Fed But Not Up

The News From Planet Ruby—Friday, February 2, 2024

• Signal: 10k BTC daily demand

• Noise: Jay

FOMC Dampens Rally

The S&P 500 hit another all-time high on Tuesday, then corrected slightly on Wednesday, going into the FOMC meeting.

As expected, the result was a hold for interest rates at 525-550 bps, but the devil is always in the detail of Jay's speech. The Fed Chair made it clear that they were taking a data-driven approach to their decision-making, cautioning the market not to expect a March cut. Markets corrected accordingly, and the dollar strengthened. The six rate cuts that traders were expecting for this year now seem overly optimistic. Nonetheless, the S&P has largely recovered those losses and looks poised to make fresh highs.

Separately, New York Community Bancorp stock crashed 46% before trading was halted, citing weakness in the property sector as one of the causes of their huge Q4 losses. The organization happens to be the one that acquired the ailing Signature Bank last year. Probably nothing to see here.

Crypto Falters

Following the ETF launches, BTC corrected from its high of $49,000 to $38,500, before recovering somewhat. To the upside, $45k is an important line, as of course is $49k itself.

The Fed's announcement put a stop to bitcoin's upward move, briefly sending it back under $42,000. At the time of writing, BTC is trading at $43,000. We don't want to get ahead of ourselves, since this correction isn't done yet (even if BTC doesn't put in new lows, there's a time factor that needs to play out before we break higher). Right now, though, it's been over three weeks since that local top. The FOMC decision may push it lower, or it may be a case of bitcoin chopping around for a while in the $40,000s before moving up again. Holding $42,500 would be positive, and there's plenty of other good news around as the ETFs do their thing.

If and when $49k breaks, and the Big Fat Round Number of $50k just above, you can bet there will be renewed interest and publicity that will see a further influx of capital. Bitcoin has only traded above this level for a few weeks in its entire history, back in 2021.

As things stand, another month or so of consolidation would probably be no bad thing in the context of the overall market cycle.

Popcorn Time For COPA

Grayscale is down but not yet out. Selling pressure from GBTC is ebbing somewhat, after the immense outflows of last week, though we're still seeing hundreds of millions of dollars leaving the fund every day. The other nine spot ETFs are now more than covering the outflows, and the amount of BTC being hoovered off the market is rising. All told, Grayscale is down almost $6 billion, but it has been a solid week of net inflows.

Tether has been buying more crypto too. Its Q4 attestation, released on January 31, show it now has $2.8 billion in bitcoin. The company earned around $1 billion in interest on the Treasuries it holds alone. Net profits for 2023 overall were $6.2 billion.

In other news, German and UK authorities have separately seized billions of dollars of crypto in separate stings.

Also in the UK, the COPA trial is almost ready to start in earnest. For the uninitiated, this has been a huge case for the crypto world, as Craig Wright took on a group of Bitcoin developers and organizations he says have been using "his" IP without permission. Wright has backed up his claims to be Satoshi with vast numbers of documents "recovered" from old PCs, which quickly turned out to have been amateurishly forged (ProTip: Don't use ChatGPT to forge "2007" files). The question is not who will win, but whether Craig will get to leave the courtroom still wearing the shirt on his back. We'll know more next week.

What's New In The SKALEVERSE?

The SKALE ecosystem has cracked the massive milestone of 10 million unique active wallets (UAW)! Make sure you follow @SkaleNetwork for the latest news.

That's all for this week!

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