September 8, 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

FASB Approves New Rules Allowing Firms to Report Cryptocurrency at Fair Market Value

The U.S. Financial Accounting Standards Board (FASB) has shifted its stance on the accounting of Bitcoin and other cryptocurrencies, allowing companies to use fair-value accounting, which permits the reflection of real-time gains and losses on income statements. Previously, companies could only record value increases in digital assets upon selling them, while losses were recorded annually.

Analysts from Stifel described the move as pivotal, highlighting how U.S. GAAP policies compelled businesses to mark down the value of crypto assets in times of price declines, but prevented upward revisions during price rallies. This could lead to a higher inclination for U.S. companies to maintain digital assets, particularly during favorable market conditions. MicroStrategy's Executive Chairman, Michael Saylor, heralded the change, emphasizing its potential to further corporate uptake of Bitcoin. The FASB is set to finalize this rule later this year, with companies mandated to adopt the new standards by 2025.

JPMorgan Chase Developing Blockchain-Based Payment and Settlement System

JPMorgan Chase & Co. is in the process of developing a blockchain-based digital payment and settlement system that aims to expedite transactions and reduce costs. While the infrastructure is mostly in place, the banking giant awaits regulatory approval before advancing. This system would use a digital deposit token, which acts as a digital representation of a customer's deposits, facilitating interbank fund transfers and settling tokenized securities. The initiative, spearheaded by JPMorgan's web3 arm Onyx, is in line with the firm's broader strategy to advance blockchain-based financial solutions, building upon its experience from a collaborative project with the Monetary Authority of Singapore last year. Once approved, the project could be launched for corporate clients within a year.

IMF and FSB Release Report on Regulatory Framework for Crypto-Assets

The IMF and FSB, under the G20's commission led by India, have released a report detailing a regulatory framework for crypto-assets, including Bitcoin and stablecoins. Emphasizing the potential financial stability and integrity threats from widespread crypto adoption, the report specifically points to Global Stablecoins (GSCs) as posing significant risks, particularly if they displace local currencies in some economies.

Recommendations include strengthening monetary policy, improving capital flow management, and enacting comprehensive crypto regulations aligned with the principle of “same activity, same risk, same regulation.” The paper, which also highlights the need for robust governance, risk management, and data reporting within the crypto sector, is set to be a topic of discussion at the upcoming G20 summit in India.

Trading Desk Insights

Equity futures are showing positive momentum this Friday, even though Wall Street is on track for a week in the red due to increasing worries about potential aggressive rate hikes by the Federal Reserve. Over the week, the S&P 500 has declined close to 1.2%, while the Nasdaq has shed 1.7%.

The market's apprehensions about additional rate increases by the Federal Reserve gained traction as the initial jobless claims reported a figure of 216,000, below the anticipated 230,000. Current market sentiment suggests there's approximately a 40% probability that we'll see a rate adjustment by policymakers come November.

Bitcoin witnessed a nice pump to 26,450 before pulling right back to the previous range. We had spoken about the resistance level of 26,300 as an important intraday level to break. As much as prices wicked higher, they weren’t able to close above this level which doesn’t exactly count as a breakout. The derivative market is flagging a decent amount of downside protection buying for both ETH and BTC just in case we eventually break below the infamous $25,000 support level.

Technical Charts


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