Hot CPI Brings Volatility

The news from Planet Ruby—Friday, April 12, 2024

• Signal: Inflation
• Noise: Risk

CPI Dominates

On Tuesday markets dropped sharply, apparently influenced by fears of Wednesday's CPI data as the traders worried that the data might prompt the Fed to hold off on cuts even longer. It turns out the problem may have been traders who knew, rather than simply suspected.

When CPI data did indeed come in hot, at 3.5% (consensus 3.4%) and up from the previous month's 3.2%, risk markets corrected even harder. The DXY rose from just above 104 to over 105, and subsequently hit 105.7: Its highest since November. Even gold tumbled, though quickly recovered to put in new all-time highs at $2,400.

This is despite the fact that the CME FedWatch Tool suggested markets have strengthened their belief in a 1.5% rate cut by December this year.

Crypto Corrects... And Recovers

Bitcoin corrected particularly hard on the CPI print, falling back under the old all-time high of $69k and dropping as low as $67,500. As is often the case on CPI days, that dip was rapidly bought back up, and a higher low was formed. Bitcoin is now trading back above $70,000.

This week has been slow for the ETFs. Grayscale's heavy outflows continued on Monday and Tuesday, but on Wednesday, GBTC outflows dropped to $17.5 million, their lowest ever. The gap between GBTC and IBIT has now narrowed to under 36,000 BTC.

Uniswap has become the SEC's latest target in a move that had anyone familiar with crypto law and the precedents in the blockchain space picking their jaws up off the floor. At this point, it seems impossible that the SEC will win, meaning this is a purely political move and little more than a piece of theater.

In better news, Web3 company Metaplanet appears to be aiming to become Japan's MSTR. The company started with a billion-yen (around $6 million) purchase of bitcoin, which was around half their market cap. Their share price promptly spiked 90%. While Metaplanet is only a small company, it's a sign that more businesses are considering the case for bitcoin as a treasury asset.

Hong Kong's bitcoin ETFs are gaining attention, as major Chinese institutions seek to launch spot products via their off-shore arms, taking advantage of the territory's more permissive regulatory stance. Hong Kong regulators are said to be likely to approve ETFs as early as next week, after moving up their schedule.

Meanwhile, Ethereum's slide against bitcoin continues, with the closing price putting in a three-year low. The SEC deferred making a decision on the spot ETH ETF, but the signs for approval in this round are not good. As one analyst put it, "Silence is violence".

What's New In The SKALEVERSE?

SKALE's devs have been hard at work improving the ecosystem. Check out some of the updates they've been making in the newly-published March roundup.

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