October 19, 2023

Markets Insights

Economic Calendar

Next FOMC meeting: Nov 1st 2023

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

The News Room

Grayscale Submits New Filing for SEC Approval to Convert Bitcoin Trust into ETF Following Pivotal Court Ruling

Grayscale Investments has filed a registration statement with the SEC as part of its efforts to convert its Grayscale Bitcoin Trust into a spot Bitcoin ETF, following a directive from a D.C. circuit court to reconsider the firm's application. The move coincides with similar approvals sought by industry giants such as BlackRock and Fidelity. Grayscale's proposed shares, to be symbolized as GBTC, aim to be listed on NYSE Arca. This development arises amid heightened anticipation in the crypto industry, especially as the SEC refrained from appealing a court ruling, hinting at the potential emergence of a spot Bitcoin ETF in the near future. SEC Chair, Gary Gensler, emphasized the thorough review process of such filings but did not comment specifically on Grayscale's situation.

Digital Euro Project Moves to 'Preparation' Phase

The European Central Bank (ECB) is advancing its digital Euro project into the preparation phase, a step toward potentially issuing a central bank digital currency (CBDC) for retail use within the European Union. Despite anticipation of a decision on its issuance following a two-year investigation, the ECB has received considerable criticism, largely around privacy concerns.

Starting in November, this preparation phase will span two years, focusing on finalizing a digital Euro guideline, choosing CBDC platform providers, and continuing tests. A decision on the digital Euro will be considered once the EU's legislative process concludes. Markus Ferber, a European Parliament member and CBDC critic, expressed concerns about the timing of this phase, suggesting the ECB might have to modify plans based on legislative outcomes. The ECB envisions a digital Euro accessible to citizens and businesses via banks and other regulated intermediaries.

Standard Chartered Sets Sights on Dubai for Institutional Crypto Custody Services Amid Regulatory Uncertainty in the U.S.

Amid the ongoing regulatory ambiguity in the U.S. concerning cryptocurrencies, major global banks are exploring digital assets in more crypto-friendly jurisdictions. Standard Chartered is pivoting to Dubai, with plans to safeguard Bitcoin and Ether for institutional clients by early 2024.

Waqar Chaudry, the bank's executive director of innovation, emphasized the need for stable regulations to foster institutional adoption. While countries like Switzerland and Singapore have been crypto hubs, others like Germany and the broader EU are now also advancing in crypto services. Standard Chartered aims to leverage its robust presence in Asia, Africa, and the Middle East. Chaudry highlighted that the Dubai International Financial Centre allows the bank to offer services globally, subject to jurisdictional equivalence. In the future, the bank sees potential in creating crypto settlement mechanisms, emphasizing interoperability with traditional custodians over a singular bank network.

Trading Desk Insights

On Thursday morning, equity futures showed signs of an uptick, with Wall Street poised to recuperate from the 1.4% drop experienced by both the S&P500 and Nasdaq the previous day.

All eyes are on Federal Reserve Chair Jerome Powell, scheduled to present a potentially pivotal policy speech at the Economic Club of New York at 12pm ET. Traders are on edge, anticipating Powell to maintain a firm stance on inflation. While the majority of the market forecasts the Fed to remain steady on rates, they'll be keenly listening to Powell for both affirmation and insights.

The stakes got even higher  Thursday morning as Treasury yields rose, driven by indicators of an enduringly robust jobs market. The latest data showed weekly jobless claims below the 200,000 mark, underscoring the sustained economic vigor even in the face of rising interest rates. Significantly, the 10-year note hovered near the critical 5% mark, a threshold not breached since 2007, right before the financial crisis took a turn for the worse.

Bitcoin continues to trade near its recent highs and is hovering between 28,050 and 28,950. As much as prices have retraced following the ETF rumor, BTC is still trading quite high. As long as prices remain above their 200-day moving average near 28,000, the short term outlook is more bullish.

Grayscale has filed an S-3 with the SEC, a shortened version of the typical S-1 filing used to offer new shares, signaling their intention to transition GBTC into a spot BTC trust.

The New York Attorney General has initiated legal action against Gemini, Genesis, and DCG, accusing them of misleading over 230,000 investors and causing losses exceeding $1 billion. The case suggests that Gemini was aware of undersecured loans at Genesis, notably with substantial concentration linked to Alameda Research under Sam Bankman-Fried, but failed to disclose this critical information to its investor base.

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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