FPG’s Weekly Perspective on Crypto Markets: Week of January 30th, 2023
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Market Summary
2023 has been shaping out to be a great year for cryptocurrencies so far, with the total market cap holding near $1.1T. BTC is up almost 40% since the start of the year, and on Sunday came close to $24,000 before dropping slightly. The sense of optimism has reached impressive heights, with Justin Sun, founder of Tron (TRX), tweeting his goal for 2023 was for TRX to be adopted by at least 5 countries as legal tender.
Markets have been relatively quiet since then, with market participants presumably waiting for important news coming up this week. The key events to observe this week are the Fed’s meeting and rate decision on Wednesday and ECB’s statement on monetary policy on Thursday. Tech giants Alphabet, Apple, Amazon and Meta are also slated to report their earnings this Friday, and together with data on US non-farm payrolls, could set the tone for markets in the coming weeks.
Notable Events and News
Wednesday 1 February
US FOMC Statement & Press Conference
US Federal Funds Rate
US ADP Non-Farm Employment Change
US ISM Manufacturing PMI
US JOLTS Job Openings
Thursday 2 February
EUR ECB Main Refinancing Rate
EUR ECB Monetary Policy Statement
Friday 3 February
US Non-Farm Employment Change
US Unemployment Rate
US Average Hourly Earnings M-o-M
US ISM Services PMI
Notable Events and News:
Sam Bankman-Fried Tried to Influence Witness Testimony
The Department of Justice (DOJ) requested that U.S. District Court Judge Lewis Kaplan modify the conditions of Sam Bankman-Fried’s bail to include a ban on private communications with current and former employees of FTX and Alameda Research. This comes after Bankman-Fried reached out to at least one FTX employee — identified as Ryne Miller, the current general counsel for FTX US — to allegedly attempt to influence his future witness testimony.
New York State Introduces New Crypto Bill Allowing Cryptocurrencies to be used as Payment to State Agencies
The state of New York has announced a new bill that would allow agencies to accept cryptocurrency as a form of payment for fines, civil penalties, taxes, fees, and other payments charged by the state. While the bill does not mandate state agencies to accept crypto as payment, it offers them the option to legally accept such payments if they agree.
Bitcoin premium hits 60% in Nigeria
The price of BTC in Nigeria spiked to 17.8 million nairas, or US$38,792 on Nigerian crypto exchange NairaEX, as the Central Bank of Nigeria continued to impose limits on ATM cash withdrawals amid an ongoing effort to accelerate its shift to a cashless society. This represents a premium of 60% over where BTC is currently trading at $23,700
Market Insights
Market Technicals and Blockchain Analysis
The strong start to 2023 for both equities and crypto has captured everyone’s attention. Market participants have once again pinned their hopes on the idea that inflation has peaked and the US Federal Reserve would be more inclined to scale back and stop or even reverse interest rate hikes. Futures markets currently show that traders are seeing a 15% chance of rate cuts by December 2023. Any indication of a dovish pivot in the upcoming FOMC meeting could send the current rally higher
However, there is still some element of hesitancy in the market and not everyone is fully bought in on the ongoing rally. Futures and Options volumes show that the recent January rally for BTC was largely driven through spot buying, with derivatives volumes dropping slightly after BTC’s initial spike above $20,000. This could indicate that market participants are taking a cautious stance and not taking on excessive leverage in anticipation of the key market events happening later in the week.
Of note is that BTC has been hovering around the $23,000 for much of the past week, with multiple attempts failing to breach the $24,000 mark, the latest during last Sunday where BTC briefly reached $23,900 before retracing slightly. The crypto fear and greed index is now registering BTC in “greed” territory, with a reading of 61. If market exuberance gets out of hand and BTC reaches overbought territory, it would be ripe for a squeeze to flush out the late entrants.
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About Floating Point Group:
Floating Point Group is a crypto prime brokerage platform and agency trading desk for asset managers that removes the barriers and complications to access liquidity across a broad set of markets in order to deploy advanced cryptocurrency-centric strategies at scale. The company carries insurance for custodied cryptocurrencies and is regulated in the U.S.; FPG has also secured VASP registration in the Cayman Islands.
Floating Point Group is backed by Tribe Capital, Coinbase Ventures, Anthony Scaramucci, FAST by GettyLab, Borderless Capital, CapitalX, Formulate Ventures, BoxOne Ventures, Seabury Global Markets, AngelList’s Naval Ravikant, and a host of angel and institutional investors.
For more information, visit floating.group.
Disclaimer:
This communication should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any asset in particular. This material is strictly for illustrative, educational, or informational purposes and is subject to change.
