October 6, 2023

Markets Insights

Economic Calendar

Next FOMC meeting: Nov 1st 2023

  • Probability of a 0bps hike → 72%
  • Probability of a 25bps hike → 28%

The News Room

FTX Co-Founder Accuses Sam Bankman-Fried of Financial Crimes in DOJ Trial

Gary Wang, co-founder of FTX, accused Sam Bankman-Fried of committing financial crimes, including wire fraud, securities fraud, and commodities fraud during his recent testimony in the U.S. Department of Justice's trial against Bankman-Fried. Wang, alongside Caroline Ellison and former FTX executive Nishad Singh, admitted to their roles in these crimes after Bankman-Fried's arrest. Wang revealed they provided Alameda Research with undue privileges to withdraw unlimited funds from FTX and concealed these actions.

Key testimonies highlighted a software bug that misrepresented Alameda's debt to FTX by $8 billion and the unconventional way FTX managed customer deposits. Adam Yedidia, a former FTX developer, gave a significant account of this software glitch and its repercussions. He also mentioned a crucial conversation with Bankman-Fried about the financial vulnerabilities of the company. Yedidia subsequently resigned from FTX after discovering Alameda's misuse of customer funds.

Volcano Energy and Luxor Technology Launch El Salvador's First Crypto Mining Pool

Salvadoran renewable energy company, Volcano Energy, has teamed up with Bitcoin mining software provider Luxor Technology to establish "Lava Pool", El Salvador's inaugural crypto mining pool powered by the nation's abundant geothermal energy. Dedicated to mining Bitcoin, Volcano Energy pledges to donate 23% of its net profits to the Salvadoran government, reinforcing a public-private collaboration.

Through Luxor's Hashrate Forward Marketplace, Volcano Energy expects enhanced risk management against Bitcoin's price volatility. This venture reflects El Salvador's intention to intertwine Bitcoin with its energy strategy, maximizing its renewable energy potential and channeling mining profits to further advance its energy infrastructure. In June, Volcano Energy garnered $1 billion in investments, led by Tether Energy, of which $250 million is already in use for renewable energy and Bitcoin mining developments.

Central Bank Group Unveils Data Project Mapping Crypto Transfers

The Bank for International Settlements (BIS) has introduced Project Atlas, a decentralized finance data platform, which could be instrumental in the regulation of crypto market participants. Developed in collaboration with the Dutch and German central banks, the platform's initial use was to chart significant international crypto exchange flows. Cecilia Skingsley of the BIS Innovation Hub highlighted the platform's potential as a critical public resource for central banks.

The study emphasizes that while crypto exchange flows constitute a small portion of total on-chain traffic, they are economically substantial. Project Atlas merges off-chain data from crypto exchanges with public blockchain information, offering a clearer picture of market activities. Given the potential manipulation of crypto data and the rise of unregulated actors in the crypto market, this initiative aims to improve transparency and aid in drafting regulations.

Trading Desk Insights

U.S. equity futures took a hit on Friday, driven by a spike in Treasury yields post the impressive U.S. employment figures.

The September jobs report was a significant outperformer, posting a robust addition of 336k, far surpassing the consensus of 171k. This showcases the labor market's resilience, even in the face of the Fed's recent rate adjustments, with unemployment figures holding steady at 3.8%.

With Treasury yields on the rise and equities retreating, there's heightened anxiety around the longevity of the Fed's stringent stance. Market participants are wrestling with the prospect of sustained high rates, fueled by the persistent inflationary environment. Voices from the Federal Reserve underscore their inflation apprehensions, hinting at prolonged elevated rates.

The recent sentiment has pushed traders to recalibrate their expectations, with the fed funds futures now pricing in a near 44% chance of another rate hike by year's end, a sharp increase from the earlier 20% projection.

Bitcoin dropped by almost 2% after the strong jobs number. This reinforces the idea that the crypto industry is still somewhat tied to macroeconomic events. The support of 26,700 remains key on an intraday basis.

Looking at the seasonality of Bitcoin, we notice an interesting trend. October is the most consistently green month for Bitcoin as price action historically averages +29% returns. BTC has only had two negative Octobers in 2014 and 2018. Finally, BTC and ETH have ended October in the green for the last 5 years.

Altcoins on the rise this morning include AVAX, MATIC, SOL and RNDR.

Technical Charts


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