reporting substantial profits, Tether's expansion into AI underscores its broader strategic vision. This includes a significant investment in Northern Data Group for AI development resources. Tether Data will focus on developing AI models, fostering collaborations for AI-integrated market products, and contributing to the advancement of open AI, aligning with the growing interest in AI and crypto synergies.

Marsh Introduces $825 Million Crypto Custody Insurance Product

Marsh, a leading insurance broker, has launched an unprecedented digital asset custody insurance product offering up to $825 million in capacity, the largest to date, designed to support organizations managing digital assets in cold storage and other custody solutions like Multi-Party Computation (MPC). This initiative comes as crypto insurance remains scarce, with exchanges and firms often self-insuring against losses. Marsh, leveraging its ties with Lloyd’s of London, previously facilitated significant crypto coverage deals and developed this new facility through its Digital Asset team in New York and London, aiming to mitigate operational risks for custodians in the rapidly growing digital asset sector.

HSBC Launches Tokenized Gold for Retail Clients in Hong Kong

HSBC has introduced tokenized gold products for its retail clients in Hong Kong, utilizing its private distributed ledger, HSBC Orion, for the first time in a retail investment product. This launch aligns with Hong Kong's ambition to advance real-world asset tokenization and marks HSBC's further exploration into blockchain applications, including the introduction of digital bonds and plans for a digital asset custody service in partnership with Metaco. HSBC's initiative represents a growing trend in the finance sector towards embracing blockchain technology for tokenizing assets, with similar ventures like SC Ventures' Libeara platform highlighting the industry's move towards digital innovation.

El Salvador Boosts Bitcoin Holdings to 5,700, Reveals Enhanced Strategy for Accumulation

El Salvador, pioneering in adopting Bitcoin as legal tender, has increased its Bitcoin holdings to 5,700, worth over $400 million at the current price. President Nayib Bukele highlighted the nation's strategic accumulation of Bitcoin, not only through daily purchases but also via passport sales, business conversions, mining, and governmental services. Bukele's disclosure of moving these holdings to cold storage revealed a greater amount than previously estimated by public trackers. This move aligns with El Salvador's pro-Bitcoin stance, underscored by recent legislation eliminating income tax on foreign remittances and offering citizenship to Bitcoin investors, further solidifying its appeal to digital asset enthusiasts and investors.

Trading Desk Insights

Bitcoin rallied to hit a session peak of $71,800 before retreating to $68,600 as the equity markets opened, coinciding with a notable reduction in open interest by nearly $1 billion, alongside a spate of long position liquidations. Post-pullback, we've observed a resurgence in spot market buying activity.

Turning to ETFs, the landscape has shown marked improvement, absorbing new net inflows of $418 million while noting a reduction in outflows from Grayscale.

In regulatory news, crypto platform KuCoin and its two founding members faced charges from U.S. federal prosecutors for breaches of anti-money laundering regulations. According to analytics firm Nansen, the aftermath saw KuCoin experiencing withdrawals exceeding $1 billion within a 24-hour window.

Elsewhere, a noteworthy collaboration in the crypto space sees three leading AI-focused tokens— (FET), SingularityNET (AGIX), and Ocean Protocol (OCEAN)—merging to establish an AI alliance. This new conglomerate, named "Artificial Superintelligence" (ASI), will debut with a combined token supply of approximately 2.63 billion and an initial token price set at $2.82.

On the broader financial front, stock futures indicated an upward trajectory on Wednesday, aiming to recover from the previous day's downturn that distanced the indexes from their record highs. The S&P 500 and Nasdaq have recorded gains of 2.1% and 1.4%, respectively, for the month, extending their quarterly uptrends to 9.1% and 8.7%. Market participants are poised to digest upcoming insights from Federal Reserve Governor Christopher Waller's speech scheduled for Wednesday evening.

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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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