March 28, 2024

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Next FOMC meeting: May 1st 2024

  • Probability of a 25bps ease → 6%
  • Probability of a 0bps hike → 94%

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The News Room

BlackRock's Tokenized Treasury Fund Rapidly Gains Market Traction, Signaling Growing Blockchain Integration in Finance

BlackRock's entrance into the tokenized real-world asset (RWA) market with its BUIDL fund, focusing on U.S. Treasuries, has quickly captured significant attention, amassing $245 million in deposits and securing second place in its category within just a week of launch. Competing with Franklin Templeton's leading fund in the sector, BlackRock's move underscores the financial industry's accelerating interest in blockchain technology to tokenize traditional financial instruments for improved efficiency and faster settlements. The tokenized Treasury market, serving as an ideal entry point for such efforts due to its low risk and familiarity among investors, has seen rapid expansion, growing from $100 million to a potential $1 billion market soon. BUIDL, operating on the Ethereum blockchain, offers institutional investors a stable yield-generating opportunity by representing investments in U.S. Treasury bills and repo agreements, highlighting the growing integration of blockchain innovations within conventional finance sectors.

Venture Smart Financial Seeks to Launch Hong Kong's First Spot Bitcoin ETF Amid Regulatory Evolution

Venture Smart Financial Holdings Ltd., a Hong Kong-based financial services firm, has applied to launch a spot Bitcoin exchange-traded fund (ETF), targeting a release as early as May or June, pending regulatory processes. This development comes as Hong Kong signals openness to spot crypto ETFs, aligning with the Securities and Futures Commission and the Hong Kong Monetary Authority's recent policy revisions. Bloomberg's Eric Balchunas highlighted potential regulatory changes to allow in-kind creations and redemptions for these ETFs in Q2, enhancing asset management and trading volumes. The ETF aims to offer exclusive features for the Hong Kong market, potentially increasing assets under management and benefiting various stakeholders within the financial ecosystem, although certain uncertainties remain regarding the readiness of service providers.

21Shares Debuts Toncoin Staking ETP on SIX Swiss Exchange, Bridging Traditional Finance with Crypto Rewards

21Shares AG has launched a Toncoin staking exchange-traded product (ETP), TONN, on the SIX Swiss Exchange, allowing investors to earn staking rewards on Toncoin without directly managing a staking node. This ETP, which charges a 2.5% annual fee, debuts with approximately $40 million in assets under management, catering to the demand for new crypto products among investors. This launch coincides with Toncoin's price surge following its integration by Telegram for sharing advertisement revenue and rewarding users, marking a significant move since Telegram's previous legal battle with the SEC over its initial blockchain project, TON. The blockchain, now managed by the TON Foundation and endorsed by Telegram for web3 infrastructure, has seen Toncoin reach a new all-time high. 21Shares, known for offering over 40 ETPs across multiple exchanges, holds around $7 billion in assets under management, highlighting its significant role in providing access to cryptocurrency investments through traditional financial markets.

Trading Desk Insights

This Friday, the spotlight's on Deribit as the leading crypto options exchange gears up for a monumental day, with BTC and ETH options contracts valued at $9.5 billion and $5.7 billion respectively hitting their settlement date. The considerable volume of these contracts expected to expire in-the-money (ITM) may well act as a catalyst for increased market buoyancy or volatility. Particularly noteworthy are the "max pain" points for this quarter's expiry, pegged at $50,000 for BTC and $2,600 for ETH, indicating the price levels where option holders could face the heaviest losses.

In anticipation of its halving on April 4th, Bitcoin Cash (BCH) experienced a notable 13% surge. The leap in BCH futures' open interest — jumping from $213 million to $500 million in just a week — signals a market bracing for heightened volatility, with traders ramping up leveraged positions.

The realm of tokenized U.S. Treasury notes is witnessing explosive growth, with over $1 billion now circulating on public blockchains, marking a staggering tenfold increase since January 2023. This surge is largely attributed to BlackRock's launch of its Ethereum-based tokenized fund, BUIDL, on March 20th. Tokenized Treasuries transform U.S. government bonds into blockchain-tradable tokens, melding traditional finance with the cutting-edge crypto market.

Meanwhile, stock futures hovered around the break-even mark on Thursday, as the S&P 500 teeters on the brink of its strongest first-quarter performance in half a decade. Market participants are taking a breather tomorrow in observance of Good Friday.

Inflation data recently came in above expectations, bolstering the argument for the Federal Reserve to pause on adjusting its short-term interest rate target. Fed Governor Christopher Waller, while acknowledging the current inflationary pressures, didn't dismiss the possibility of rate cuts later in the year. This stance hinges on whether recent data points are merely blips in the ongoing battle against inflation or if they suggest a more sustained trend that could adjust rate cut forecasts for the remainder of the year.

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