September 13, 2023

Markets Insights

Economic Calendar

Next FOMC meeting: Sept 20th 2023

  • Probability of a 0bps hike → 93%
  • Probability of a 25bps hike → 7%

The News Room

Franklin Templeton Joins Spot Bitcoin ETF Race

Asset management giant Franklin Templeton has filed with the U.S. SEC to launch a Coinbase-custodied Bitcoin ETF that would be listed on the Cboe BZX Exchange, marking its inaugural venture into the Bitcoin ETF landscape. The firm follows in the footsteps of other financial behemoths such as BlackRock, betting on the SEC's eventual allowance for a spot Bitcoin ETF in the market, potentially enhancing accessibility for everyday investors to Bitcoin investments through regular brokerage accounts.

While the firm’s move into digital assets has been gradual, it is not entirely unexpected given its history with structured investment products. Despite the firm’s notable entry, industry analysts foresee other contenders such as BlackRock, WisdomTree, and Fidelity potentially receiving the green light from the SEC ahead of Franklin Templeton. The SEC is expected to review these filings in mid-October, but a final decision may be delayed until March 2024.

Nasdaq Files to List Ethereum ETF by Brazilian Asset Manager Hashdex

The Nasdaq stock exchange has filed with the U.S. Securities and Exchange Commission (SEC) to list a novel Ethereum ETF conceived by Brazilian asset manager Hashdex. Managed by Toroso Investments, the Hashdex Nasdaq Ethereum ETF plans to hold a combination of spot ether, ether futures contracts listed on the CME, cash, and cash equivalents, diverging from the more typical approaches that focus exclusively on either futures contracts or spot funds. This strategy aims to mitigate potential price manipulations in the unregulated ether spot exchanges by reducing dependence on the spot market.

The filing comes amidst a surge in applications for crypto ETFs, with industry players keenly watching the SEC's pending decisions on several spot crypto fund filings, including recent submissions by Ark Invest, 21Shares, and VanEck. Hashdex CEO Marcelo Sampaio emphasized working cooperatively with regulators, anticipating the eventual approval of a spot Bitcoin ETF.

Bankrupt FTX Reveals $100M Weekly Crypto Liquidation Plan in Court Filing

Cryptocurrency exchange FTX has submitted a revised order to the bankruptcy court outlining proposed guidelines for selling its digital assets in its ongoing Chapter 11 proceedings. These guidelines include structured processes for liquidating cryptocurrency holdings, with weekly sales limits starting at $50 million and rising to $100 million for Bitcoin and Ethereum. Stricter controls are proposed for insider-affiliated tokens, requiring advance notice and creditor approval. FTX also seeks permission to engage in cryptocurrency hedging, initially limited to Bitcoin and Ethereum.

The proposed asset sales aim to address the liquidity crisis that led to FTX's bankruptcy, with its new leadership looking to expand its business while holding $1.2 billion in cash. The bankruptcy court will review these guidelines amid FTX's diverse asset portfolio, estimated at $7 billion.

Trading Desk Insights

U.S. equity futures ticked lower Wednesday morning as investors absorbed a hotter-than-expected inflation report. The consumer price index, which measures costs across a broad variety of goods and services, rose 3.7% YoY, surpassing estimates of 3.6%. The initial release lead to some pressure across risk assets before recovering shortly after.

In the United States, the mortgage market has fallen to a level reminiscent of the 1996 era. Elevated mortgage rates persistently exert their influence on the mortgage landscape, particularly affecting refinancing activities. Refinancing demand experienced a notable weekly decline of 5%, marking a substantial 31% reduction compared to the corresponding week in the preceding year. Conversely, applications for mortgages aimed at home purchases exhibited a modest week-to-week uptick of 1%, although they remained 27% below the levels observed in the same week one year prior.

Bitcoin continues to trade in a tight range despite the recent pop to 26,600. On an intraday basis, prices can’t seem to close above 26,300. All rallies have been shorted since the end of August and we should expect this to continue until a new catalyst takes place and we trade out of this range whether it’s on the upside or downside.

The market appears to be undervaluing the potential of a Bitcoin spot ETF. The likelihood of regulatory approval for such an ETF has never been more promising, yet Bitcoin is currently trading at levels seen before the announcement from BlackRock.

To put it in perspective, Purpose ETF managed to attract 11,141 BTC in inflows. Following Purpose, a sequence of ETF launches occurred in Canada, resulting in a remarkable 58,000 BTC in inflows within the initial four months. It's important to note that the Canadian market is considerably smaller than its U.S. counterpart. The approval of multiple Bitcoin spot ETFs is expected to trigger a substantial influx of capital, surpassing the inflows generated by both the BITO and Purpose ETFs.

Technical Charts


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