October 12, 2023

Markets Insights

Economic Calendar

Next FOMC meeting: Nov 1st 2023

  • Probability of a 0bps hike → 89%
  • Probability of a 25bps hike → 11%

The News Room

UK FCA Blueprint for Fund Tokenization Set to Release This Year

The Financial Conduct Authority (FCA), the primary regulatory body for the financial sector in the U.K., has been collaborating with the Technology Working Group to establish guidelines for fund tokenization, according to a statement by FCA Chair Ashley Alder. Earlier in February, the FCA had unveiled a discussion paper exploring advancements in the nation's asset management framework, emphasizing the potential incorporation of distributed ledger technology by fund managers to introduce fully digitized funds.

With this development in mind, the FCA expressed its proactive stance in the discussion paper, communicating its ongoing consultations with industry stakeholders about potential modalities for fund tokenization. Alder reiterated their commitment by announcing the impending release of a blueprint on the subject, developed in partnership with the Technology Working Group under the Treasury’s Asset Management Taskforce. This publication is expected later this year.

Immutable and Amazon Web Services Partner to Advance Blockchain Gaming Infrastructure

Blockchain gaming company, Immutable, has forged a strategic partnership with Amazon Web Services (AWS) to enhance the gaming infrastructure for developers. This collaboration gives Immutable access to AWS's extensive technical resources, fostering innovation and expansion in the blockchain gaming sector. By joining Amazon’s Independent Software Vendors (ISV) Accelerate Program, Immutable can now connect with potential game studios globally and avail expert resources from AWS for deals with prominent game studios.

Though this partnership is mutually advantageous, it will not grant Amazon any exposure to Immutable X's native token, IMX. The alliance also allows game developers working with Immutable to benefit from the AWS Activate program, which delivers technical support, referral opportunities, and AWS credits. AWS continues its venture into blockchain solutions, having previously partnered with Ava Labs to boost blockchain adoption across various sectors.

Xapo Secures European Broker License, Expanding Services to Offer Stocks Like Apple

Gibraltar-based Xapo, initially a Bitcoin-only digital asset bank, is expanding its offerings following the acquisition of a securities broker license, enabling it to offer trading of S&P 500 stocks like Apple in Europe alongside its crypto wealth management services. Catering to long-term investors, CEO Seamus Rocca reveals their target demographic leans towards those using Bitcoin as a potential pension pot or property purchase fund.

Having started with a robust BTC reserve and a cold-storage vault in 2013, Xapo has acquired significant credentials including a banking license and principal membership with Visa, Mastercard, and SWIFT, enabling direct engagement with correspondent banks. The firm, which traditionally embraced a Bitcoin-only strategy, is set to break its mold by incorporating Ethereum into its offerings in response to client demand, according to Rocca. This step towards diversification signals a broader shift and potential future expansions in the digital bank's asset offerings.

Trading Desk Insights

U.S. equity futures remained steady on Thursday as market participants eagerly awaited fresh consumer inflation figures to glean deeper insights into the economic trajectory.

The Consumer Price Index (CPI) recorded a month-over-month uptick of 0.4%, surpassing the anticipated 0.3%. On a year-over-year basis, inflation settled at 3.7%, slightly edging past the forecasted 3.6%. Stripping out volatile components such as food and energy, the core inflation metrics aligned with market predictions, registering a 0.3% monthly rise and an annual increase of 4.1%.

Minutes from the recent FOMC meeting, unveiled yesterday, spotlighted the Federal Reserve's heightened vigilance towards potential inflationary pressures. Additionally, the documentation underscored the economy's surprising robustness, suggesting its durability might continue. Presently, indications from the Fed officials tilt towards a hiatus in the rate-hiking sequence, bolstering sentiments that the tightening phase might be concluding. Analyzing futures data, the broader market seems to be discounting the possibility of a rate increment come November.

The S&P500 is trading near a gap between 4375 and 4405. The top of the gap also intersects with the 50-day moving average, thus reinforcing the view that we are currently in a resistance area. Odds favor shorts at these levels, unless positive macro news surfaces.

Bitcoin has dropped by 6% since the recent highs of 28,500. We broke below the 20-day and 200-day moving averages and are trading near the 50-day moving average. The RSI broke below the rising trend line and is now below the neutral level of 50. It seems that BTC is getting ready to get back in the previous trading range for some more sideways price action.

Looking back at history, most specifically around 2019, the Federal Reserve concluded its cycle of rate hikes, opting for a seven-month hiatus. In the same time period, Bitcoin witnessed a remarkable appreciation, escalating over 300% in value. Drawing parallels, should the Fed indeed culminate its rate-increase cycle this July 2023, then Bitcoin might be poised for a substantial uptrend.

“History never repeats itself, but it does often rhyme.”
Mark Twain

According to the top crypto options exchange, Deribit, options trading, as a segment of the broader derivatives market, has been on a steady ascent. By the end of September, the 7-day moving average of options volume had reached 3% of the cumulative derivatives market activity, marking an all-time high.

Technical Charts


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