GB Market Commentary 16/02/2022
by Marcus Sotiriou
Bitcoin remains hesitant, as data shows that this recent rally was driven mostly by futures, whilst spot has been selling. We know this because the aggregated CVD (Cumulative Volume Data) for spot has been stagnant whilst the CVD for futures has increased. This suggests that this price rise was driven by speculation or hedging rather than genuine demand.
The market is eagerly waiting to find out the minutes from the Federal Reserve’s last policy meeting on January 25th-26th at 7pm this evening. This will give more insight into how the Federal Reserve plans to hike rates and begin the process of quantitative tightening. These minutes could hint at how aggressive the Federal Reserve will be and the likelihood of a 50 basis point rate hike in March. As the market is now pricing in the scenario of a 50 basis point rate hike as 58.9%, according to data from Investing.com, I think it is unlikely that the market will be shocked by what is released today.
More major financial institutions are entering the space as DBS, the largest bank in Southeast Asia by assets, is planning to launch cryptocurrency trading services for retail clients this year. DBS initially launched a crypto trading service for institutional investors in 2021. The CEO Piyush Gupta said during the bank’s earning call on Monday, “what we will focus on in the first half, the first two quarters, of this year is to make the access to digital assets a lot more convenient. He elaborated: “Today, what happens is that you’ve got 24/7, but the customers still need to call and speak to bankers. So the first order is to make it all online, make it self-service, make it instant, and make sure the internal processes are robust to be able to support that.”
In addition, Fidelity, the world’s fourth largest asset manager, have launched an ETP (Exchange Traded Product) in Europe. This will have a fee of 0.75%, making it Europe’s cheapest Bitcoin ETF. Even though the US has only accepted a Bitcoin ETF linked to futures, Europe and Canada have been far more permissive. The product will be settled like shares and people will be able to buy it on stock exchanges in Frankfurt and Switzerland. Being able to buy crypto from traditional finance systems, like DBS and Fidelity, who are familiar to the general public, is a great step towards mainstream adoption.