PDAXSCOPE: Market trends & insight to drive your next money move

Market Update (2:17 pm, September 29, 2023)

Here's a quick rundown of this week's market update: 

1) Crypto market sentiment improved slightly 

2) Bitcoin ETF listing by year-end in the US is still possible

3) Major cryptocurrencies to potentially benefit from improved sentiment (BTC, ETH, etc.)

What you’ll find in this edition of PDAXScope:

Overall Crypto Market Sentiment

FOMC Meeting

Digital Euro Updates

SEC & Ark’s ETF Filing

Global Crypto Market sentiment improved slightly on a week-on-week basis, with the Crypto Fear and Greed Index currently at 48 vs. last week’s 44. The Crypto Fear and Greed Index is a market sentiment indicator from 0-100, with a score of 0 indicating that the market does not want anything to do with Crypto, while a score of 100 shows that everyone and their grandma is hoarding Crypto. The current score of 48 indicates that the market still has a “Neutral” sentiment on Crypto, but the slight +4 improvement is welcome news to industry participants. 

Bitcoin broke above the USD 27K level last Thursday before falling back to the USD 26-27k range following the rise in Bond Yields, with US Treasury 10-year bonds breaking above 4.6%, a level not seen in the past 15 years, as well as rising Oil Prices, with Crude Oil WTI futures continuing its relentless advance upwards and now currently trading at $91. These developments continue to signal that the Fed will remain hawkish (meaning that they are inclined to increase interest rates) in the near-term, and potentially even the medium-term, as inflation continues to be a main concern of Central Banks globally, but a slight positive change in risk sentiment this week is welcome. 

Chart from Coindesk

Current Total Cryptocurrency Market Cap stands at $1.07 trn, We expect the total market cap to range between USD 1.03 trillion to USD 1.1 trillion, with a slight bias to go upwards, potentially benefiting the major cryptocurrencies the most ie. BTC, ETH.

Chart from CoinMarketCap

In other news, the US SEC continues to delay decisions on Bitcoin ETF (exchange-traded fund) filings, but the hope for a Bitcoin ETF listing by the end of the year is still alive. Governments globally have adopted a cautious stance on cryptocurrency adoption, with the ECB also clarifying that they will adopt a cautious approach for the piloting of a digital Euro. Despite regulatory cautiousness acting as a short-term headwind, from a longer-term horizon, we see this push-and-pull dynamic as beneficial for the industry as trust in the regulatory safeguards of the asset class is crucial to the eventual participation of Institutional Investors in this space. 

The Federal Reserve has decided to keep its benchmark interest rate steady in the range of 5.25% to 5.5%. This decision comes after a previous rate hike in July aimed at curbing inflation. The decision was expected by the market, and while this pause does not necessarily signal the peak of interest rates, many investors are hopeful that further increases won't be necessary this year and demand for risk assets will increase. Inflation reached 40-year highs in 2022 due to factors like pent-up consumer demand, supply chain disruptions, and a tight labor market. 

Learn more via Forbes.

The European Central Bank (ECB) has indicated that a digital euro is at least two years away, with decisions on its development pending approval. The ECB will decide on the project's progression in October, with a pilot phase expected to last at least two more years.This cautious approach to central bank digital currency (CBDC) development emphasizes  the importance of addressing privacy concerns and regulatory considerations, potentially paving the way for more comprehensive and privacy-focused regulations in the broader cryptocurrency space. From an institutional adoption perspective, the cautious approach is welcome 

The US Securities and Exchange Commission (SEC) has once again postponed its decision on Bitcoin spot exchange-traded fund (ETF) applications. The delayed ETFs include GlobalX and Ark/21Shares. The SEC has set a final deadline of January 10, 2024, for approving or denying Ark's application. This follows a previous delay in August and numerous delays for rival firms' applications due in early September. BlackRock, a prominent competitor, faces a deadline of October 17, which could also be postponed. This delay comes after a group of pro-crypto congressmen urged the SEC not to discriminate against spot Bitcoin ETFs. Grayscale recently won a lawsuit against the SEC, raising anticipation about the SEC's response, which could involve approving a spot ETF or appealing the court's decision. Bloomberg ETF analyst James Seyffart suggested that Tuesday's delays may have dashed hopes for a spot ETF approval by year-end.

Learn more via The Block

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