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Markets Insights
Economic Calendar
Next FOMC meeting: Jan 31st 2024
- Probability of a 25bps ease → 3%
- Probability of a 0bps hike → 97%
The News Room
Alan Howard's Elwood gets FCA Nod to Offer Trading of Security Tokens and Derivatives
Elwood Technologies, a firm specializing in digital asset services, has obtained authorization from the UK's Financial Conduct Authority (FCA) to operate as a services company. This regulatory approval is a significant milestone in Elwood’s goal to offer a comprehensive digital asset platform, operating under a regulated and transparent framework in the UK, a leading financial services hub. The FCA's authorization specifically pertains to Elwood's execution management system, which facilitates client connections to cryptocurrency exchanges and over-the-counter trading venues for security tokens and derivatives. Elwood's progress in the digital assets space has been marked by significant investment support, including a $70 million Series A funding round in May 2022, co-led by Goldman Sachs and Dawn Capital, and supported by notable entities such as Barclays, BlockFi Ventures, and Galaxy Digital Ventures. Alan Howard, a prominent figure in the hedge fund industry and crypto sector, and the company’s majority shareholder, has been actively investing in crypto startups and launched BH Digital, a crypto-focused division of Brevan Howard in 2021.
Crypto Bank Sygnum Raises $40 Million at $900 Million Valuation
Sygnum, a crypto banking group, has successfully raised over $40 million in an interim close of a strategic funding round, surpassing its initial target of $35 million. The round was led by Milan-based Azimut Holding. This achievement comes as the industry begins to recover from the 'crypto winter,' with investors and market participants increasingly seeking reliable and well-managed financial institutions. Gerald Goh, the CEO of Sygnum's Singapore branch, indicated that the funds will be used to enhance Sygnum's suite of fully regulated solutions, catering to investors expanding their exposure to digital assets. Sygnum plans to leverage this capital for its expansion into new markets in Europe and the Asia-Pacific region and to further develop its regulated offerings, including bank-to-bank digital asset services. This fundraising follows Sygnum's previous series B round in January 2022 where it raised $90 million. With operating licenses in Abu Dhabi and Luxembourg, the Swiss and Singapore-based Sygnum Bank manages assets exceeding $4 billion for over 1,700 clients across 60 countries.
SEC Delays Decision on BlackRock's Ethereum Spot ETF Proposal to March 10
The U.S. Securities and Exchange Commission (SEC) has extended its decision-making timeline regarding BlackRock's proposal for a spot Ethereum exchange-traded fund (ETF) to March 10, as stated in a recent filing. This extension allows the SEC more time to thoroughly consider the proposed rule change and its implications. BlackRock had filed for the iShares Ethereum Trust in November, while a similar application by Fidelity for the Fidelity Ethereum Fund was also delayed in a filing from last week. Bloomberg Intelligence ETF analyst James Seyffart anticipates continued sporadic delays for spot Ethereum ETF proposals, with the next significant date being May 23rd. The crypto community remains mixed in its outlook, with some experts optimistic about an imminent SEC approval following the recent sanction of spot Bitcoin ETFs. However, SEC Chair Gary Gensler cautioned against interpreting the Bitcoin ETF approval as a broader acceptance of other crypto-linked exchange-traded products, emphasizing the specific and limited nature of the Bitcoin ETF decision during a media briefing.-
Trading Desk Insights
Bitcoin is making attempts to recover from the key support zone around 38,500, showing a Hammer candlestick pattern—a bullish sign in technical analysis. Our expectations include a rebound toward 41,000 and potentially 42,000.
Grayscale's assets have decreased by 28% in the two weeks since the ETF launch, dropping from $28 billion to $20.7 billion. If this trend persists, AUM could be at $14.7 billion in two weeks and $10.7 billion by mid to late February. By then, with other spot ETFs accumulating more assets, Grayscale investors might reconsider selling. This could result in more inflows than outflows in the coming weeks, potentially boosting price action.
On Friday, approximately $5.8 billion in crypto options, with $3.75 billion for BTC and $2 billion for ETH, are set to expire on Deribit. Call-put skew in options data has been rising, indicating a shift in market sentiment. The max pain point for BTC's January expiry options is $41,000, while ETH's is set at $2,300. Max pain point is the level at which options buyers stand to lose the most on expiry.
Tesla's Bitcoin holdings remained unchanged in Q4, valued at over $387 million.
Equity futures edged higher as GDP data showed the U.S. economy grew at a rate of 3.3% in the fourth quarter, exceeding expectations of 2%. The European Central Bank held interest rates steady, emphasizing a commitment to keeping rates high. Turkey's central bank raised its key interest rate to 45%, responding to increased inflation of 64.8% year-on-year in December.
Traders have reduced expectations of aggressive rate cuts by the Federal Reserve ahead of the U.S. GDP report. Next US Fed meetings:
- Jan 31st → 97% probability of no changes in rates
- March 20th → 44% probability of a rate cut
- May 1st → 36% probability of another rate cut
Crypto Charts
Macro Charts
Disclaimer
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.
The information on which the analysis is based has been obtained from sources believed to be reliable such as, for example, the company’s financial statements filed with a regulator, company website, company white paper, pitchbook and any other sources. While Secure Digital Markets has obtained data, statistics, and information from sources it believes to be reliable, it does not perform an audit or seek independent verification of any of the data, statistics, and information it receives.
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Crypto and/or digital currencies involve substantial risk, are speculative in nature and may not perform as expected. Many digital currency platforms are not subject to regulatory supervision, unlike regulated exchanges. Some platforms may commingle customer assets in shared accounts and provide inadequate custody, which may affect whether or how investors can withdraw their currency and/or subject them to money laundering. Digital currencies may be vulnerable to hacks and cyber fraud as well as significant volatility and price swings.
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