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Today’s Stories:
Key Metrics Show Crypto Traders Turning to Ether From Bitcoin
BlackRock, Bitwise File Updated Applications for Spot Bitcoin ETF
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This episode was hosted by Noelle Acheson. “Markets Daily” is executive produced by Jared Schwartz and produced and edited by Eleanor Pahl. All original music by Doc Blust and Colin Mealey.
Audio Transcript: This transcript has not been edited and may contain errors.
It’s Wednesday, December 6th, 2023 and this is Markets Daily from CoinDesk. My name is Noelle Acheson, CoinDesk collaborator and author of the Crypto is Macro Now newsletter on Substack. On today’s show we’re talking about market moves, bitcoin ETFs, employment data and more. So you don’t miss an episode, be sure to follow the podcast on your platform of choice, and turn on notifications. And just a reminder, CoinDesk is a news source and does not provide investment advice.
Now, a markets roundup.
The crypto market continues to reach new highs, with bitcoin at one point yesterday almost reaching $44,500 dollars. It has since retraced slightly, but we have not seen the sharp correction that we’re used to seeing after strong run-ups. According to CoinDesk Indices, at 9am Eastern time this morning, bitcoin was up 5.3% over the past 24 hours, at 44,085 dollars. Ether was trading up 2.7%, at 2,261 dollars. Elsewhere, AVAX was up 21%, dogecoin was up 16%, Cardano was up 11.5%.
So far this year, ether has notably underperformed bitcoin. The second largest crypto asset by market cap is up 91% year-to-date, which is not bad. But it is less than bitcoin’s 167% gain over the same period. Yet the derivatives market is starting to send hints that ether might be about to do some catching up.
CoinDesk’s Omkar Godbole reported this morning that the notional open interest on the CME for ether futures has increased by 30% over the past five days, beating the 19% growth in bitcoin futures open interest. And the premium in the futures price relative to spot was 5% higher for ether than for bitcoin early this week.
In macro matters, economic data is still sending conflicting signals. The Institute for Supply Management’s overall gauge of services for November was released yesterday. It climbed by more than expected, suggesting that the services sector is still healthy. However, employment data is showing a cooling.
Yesterday, we got the latest numbers for job openings in the U.S., which gives us an idea of the demand for labor. In October, the number of job openings pulled back to its lowest level since early 2021. This was well below expectations, and was more than 6% below the average forecast. Even more worrying, the decline was broad-based across sectors.
This morning we got more information to confirm the trend. The ADP non-farm employment increase for November came in much lower than expected, and also lower than October’s figure. This private company calculation is not as comprehensive as that from the U.S. Bureau of Labor Statistics, but it often gives us a hint at what to expect from the official data which will be released on Friday.
The market is taking the job openings slowdown and the disappointing ADP employment increase as further confirmation that peak U.S. rates are in – bond yields are continuing to drop, with the U.S. 10-year yield falling below 4.15% for the first time since early September, and the 2-year yield is at its lowest since June.
In stocks, the main U.S. indices were mixed yesterday, with the S&P 500 and the Dow Jones slightly down and Nasdaq up three tenths of a percent. Futures are pointing to a strong opening today as traders are liking the ADP employment numbers I mentioned earlier.
In Europe, stocks were mixed yesterday. The FTSE 100 closed down three tenths of a percent, while the Eurostoxx 600 rose almost one percent and the German DAX climbed eight tenths to reach its highest ever close as traders start to price in rate cuts by the European Central Bank. So far today, all the main European indices are up at least a half a percent.
In Asia trading today, Japan’s Nikkei index rebounded sharply from three-week lows, jumping more than 2%. China’s Shanghai Composite was more or less flat, while the Hang Seng climbed eight tenths of a percent.
In commodities, the oil price has continued to decline. This seems to be largely driven by news that U.S. crude shipments are nearing a record 6 million barrels a day, which has traders concerned about market oversupply despite the announced OPEC+ production cuts. Earlier today, the Brent Crude benchmark reached $76 dollars and 50 cents, its lowest level since June.
Gold, meanwhile, is holding steady at 2,027 dollars per ounce.
Stay with us – after the break I offer an update on the bitcoin spot ETF outlook.
Welcome back!
Today we’re going to talk about bitcoin spot ETFs – there have been some changes to the landscape, and some moves that suggest a listing approval is coming soon. First, we’re starting to see S-1 amendments filed. S-1s are registration statements filed with the U.S. Securities and Exchange Commission before any new asset can be listed on regulated exchanges.
The companies proposing bitcoin spot ETFs have already filed these - what we’re seeing now is refilings with changes. These amendments come after dialog with the SEC, and most likely reflect suggestions from the regulator. This is significant – the SEC is suggesting changes, rather than stonewalling the issuers prior to a denial, as it did with previous rounds of spot ETF proposals.
So far, BlackRock and Bitwise have filed amendments, and we are likely to see more over the rest of this week.
There are quite a lot of changes, focusing on issues ranging from custody arrangements and cash management protocols to valuation policies and fork handling procedures. The level of detail suggests that the SEC has put a lot of work into reviewing these, and that this could be the final round of amendments.
One surprising addition to BlackRock’s filing is wording in its Risk warnings that addresses the possibility that bitcoin could be declared a security by the SEC or a state securities regulator. This is strange, but could be something that the SEC insisted on and BlackRock thought why not.
Second, there’s a new filer in the ETF race. Last week, Swiss asset manager Pando submitted a U.S. bitcoin spot ETF proposal, making it the 13th company to do so.
And finally, the dates to watch are January 8th to January 10th. This is the only window in between the closure of ongoing comment periods on the 5th, and the final deadline to decide on the filing from Ark/21 Shares, which falls on the 10th. Of course, this is not set in stone, and we could hear something before or after, although it’s unlikely.
If you thought the beginning of December was interesting, it could be that the beginning of January will be even more so. And always with crypto, a lot can happen in the meantime.
