October 2, 2023

Markets Insights

Economic Calendar

Next FOMC meeting: Nov 1st 2023

  • Probability of a 0bps hike → 69%
  • Probability of a 25bps hike → 31%

The News Room

SEC Delays Decisions on Spot Bitcoin ETFs from VanEck, WisdomTree, and Fidelity Amidst Potential Government Shutdown

Ahead of a potential government shutdown, the Securities and Exchange Commission (SEC) has postponed decisions on proposed spot Bitcoin ETFs from VanEck, WisdomTree, and Fidelity, indicating a lengthier approval process. Inviting public commentary over the next 21 days, followed by a 35-day rebuttal period, the regulator extends the timeline for evaluations. This move is in line with the SEC's recent actions, where it delayed decisions on other fund proposals from BlackRock, Invesco, Valkyrie, and Bitwise. While the SEC asserts that this delay doesn't reflect any conclusions, it seeks fresh perspectives, especially on the sufficiency of regulations on platforms like the Chicago Mercantile Exchange and a potential surveillance-sharing agreement with Coinbase, to ensure a robust review of the spot Bitcoin ETFs amidst a burgeoning interest in cryptocurrency-based financial products.

UBS Trials Tokenized Money Market Fund on Ethereum

UBS Asset Management, the investment arm of Swiss banking behemoth UBS, has ventured further into the blockchain space with the launch of a tokenized investment fund on the Ethereum network. This initiative comes as part of Singapore's Project Guardian, a pilot program spearheaded by the Monetary Authority of Singapore. Utilizing UBS's proprietary tokenization service, "UBS Tokenized," the fund operates as a smart contract facilitating various asset management functions like processing fund subscriptions and redemptions. Thomas Kaegi, the head of UBS Asset Management in Singapore and Southeast Asia, hailed this step as a pivotal milestone in grasping fund tokenization, a move aimed at bolstering market liquidity and access. This comes in the wake of UBS's prior blockchain endeavor last November, issuing a $370 million bond on SIX Digital Exchange's platform, signaling growing institutional interest in asset tokenization, which according to Bank of America's research, could embody 10% of the global GDP by 2030.

Invesco and Galaxy Digital Partner for Ethereum Spot ETF Application

Invesco and Galaxy Digital are collaborating to apply for an Ethereum (ETH) spot exchange-traded fund (ETF), following their joint Bitcoin (BTC) ETF application in June. The proposed Invesco Galaxy Ethereum ETF aims to mirror the spot price performance of Ether by holding units of the cryptocurrency through an unidentified custodian. Amidst rising anticipation for an Ethereum futures product, this submission joins other recent Ethereum spot ETF applications from Ark Invest/21Shares, VanEck, and Hashdex, pushing spot ETFs as a significant next step for US crypto investments. While the SEC has approved Ethereum futures ETFs from VanEck and Valkyrie, it continues to delay spot crypto ETFs, with Invesco and Galaxy’s Bitcoin spot ETF application experiencing two delays already. The SEC's stance on spot ETFs is under scrutiny, especially after a lawsuit loss to Grayscale, pressuring for a clear regulatory approach towards spot crypto ETFs amidst a burgeoning interest and associated applications in the crypto ETF space.

Trading Desk Insights

Despite the U.S. Senate's timely passing of a continuing resolution to prevent a government shutdown, stock indices demonstrated a softening on Monday. With President Joe Biden signing the resolution moments before the Saturday midnight deadline, this move ensures that the government remains operational for an additional 45 days. However, the market's tempered optimism is discernible; investors remain cautious due to the unresolved broader disagreements on overall government spending.

To encapsulate September's performance, both the S&P 500 and Nasdaq witnessed their most challenging month of the year. The S&P 500 declined by 4.9% monthly and 3.7% quarterly, whereas the tech-centric Nasdaq saw a monthly slip of 5.8% and a quarterly dip of 4.1%.

BTCUSDT jumped to $28,500, reaching its highest level since mid-August, possibly on the back of the launch of several ETH futures ETFs today, which could be a positive sign for the crypto industry. Liquidations on a 24hr basis surged by 168% to reach $110 million. Volume for BTC jumped by 225% to $33B while ETH’s volume increased by 100% to $13.5B. Even though the global crypto market cap has risen 30% YTD, volumes are struggling to sustain higher levels as they have been trending lower since March, and currently sit 57% below 2022 averages.

On the horizon for Ethereum enthusiasts: Nine Ethereum Futures ETFs are queued for an accelerated approval by the SEC, with a potential launch as early as next Monday. In tandem, Grayscale, boasting the globe's most substantial Ethereum trust valued near $5 billion in assets under management, is anticipated to transition its Ethereum trust into a spot ETH ETF.

Lastly, a noteworthy mention for digital asset stakeholders: Last week marked a turn with investment products in this realm experiencing inflows – the first in six weeks, aggregating to $21 million

Technical Charts


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