March 4, 2024

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Next FOMC meeting: Mar 20th 2024

  • Probability of a 25bps ease → 3%
  • Probability of a 0bps hike → 97%

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The News Room

BIS Outlines Global Recommendations for Stablecoin Regulation to Bolster Financial Stability

The Bank for International Settlements (BIS) has issued recommendations for the regulation of global stablecoins (GSCs), emphasizing their widespread adoption and potential systemic importance across jurisdictions. These recommendations aim to address financial stability risks and support innovation within the GSC sector, urging global jurisdictions to prepare for effective regulation and supervision. Emphasizing cross-border cooperation, coordination, and information sharing, the BIS highlights the need for comprehensive risk management frameworks that address operational resilience, cybersecurity, anti-money laundering measures, and adherence to 'fit and proper' requirements. The BIS also focuses on data storage, redemption rights, and prudential requirements, stressing that while stablecoins can enhance financial service efficiency, they also pose risks to financial stability. The recommendations advocate for a consistent, effective, and technology-neutral approach to regulation, focusing on the activities and risks associated with GSCs.

Crypto Mining Industry Wins Legal Battle Against U.S. Department of Energy Survey

The Department of Energy's initiative to survey cryptocurrency mining firms on their electricity consumption has been halted as a result of a legal settlement, following a lawsuit filed by the Texas Blockchain Council and Riot Platforms challenging the survey's legality and process. The agreement mandates the Energy Information Administration to discard any data already collected and to issue a new notice allowing for public comments on the survey. This move has been celebrated by the crypto mining industry and political figures as a victory for free enterprise, highlighting concerns over government overreach and the potential misuse of emergency powers against a legitimate industry. The Sierra Club's support for the Department of Energy, citing environmental and grid reliability concerns, contrasts with the industry's and lawmakers' views on the need for regulatory restraint and the importance of data collection for informed policy-making on energy consumption by crypto mining operations.

BlackRock's iShares Bitcoin Trust ETF Debuts on Brazil's B3, Widening Global Crypto Investment Scope

BlackRock's iShares Bitcoin Trust ETF (IBIT), the most popular among the 10 U.S.-launched spot bitcoin exchange-traded funds, has expanded its reach by beginning trading on Brazil's B3 stock exchange, as announced by the company on Thursday. This move opens up new opportunities for Brazilian investors to include Bitcoin exposure in their portfolios, reflecting the global surge in interest towards the crypto market. IBIT, which has attracted over $7 billion in net investment since its U.S. debut on January 11, features a management fee of 0.25%, set to be reduced to 0.12% for the first year or until the fund amasses $5 billion in assets, mirroring the fee structure of its U.S. counterpart.

Trading Desk Insights

Bitcoin initiated a bullish surge on Sunday and maintained its upward trajectory into Monday, reaching $66,000. Prices are nearing their all-time high, rebounding swiftly after a brief pause over the weekend. Historical data suggests that each period of sideways consolidation has preceded significant price movements, fueled by robust demand from new spot ETFs. In USD terms, BTC is now just 5% shy of its 2021 peak, having already set records in other currencies such as EUR and CAD. Notably, recent blockchain data indicates that 97% of addresses are now in profit. The total global cryptocurrency market cap has surpassed $2.5 trillion, with BTC's market cap exceeding $1.3 trillion.

Over the weekend, open interest surged by 12%, surpassing $1.2 billion in open contracts, reflecting a significant level of leverage across various markets, with APR crossing above 100%.

In a rare occurrence, Friday witnessed outflows totaling $139.5 million in ETF flows, with Grayscale experiencing particularly high outflows amounting to $492.4 million.

Pepecoin (PEPE) saw a remarkable surge of up to 60% in the past 24 hours, extending its weekly gains to over 370% amid a broader rally in meme coins spurred by the likes of dogecoin (DOGE) and bonk (BONK). Trading volumes for DOGE reached all-time highs of $3.6 billion. Futures contracts tracking PEPE witnessed over $50 million in liquidations, potentially contributing to the price spike.

In regulatory news, the Texas Blockchain Council's lawsuit successfully halted the Biden administration's efforts to collect government data on Bitcoin miners, with the government agreeing to destroy the collected data.

Equity futures retreated on Monday as traders took a breather following a rally that propelled major U.S. stock benchmarks to record highs. Apple shares declined over 2% after being slapped with a nearly $2 billion antitrust fine by the European Union.

Looking ahead, the upcoming week promises significant economic reports, including interest rate decisions in Canada and Europe, China's CPI and PPI figures, and a flurry of job data in the US, with the nonfarm payrolls report on Friday being particularly noteworthy.

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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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