November 2, 2023

Markets Insights

Economic Calendar

Next FOMC meeting: Dec 13th 2023

  • Probability of a 0bps hike → 83%
  • Probability of a 25bps hike → 17%

The News Room

St.Galler Kantonalbank Teams Up with SEBA Bank to Offer Bitcoin and Ethereum Services to Swiss Customers

St.Galler Kantonalbank (SGKB), a prominent Swiss cantonal bank, has begun offering its wealth management clients the ability to buy and trade cryptocurrencies, specifically Bitcoin and Ethereum, in collaboration with SEBA Bank, a regulated digital asset specialist. The service will soon extend to retail consumers, with plans to include additional coins and staking services. This move marks a significant shift in Switzerland’s banking sector, traditionally catering to private clients and high-net-worth individuals, towards embracing retail customers in the growing cryptocurrency space. SEBA Bank’s partnership with SGKB signifies the expanding interest in crypto services among Swiss retail banks, a trend that has been noted with other banks in the country as well, indicating a broadening of the digital asset adoption within the Swiss financial landscape.

HSBC Launches Gold Tokenization Platform for Institutional Investors

London-based financial giant HSBC has entered the gold tokenization space, launching a platform for tokenized ownership of physical gold stored in its London vault using distributed ledger technology (DLT) for trading with institutional investors. Each token on HSBC’s platform represents 0.001 troy ounce of physical gold, and can be traded via the HSBC Evolve platform. HSBC has previously embraced blockchain technology, partnering with Wells Fargo for transaction processing and announcing plans to launch a digital bond issuance platform, HSBC Orion. The move into gold tokenization aligns with a broader industry trend, as gold is the second-most tokenized asset after USD, and offers a “flight to quality” for investors amidst macroeconomic challenges. The launch is part of HSBC’s broader strategy to develop a comprehensive set of digital asset capabilities, contributing to the ongoing convergence between traditional finance and decentralized finance.

PayPal UK Receives Registration from FCA for Crypto Asset Activities

PayPal UK has obtained registration from the UK’s Financial Conduct Authority (FCA) to provide crypto asset activities starting October 31, although with significant restrictions. New customer onboarding for crypto services is prohibited, and existing users can only hold or sell tokens, not purchase them, with no expansion of current services allowed. Activities such as peer-to-peer transactions, involvement in initial coin offerings, staking, and participation in decentralized finance (DeFi) are all forbidden. This follows PayPal’s suspension of crypto purchases in the UK in August, in compliance with FCA regulations, which will remain in effect until 2024. The registration aligns with the UK Treasury’s recent proposals to bring crypto asset activities into the regulatory framework of financial services, requiring companies to gain approval and comply with anti-money laundering rules.

Trading Desk Insights

Equity markets advanced on Thursday, spurred by a retreat in Treasury yields and rising optimism that the Federal Reserve's rate-hiking cycle could be at a pause for the remainder of 2023. The S&P 500 is navigating towards its most robust weekly performance this year, bolstered by the Fed's latest stance to maintain the interest rate corridor at 5.25%-5.5%, its level since July, coupled with a more favorable view on the domestic economic landscape. Federal Reserve Chair Jerome Powell has left the door open for a potential rate hike in December, while emphasizing that the Federal Open Market Committee (FOMC) is not currently entertaining the idea of rate cuts.

The prevalent sentiment among Fed officials supports a "higher-for-longer" interest rate environment as the effectiveness of prior hikes is evaluated. Although the talk of rate reductions is off the table, market indicators are starting to price in the possibility of a rate cut around mid-2024.

Bitcoin experienced a notable surge, touching a peak for the year at $36,000 in the wake of the Fed's decision to hold rates steady. The cryptocurrency has since retraced to a session low of $34,600.

Historical data of Bitcoin's performance from January to October, and subsequently in the final two months for the years 2010 through 2022, reveal that in seven out of twelve instances, Bitcoin has registered gains of at least 100% in the first ten months. On average, in these instances, Bitcoin has mounted an impressive 65% rally in the final weeks of those years. Matrixport Technologies highlights that when Bitcoin boasts a rise of over 50% by October's conclusion, it typically carries a 78% likelihood of climbing higher as the year closes. Past patterns indicate that Bitcoin has continued to soar, averaging an additional 68% growth towards year-end in seven out of nine such occurrences, resting on thirteen years of its historical performance.

In the derivatives realm, the surge in open interest at the CME echoes a swell in institutional engagement. Funding rates for Bitcoin perpetual futures have turned positive across trading platforms, signifying a bullish shift in market sentiment. Post a spate of liquidations sparked by the initial price rally, we're witnessing a gradual reconstruction of open interest, underpinning this sentiment shift.

Technical Charts


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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