In Markets
In a week that marks 53 years since President Richard Nixon took the US off the gold standard, leaving the US dollar essentially unbacked, Bitcoin traded as high as A$92.6K (US$61.7K) and as low as A$86K (US$56.8K)… but finishes the week pretty much where it began at A$89,774 (US$60,752). Ethereum lost 2.8% over the same period and is currently trading around A$3,945 (US$2,642). The memecoin craze may finally be waning, with Coinshares attributing a record A$57.9M (US$39M) outflow from Solana funds last week to a “sharp decline in trading volumes of meme coins, on which it [Solana] heavily relies.” Solana and Cardano lost 2%, XRP gained 3% and Dogecoin fell by 5.5%. The Crypto Fear and Greed Index is at 30, or Fear, which is a marginal improvement on last week’s 25 or Extreme Fear.
From the IR OTC Desk
The short-term price of BTC (and the cryptocurrency complex) appears to be aligned with the 5th of November US Presidential election. While other global risk assets have most recently performed positively on the expectation of a September US interest rate cut, cryptocurrencies have not yet profiled a change in monetary policy. Instead, the cryptocurrency complex is cautious of divergent ‘crypto specific’ legislative policy, and US Government BTC sales.
Current market pricing for the 18th September US Federal Reserve meeting indicates (just more than) a 30bp cut to the current 5.25-5.50 federal funds rate. This change in forward looking monetary policy, has seen the US 10 year treasury bond yield fall to 3.88%. To provide context, it was only at the end of May when US Treasury yields were more than 4.6%!
The pricing effect of lower implied yields has profiled differently for each individual asset class. In AUD/USD for example, it is the relative change in yields which has seen AUD appreciate against the USD – a direct relationship to funding. The broader commodity complex however, appears to be overlaying cheaper funding with forward looking aggregate demand and geopolitical concerns! The market is desperate for US election clarity.
In the economic calendar, key event data this week includes the US Federal Open Market Committee (FOMC) meeting minutes for August (Thursday), as well as a speech by FOMC Chair Powell (Saturday). In the lead-up to the September FOMC decision, all policy communication will be heavily analysed to determine whether the FOMC will be satisfied with a 25bp reduction to the Federal Funds Rate or whether they are thinking that perhaps a larger cut is warranted.
In Australia (AEST)
- Tuesday 11:30am RBA Meeting Minutes (August)
In the US (AEST)
- Thursday 04:00am FOMC Minutes (August)
- Saturday 12:00am US Fed Chair Powell Speech In NZ (AEST)
- Tuesday 08:45am NZ Balance of Trade (July)
- Friday 08:45am NZ Retail Sales (Q2)
In China (AEST)
- Tuesday 11:15am CN Loan Prime Rate 1yr/5yr (August)
In Singapore (AEST)
- Friday 3:00pm SG Inflation data (July)
On the OTC desk this week, the volumes out of our Singapore office have certainly been a highlight. Flows have remained skewed to the majors (BTC, ETH) and SOL, with stable coins remaining the dominant flow across the OTC desk. As previously communicated, we have not yet seen a material increase in enquiry of Alts, however, we remain attentive to periods of sustained positive price action in the majors which can cause a rapid uptick in Alt enquiry. For now, we await the US election.
For any further information, please feel free to reach out.
In Headlines
Bitcoin ETF filings
Second quarter filings show that large numbers of hedge funds, pensions and banks have been throwing capital into the Bitcoin ETFs, with 701 newcomers amid the 1,950 filings in total. Hedge fund Millennium Management has invested in five different ETFs and is the top holder for most of the funds, including BlackRock’s IBIT. Capula Investment Management, Schonfeld Strategic Advisors, Steven Cohen’s Point72 Asset Management and the State of Wisconsin Investment Board all reported holdings too. Noelle Acheson, from the Crypto Is Macro Now newsletter, said the strong interest shown is impressive considering Bitcoin’s price fell 13% over the quarter and most advisors are prevented from recommending the ETFs. “Morgan Stanley is the only one of the large wirehouses whose financial advisers can recommend BTC spot ETF diversification positions. But others will follow, bringing not just more demand but also a longer-term view,” he said.
India warms up to crypto again
India appears to be quietly embracing crypto again, with Binance, Kucoin and other global exchanges resuming services in the country. Nine offshore exchanges last year were shuttered for operating illegally and told to register with the Financial Intelligence Unit. Local exchange WazirX meanwhile was forced to suspend operations recently after suffering a US$235M (A$349M) hack last month.
Silk Road Bitcoin likely sold by US
The US government has transferred nearly US$600M worth (A$882M) of seized Silk Road Bitcoin to Coinbase. While the US Marshalls have a trading and custody agreement with Coinbase, and might just be storing them, attorney Scott Johnsson argued the agreement “requires USMS assets remain completely segregated, [so] whenever a transfer is ultimately made to CB prime (or other commingled exchange address), you can be sure USMS has already sold or is selling imminently.” We won’t know for sure until the DOJ’s asset forfeiture report in January. But in some good news for ancient Bitcoin overhangs, The Mt Gox Trustee Wallet is now down to just 32,371 Bitcoin, having distributed more than 100K since the start of July when it held 141,686 BTC. And the price has held up pretty well.
Crypto reset is not happening
The much anticipated Kamala Harris “crypto reset” is looking shaky with zero mentions of crypto in the just released Democrat party platform. The Harris team is also reportedly likely to include high profile crypto haters including Biden economic advisors Brian Deese and Bharat Ramamurti (the latter was described by Fortune as the “White House’s top crypto critic.”). However a report today claiming Harris is considering SEC boss Gary Gensler as treasury secretary seems a little suspect. It’s written by a former Republican candidate, published on a Republican run website called Washington Reporter, and crypto insiders in Washington say they’ve heard the rumour is false.
EZ way to make money in crypto
Franklin Templeton has filed for approval of a new crypto index ETF until the ticker EZPZ, which will initially hold Bitcoin and Ether until further digital assets are approved. Meanwhile the 19b-4 form for the VanEck/21Shares Solana ETF has been removed from the CBOE website suggesting the SEC may not be going ahead with the process. However Matthew Sigel, VanEck’s head of digital assets research, said today that VanEck’s S-1 prospectus “remains in play.”
ETFs are doing OK
The Ether ETFs had an OK week, with a net outflow of US$14.1M (A$20.9M). Fun fact: BlackRock now holds more Ether than the Ethereum Foundation. The Bitcoin ETFs ended up the week positive, with inflows of US$32.4M (A$48.1M). Fun fact 2: With US$22B (A$32.7B) in total crypto holdings, BlackRock is now the world’s largest crypto fund manager, taking the mantle from Grayscale which has US$14.2B (A$21.1B). And Fidelity is also nipping at Grayscale’s heels with almost US$11B (A$16.3B).
Bits and pieces
The Australian Securities and Investments Commission (ASIC) closed down 615 crypto investment scam sites in the first year of a program to identify and close fake investment websites. Crypto scams accounted for 9% of the total 7,300 phishing and other scam sites it identified. Optimism’s long-awaited permissionless fraud-proof system was rolled back after vulnerabilities were found. A hard fork is planned to fix the issues on September 10. A viral tweet suggesting that just 3% of Pump.fun traders have made more than US$1,000 (A$1,484) was criticised by Lookonchain … which claims the top memecoin trader on Pump.fun made just 4 SOL, which is around US$595 (A$857).
Bull run has another year to go
A Bybit report suggests the Bitcoin bull run has another 350 days left based on previous cycles. With the current trough-to-peak ratio of 3.5x, significantly lower than the 20x observed in prior cycles, the report tips there’s plenty of time for some upward movement. “Then, we have in each case observed BTC spot price push past that previous all-time high into new, unexplored higher price levels,” analyst Nathan Thompson wrote. Another halving historian, analyst Rekt Capital, says we are currently 125 days after the halving and history suggests the price enters the parabolic phase around 160 days after the halving -“that’s late September.” However this cycle is not playing out like usual, with the price dropping 8% since the halving, while it was up 5.5% at this point after the second halving and 17.2% after the third. Until next week, happy trading!
