At the time of writing, Bitcoin is trading at $17,600 USD and Ethereum at $1,215 USD. Bitcoin made a new 52 week low yesterday (Tuesday Nov 8th) as crypto markets fell after the events that unfolded between FTX and Binance this week.
This past Sunday, Binance’s CEO, Changpeng ‘CZ’ Zhao, announced that his exchange is liquidating its stash of FTX’s native token FTT—prompting a rush of withdrawals from FTX users, with weekly stablecoin outflows from FTX reaching $451 million. CZ said that he “won’t support people who lobby against other industry players behind their backs,” in an apparent reference to FTX CEO Sam Bankman-Fried’s efforts to engage with regulators. FTX CEO Sam Bankman-Fried tried to soothe nerves, but ultimately CZ said FTX asked for its help and announced yesterday that Binance intends to buy FTX’s non-U.S trading platform. Binance could still pull out of the non binding letter of intent to buy FTX.com. FTX’s ‘bailouts’ of crypto firms earlier in the summer bolstered the view that the exchange had endured crypto market volatility with balance sheet strength even though they were insolvent.
If you’d like to read more about how your assets are protected at Coinsquare, check out our blog post about our commitment to transparency and risk management. Please contact us if you have questions on any of the information provided on this topic.
As the markets had anticipated, the Fed hiked rates by 75-bps last Wednesday, but investors turned out to be a little too complacent about the rate pausing narrative which caused stocks to fall. Federal Reserve Chair Jerome Powell hinted at no pause in hikes in sight while at the same time upping the terminal rate even higher, citing the strong labour market as a rationale for supporting more rate hikes in the face of rising inflation expectation. The Fed’s rate decision came after the release of strong jobs data, with better-than-expected non-farm payrolls for October showing a resilient labour market. The JOLTS report on Tuesday also showed that job openings increased despite the Fed’s aggressive tightening clip.
October’s nonfarm payrolls report released on Friday gave investors some comfort as it wasn’t a straight-out good number. While the new payrolls added beat expectations, with 261,000 jobs created vs expectation of 195,000, the unemployment rate rose to 3.7%. Expectation was for a rate of 3.6% while the rate in September was 3.5%. Nonetheless, US Treasury yields surged, with the 2-year yield surging to one of its fastest rises in history, and the 10-year yield is now firmly above 4%.
The US midterm elections are currently taking place. Early on polls were showing there was a strong possibility that the Republican Party would make a decisive comeback in Tuesday’s midterm elections. However, as votes starting coming in, investors are waking up to political uncertainty as Democrats put up a better-than-expected midterm fight, casting doubt on a Republican “wave.” A split government remains a solid possibility as the votes continue to roll in which historically has been market friendly.
Equities, Fixed Income, FX and Commodities
Tech stocks and consumer discretionary stocks were the most badly hit, with the Nasdaq losing the most. Even though stocks rebounded on Friday after a mixed bag in the payrolls report, they still ended the week lower. The Dow shed 1.4%, ending four weeks of gains, while the S&P and Nasdaq fell 3.35% and 5.65% respectively, breaking two-week winning streaks.
Fixed Income, FX and Commodities
The US dollar tracked lower while sovereign bond yields drifted higher both in the US and across Europe. EUR/USD tested parity as markets not beginning to believe that ECB most likely would have to tighten policy more than currently priced in. Oil prices edged lower at the time of writing, paring gains after rising to more than two-month highs, on mixed signals over strict COVID-19 restrictions in China, the world’s top crude importer.
News we’ve been reading
- Google Cloud revealed on Saturday it is running a node to validate transactions on Solana. The company said it is working on adding the network to its recently launched service ‘Blockchain Node Engine’ next year. Solana’s native token SOL rallied ~15% on the news.
- The Hong Kong Securities and Futures Commission is looking to authorize listings of futures-based crypto ETFs. An official said the first products to launch would be products based on BTC and ETH futures that trade on the CME. Late last month, reports emerged that the country planned to establish a crypto licensing framework by March 2023 to allow retail trading on registered platforms.
- Fidelity is launching a retail-focused crypto trading app. The platform will offer commission-free trading for BTC and ETH, with assets custodied at Fidelity Digital Assets. The firm plans to take a 1% spread on execution.
- Hydro-Québec has requested to suspend providing power to the blockchain industry. The grid operator said it planned to reserve 270 MW in capacity for 2022-2032 which ‘would increase pressure on current balances.’
- The European Union’s Markets in Crypto Assets (MiCA) regulatory framework is expected to be voted on in February 2023. The European Parliament is scheduled to vote on the legislation this month, however spokespersons said the requirement to translate the draft into 24 languages, which they described as complex and long, will likely push the vote date back.
This confidential presentation has been prepared by Coinsquare Ltd. (the “Company”) solely for information and/or educational purposes. It shall not be construed as investment advice. Information contained herein does not purport to be complete and is subject to certain qualifications and assumptions and should not be exclusively relied upon for the purpose of making any investment or entering into any transaction in relation therewith. Neither the Company nor any of its representatives shall have any liability whatsoever, under contract, tort, trust or otherwise, to you or any person resulting from the use of the information in this presentation by you or any of your representatives or for omissions from the information in this presentation. The information and opinions contained in this document are provided as at the date hereof and are subject to change without notice and, in furnishing this document, the Company does not undertake or agree to any obligation to provide recipients with access to any additional information or to update or correct the document. This document has not been reviewed or approved by any securities administrator in any jurisdiction. This presentation or the information contained herein is not to be given to any person other than the person or group that was provided with the presentation directly by the Company or their advisors and is not to be reproduced in any manner whatsoever. Any further distribution or reproduction of this presentation in whole or in part, or the disclosure of any of its contents by the recipient, is unauthorized. Interested investors are not advised to rely solely on this document in forming investment decisions and are strongly advised to conduct further due diligence by requesting additional information from the company before making any such investment decisions. Unless otherwise noted, all figures expressed herein are in Canadian dollars. Coinsquare Wealth advisors cannot provide investment advice.
Certain of the information contained in this confidential presentation may contain “forward-looking information”. Forward-looking information and statements may include, among others, statements regarding the future plans, costs, objectives or performance of the Company, or the assumptions underlying any of the foregoing. In this presentation, words such as “may”, “would”, “could”, “will”, “likely”, “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate” and similar words and the negative form thereof are used to identify forward-looking statements. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether, or the times at or by which, such future performance will be achieved. The actual results of the Company could vary from the forward-looking information contained herein, including as a result of such risks as a collapse in the market for cryptocurrencies, adverse regulatory developments and competition from other cryptocurrency custodians. Forward-looking statements and information are based on information available at the time and/or management’s good-faith belief with respect to future events and are subject to known or unknown risks, uncertainties, assumptions and other unpredictable factors, many of which are beyond the company’s control. The forward-looking information contained herein was developed based on assumptions related to, among other things, the continued growth of the cryptocurrency market, the company’s ability to obtain a license from the Alberta Treasury Board and Finance to operate a trust company or to receive a license from the applicable securities commissions as a clearing agent, grow its market share and the viability of the Company’s intended future product offerings. The Company does not intend, nor does it undertake any obligation, to update or revise any forward-looking information or statements contained in this presentation to reflect subsequent information, events or circumstances or otherwise, except if required by applicable laws. The Company is a new company with no operating history; and it may not actually achieve its plans, projections, or expectations. Important factors that could cause actual results to differ materially from the Company’s expectations include, consumer sentiment towards the Company’s products and blockchain technology generally, litigation, global economic climate, equipment failures, increase in operating costs, decrease in the price of cryptocurrency, security threats, government regulations, loss of key employees and consultants, additional funding requirements, changes in laws, technology failures, competition, and failure of counter-parties to perform their contractual obligations. Neither the Company nor any of our representatives make any representation or warranty, express or implied, as to the accuracy, sufficiency or completeness of the information in this presentation. Certain information contained herein is based on, or derived from, information provided by independent third-party sources. The Company believes that such information is accurate and that the sources from which it has been obtained are reliable. The Company cannot guarantee the accuracy of such information, however, and has not independently verified the assumptions on which such information is based. The Company does not assume any responsibility for the accuracy or completeness of such information.