September 27, 2023

Markets Insights

Economic Calendar

Next FOMC meeting: Nov 1st 2023

  • Probability of a 0bps hike → 84%
  • Probability of a 25bps hike → 16%

The News Room

Lawmakers Urge SEC Chair Gensler to Allow Spot Bitcoin ETFs 'immediately'

A bipartisan coalition of U.S. lawmakers has written to SEC Chair Gary Gensler urging a reconsideration of the agency's stance on Bitcoin ETFs. Highlighting a recent Court of Appeals' decision and noting the similarities between spot and futures-based crypto ETFs, they argue for a more consistent and non-discriminatory approach to such ETF approvals. The push follows the D.C. Circuit Court of Appeals' ruling, where Judge Neomi Rao deemed the SEC's rejection of Grayscale's application as "arbitrary and capricious." The approval of a Bitcoin ETF would simplify investor access to the crypto market through familiar brokerage accounts.

SEC Extends Decision Deadlines for Bitcoin ETF Applications Amidst Potential Government Shutdown

Amidst a potential federal government shutdown due to a budget deadlock in Congress, the U.S. Securities and Exchange Commission (SEC) has extended the decision deadlines on the applications from Ark 21Shares and Global X to list spot Bitcoin Exchange Traded Funds (ETFs). The new deadline for Ark Investment Management and 21Shares, who have been seeking approval since 2021, is set for Jan. 10, while Global X will await a response until Nov. 21.

This delay comes despite a recent federal court ruling urging the SEC to reconsider its stance on Bitcoin ETFs, which was underscored by a bipartisan group of lawmakers who appealed to SEC Chair Gary Gensler for immediate approval of pending spot ETF applications. The SEC, citing concerns of market manipulation and inadequate investor protections, continues its tradition of utilizing the full 240-day review period to deliberate on such applications.

Hong Kong's Securities and Futures Commission to Release Guidance on Tokenized Investment Products

Hong Kong's Securities and Futures Commission (SFC) is set to release guidance on the tokenization of authorized investment products in the near future. Christina Choi, the SFC's executive director of investment products, shared that the initial focus will be on primary dealings of tokenized, SFC-authorized products due to the early development stage of the virtual asset services platforms in the region. Since June, licensed exchanges have been permitted to provide retail trading services following the initiation of a crypto licensing regime.

However, Choi highlighted that tokenization introduces new risks along with legal, regulatory, and supervisory challenges. She stressed a need for careful evaluation concerning secondary trading of tokenized SFC-authorized products on virtual asset trading platforms (VATPs), as it can amplify certain risks, essentially transforming tokenized products into 'exchange traded products'. In recent developments, Hong Kong authorities cracked down on crypto exchange JPEX, arresting 11 individuals, following misleading statements by the platform regarding its licensing status. The SFC has since made crypto license applicants' details public in light of these investigations.

Trading Desk Insights

U.S. stock futures signaled an upward move on Wednesday, with Wall Street aiming to recuperate from the significant downturn experienced in the prior session, buoyed by a decline in Treasury yields. Both the 10-year and 2-year Treasury yields retreated to 4.52% and 5.075% respectively, marking a decrease from their peak values since 2007.

Consumer sentiment remains cautious due to inflationary concerns and the repercussions of increased borrowing costs, which have influenced the housing market dynamics as mortgage rates edge upwards.

The forthcoming earnings season, scheduled to kick off in mid-October, holds potential to serve as a decisive factor for the market's trajectory, possibly culminating the ongoing correction or further pressuring the market downwards.

On an intraday basis, the S&P500 has fallen by 4% since the breakdown of the rising wedge pattern that took place during the Federal Reserve’s interest rate decision. The index was unable to break above a previous high as it keeps digging lower and lower. We expect a short-term recovery back to the 38.2% Fibonacci level around 4385. On the daily chart, the S&P500 broke below a Head-and-Shoulders pattern which is a bearish reversal pattern. The profit target of this pattern is suggesting a move towards 4100 which is 5% away from current levels.

Bitcoin squeezed from 26,300 to 26,830 (+2%) as the recent pop was due to shorts covering. The 24hr liquidation figure increased by 155% to $68m. We have recently added an intraday support at 26,000. The trading volume of Bitcoin futures is 17 times greater than that of spot Bitcoin. This leads us to believe that the recent rally isn’t sustainable as it’s mostly based on short-term speculation.

In the past 20 days, Bitcoin's implied volatility has consistently outperformed ETH's, marking a historic moment. The difference between Deribit's 30-day forward-looking implied volatility indices for ETH (ETH DVOL) and BTC (BTC DVOL) has remained negative since September 7. This is the most extended period observed since the inception of the DVOL indices in early 2021. Notably, the spread dipped into the negative territory briefly in March, indicating the premium placed on BTC IV. This trend is now becoming more commonplace, suggesting that traders are currently focused on macroeconomic factors and are showing diminished interest in trading altcoins.

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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