The inevitable eventually happens!

Thoughts of the Day

The US authorities finally announced approvals for 11 spot Bitcoin ETFs. Bitcoin spiked nearly 4% to 47750 on the good news and Ethereum surged more than 10% higher on the day.

This is just yet another inevitable step in cryptocurrencies journey to being an alternative asset class for the masses. We’ll have more to say on this in a podcast which will be published later, follow & subscribe to hear our insights!

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Day Ahead

The US Consumer Price Index is expected to show that prices rose 3.2% Year-on-Year, up from 3.1% in November. 

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What Happened Yesterday

Market Movements as of New York Close 10 Jan 2024
  • Fedspeak:
    Williams (current voter, known centrist): 
    “Financial markets remain highly reactive to new data. Money market volatility has not affected the Fed funds rate. Fed policy remains quite restrictive. The Fed is in a good place, time to think about what’s next for interest rates. Eventually, the Fed will have to return to neutral policy levels.”
    (Williams noted that the market overreacted to the December policy meeting previously and remains neutral in his stance.)
  • The US Treasury Yield curve inversion narrowed to 0.33% as the US 2-year bond yield rose +0.01% to 4.37% while the 10-year yield rose +0.02% to  4.04%.
  • The US stock futures were quiet during the Asian and London trading sessions with minute movements made. The S&P 500 futures were up +0.09% on the day when the New York session began.
  • The US stock market opened slightly higher from Tuesday. It then drifted higher through the New York session. On a slow news day, the S&P 500 moved +0.57% higher on the day (high: +0.72%, low: -0.01%), the Dow Jones rose +0.45% (high: +0.57%, low: 0.00%) while the Nasdaq gained +0.69% (high: +0.89%, low: -0.14%). 
  • The crypto market rose on the day following the US Securities and Exchange Commission’s approval of Bitcoin ETFs, dramatically broadening access to the 15-year-old cryptocurrency (See headline 1). ETH, the second biggest cryptocurrency by market capitalisation, rallied more than 10% on expectations that it will be the product for the next wave of ETF applications. 
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Headlines & Market Impact

US SEC approves bitcoin ETFs in watershed for crypto market

Notable Snippet: The U.S. securities regulator on Wednesday approved the first U.S.-listed exchange traded funds (ETFs) to track bitcoin, its Chair Gary Gensler said, in a watershed for the world’s largest cryptocurrency and the broader crypto industry.

The U.S. Securities and Exchange Commission approved 11 applications, including from BlackRock (BLK.N), Ark Investments/21Shares (ABTC.S), Fidelity, Invesco (IVZ.N) and VanEck, among others, according to a notice on its website. Some products are expected to begin trading as early as Thursday, kicking off a fierce competition for market share.

The products – a decade in the making – are a game-changer for bitcoin, offering institutional and retail investors exposure to the world’s largest cryptocurrency without directly holding it, and a major boost for a crypto industry beset by a string of scandals.

Standard Chartered analysts this week said the ETFs could draw $50 billion to $100 billion this year alone, potentially driving the price of bitcoin as high as $100,000. Other analysts have said inflows will be closer to $55 billion over five years.

“It’s a huge positive for the institutionalisation of bitcoin as an asset class,” said Andrew Bond, managing director and senior fintech analyst at Rosenblatt Securities. “The ETF approval will further legitimise bitcoin.”

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Microsoft challenges Apple as world’s most valuable company

Notable Snippet:  A recent dip in Apple’s (AAPL.O) stock over worries about iPhone sales has left the Silicon Valley tech heavyweight in danger of being overtaken by Microsoft (MSFT.O) as the world’s most valuable company.

Fresh worries about smartphone demand have pushed Apple’s shares down 4% so far in 2024 after rallying 48% last year. Microsoft is up about 2% year to date after surging 57% in 2023.

Apple dipped 0.4% on Wednesday, while Microsoft added 1.6%, further eroding the iPhone maker’s lead. Apple’s stock market value is now at $2.866 trillion, compared to Microsoft’s $2.837 trillion value.

Apple’s market capitalization peaked at $3.081 trillion on Dec. 14, while Microsoft’s value reached as much as $2.844 trillion on Nov. 28.

IPhone sales in China dropped 30% in the first week of 2024, Jefferies analysts said in a client note this week, adding to signs of growing competitive pressures from Huawei and other domestic rivals.

A handful of times since 2018, Microsoft has briefly taken the lead over Apple as the most valuable company, most recently in 2021, when concerns about supply chain shortages related to the COVID-19 pandemic hit the iPhone maker’s stock price.

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Israel to face Gaza genocide charges at World Cou

Notable Snippet: Israel prepared to defend itself on Thursday at the top U.N. court against accusations of genocide in Gaza, as Prime Minister Benjamin Netanyahu publicly rebuffed for the first time calls by some right-wing ministers to permanently occupy the enclave.

As Israel’s war in Gaza continued to rage, the International Court of Justice in The Hague, also known as the World Court, was to hold hearings on Thursday and Friday in a case brought by South Africa in December claiming Israel’s war against Hamas militants in Gaza violates the 1948 Genocide Convention.

Israeli government spokesperson Eylon Levy said on Wednesday: “Tomorrow, the State of Israel will appear before the International Court of Justice to dispel South Africa’s absurd blood libel, as Pretoria gives political and legal cover to the Hamas Rapist Regime.”

The hearings will deal exclusively with South Africa’s request for emergency measures ordering Israel to suspend its military actions in Gaza while the court hears the merits of the case – a process which could take years. Colombia and Brazil expressed their support of South Africa late Wednesday

“I want to make a few points absolutely clear: Israel has no intention of permanently occupying Gaza or displacing its civilian population,” Netanyahu said on social media platform X.

Potentially timing his comments ahead of the ICJ hearings, he added: “Israel is fighting Hamas terrorists, not the Palestinian population, and we are doing so in full compliance with international law.”

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Best,
Phan Vee Leung
CIO & Founder, TrackRecord