October 30, 2023

Markets Insights

Economic Calendar

Next FOMC meeting: Nov 1st 2023

  • Probability of a 25bps ease → 2%
  • Probability of a 0bps hike → 98%

The News Room

Brazil Sees Surge in Stablecoin Usage, USDT Dominates Cryptocurrency Transactions

The Brazilian Special Department of Federal Revenue, Receita Federal, has noted a significant surge in the usage of stablecoins, particularly Tether's USDT, within the country. In 2022, USDT’s trading volume surpassed that of all other cryptocurrencies combined, accounting for 80% of all reported crypto transactions in the initial months of 2023. This shift in market dynamics has been attributed to the collapse of Terra LUNA in 2022, prompting investors to seek refuge in less volatile assets. USDT’s trading volume in Brazil reached approximately 271 billion Brazilian reais ($54 billion), almost double that of Bitcoin, which saw transactions totaling just over 151 billion reais ($30 billion). While stablecoins comprise around 10% of the global crypto trading volume, their role as a safe haven during market fluctuations and a bridge between fiat and digital assets has solidified their position in the market. The Receita Federal is closely monitoring these developments, acknowledging the potential implications for Brazil’s tax and regulatory landscape and highlighting the possibility of additional legislation to address the burgeoning digital asset industry.

WisdomTree Expanding Digital Fund Offerings on Blockchain-Enabled Platform

As a strategic move reiterated to maintain the firm’s pioneering status in tokenization, WisdomTree, a global asset manager handling around $94 billion in assets, is poised to broaden its digital fund offerings on its “blockchain-enabled” consumer application, WisdomTree Prime, by the close of this year. Launched in July, and expanded to an additional 11 states earlier this month, WisdomTree Prime provides users access to nine digital funds recorded on the Stellar or Ethereum blockchains, alongside dollar and gold tokens, as well as Bitcoin and Ether. The company is gearing up to introduce a money market fund and three digital funds under the WisdomTree Siegel brand, offering a simplified, one-click investment experience, and has plans to roll out more features like debit card connectivity and peer-to-peer functionality in subsequent quarters. Moreover, WisdomTree is pursuing the approval of a spot Bitcoin ETF in the U.S., a product that has yet to receive the green light from the Securities and Exchange Commission.

Gemini Files Lawsuit Against Former Partner Genesis Global Over GBTC Collateral

Gemini, a cryptocurrency exchange, has filed a lawsuit against its former business partner Genesis Global, related to their Gemini Earn product, seeking control over 60 million shares of the Grayscale Bitcoin Trust (GBTC) pledged as collateral. Gemini asserts that acquiring these shares would fully secure and settle the claims of all Earn customers, who found their funds locked when Genesis froze withdrawals last year amid financial turbulence.

The filing comes amidst ongoing legal challenges, including a lawsuit from New York Attorney General Letitia James against both Gemini and Genesis, accusing them of defrauding over 230,000 investors of more than $1 billion. Both companies have faced significant financial strain following the 2022 collapse of major entities in the crypto space, leading to Genesis’ bankruptcy filing in January 2023. Despite these issues, Genesis and DCG promised in September that Gemini Earn customers would receive near-full compensation under a proposed settlement. Genesis has yet to respond publicly to the lawsuit, and both companies have jointly opposed SEC accusations that Earn was an unregistered security, requesting a dismissal of the SEC's lawsuit against the program in May.

Trading Desk Insights

Markets are gearing up for a consequential week, as U.S. stock futures point northwards Monday. Eyes are trained on the Federal Reserve's rate verdict, the jobs data for October, and Apple's quarterly results. Following a turbulent spell, the S&P 500 retreated 2.5% over the past week, sliding 10.6% from its pinnacle this year. October could mark its third consecutive bearish month – a trend not seen since the 2020 pandemic onset.

Wednesday's Federal Reserve announcement is the talk of the town. The consensus is leaning towards a steady benchmark interest rate. With soaring interest rates being the primary antagonist behind the recent stock market downturn, market participants are optimistic that the Fed might signal a pause in rate hikes. The sentiment is that the Fed could sideline rate escalations throughout 2023. The week will close with October's employment data, where a tempering labor market could solidify the Fed's inclination to halt rate increases for the foreseeable future.

Tech heavyweight Apple is slated to disclose its earnings post-market close on Thursday. The tech mammoth is grappling with its own correction, retracting 15% from its annual high.

In the crypto sphere, Bitcoin is oscillating between $33,400 and $35,200, while altcoins propel towards annual highs. Data from the Bitcoin network reveals heightened whale activity, registering a fresh year-to-date peak of 23,400 transactions exceeding $100,000.

Amidst a bullish undertone, the crypto market witnessed its heftiest investment product inflows in 18 months, amassing $326m. Regionally dissecting, U.S. contributions were relatively modest at $38m (12%), overshadowed by Canada, Germany, and Switzerland, pooling in $134m, $82m, and $50m, respectively.

Altcoin arenas like LINK, SOL, XRP, and LTC are buzzing with substantial trades and volume. The DeFi landscape is also thriving; assets locked across platforms soared to a three-month apex of $42 billion, rebounding from its lowest point since February 2021.

On the regulatory front, the U.K. unveiled its conclusive crypto framework. A tiered rollout of regulations is on the horizon, with norms for fiat-anchored stablecoins expected early next year.

Technical Charts


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