MARKETS week ahead: January 29 – February 4
Last week in the news
A new week and a new ATH for the S&P 500 during the first trading month in a year. Positive market optimism continues to be supported with expectations on forthcoming Fed rate cuts. On the other hand, the ECB meeting held during the previous week revealed potential for April`s rate cuts in the Euro Area. At the same time, USD, US Treasuries and Gold were holding relatively steady, while the crypto market increased its weekly volatility. Bitcoin ended the week with a bounce above the $ 41K, after shortly testing the 38K support.
The market optimism which is reflected in the value of US equity indices continues to be supported by relatively solid US economic data. The preliminary US GDP growth rate for Q4 of the previous year reached 3.3% for the quarter, which was still above forecasted 2.0%. A drop in inflation has fueled consumer spending, supporting the economic output of the county. Although figures are showing improvement of the economy, there are analysts who are pointing to potential risks that might impact the economic output in 2024, which are related to geopolitical issues and potential other supply-chain disturbances which might trigger another surge in inflation and slow-down of economic growth. Still, considering a new ATH of the S&P 500 it seems that the market is currently not pricing any of these potential risks.
The European Central Bank held a meeting during the previous week, where it left Euro rates unchanged, at 4,5%. In an after the meeting speech of ECB president Lagarde, market expectations were heated regarding the ECB`s possibility for its first rate cut from April this year. This was supported by the positive outlook for the EU economy, as perceived by ECB members. However, President Lagarde did not comment on any potential rate cuts for the moment.
First data related to the BTC ETF show that BlackRock's ETF is currently the first one to reach $2 billion in value of assets under management. Total tokens held by the IBIT is currently around 50.000. The fund is followed by Fidelity's ETF (FBTC), which already reached $2 billion in value of assets. As per available data, the Grayscale`s ETF currently manages $30 million value of funds, after experiencing high outflow for the last two weeks. Analysts from Bloomberg Intelligence are reporting a net outflow of funds from all BTC linked ETFs by $158 million on Wednesday. As reported, the inflows of funds are modestly weakening during the last couple of days.
The SEC`s approval of the first ETH Ethereum is still pending, and will be so for some time in the future period, based on SEC`s response to BlackRock`s and Fidelity`s filings. Namely, the SEC officially published that it needs a longer period of time and cannot provide an accurate answer at this moment. The date mentioned in SEC`s official letter, published on their website, is March 10th 2024, as the date of the final decision for the first ETF Ethereum.
Crypto market cap
While the US stock market continues to rally, the majority of crypto investors are asking what is going on with the crypto market after the approval of the first BTC ETF. There are several issues related to BTC`s increased volatility during the previous weeks. On one side it should be considered speculative money which strongly flowed to the BTC market on the first news that an ETF might be approved. These funds are now moved from the crypto market, after the collection of short term profits. The second topic which should be considered is that investors, who wanted to have an exposure toward crypto, already had an opportunity for that through BTC-linked ETF`s and other derivative products. Predictions of several analysts prior to the SEC`s approval were quite positive, noting that the price of BTC will skyrocket. However, the reality check showed that BTC entered into the mainstream, and is there to stay, in which sense, it cannot be expected in the future the same behavior as BTC did in the past. The higher adoption by the mainstream means a higher inflow of funds, higher availability of coins which all decreases the potential for higher fluctuations in the price of BTC. Same like with the FX market, if someone wants to make a significant move in this market, it will need to have a substantial amount of funds to make a difference in price. At the bottom line, that means huge institutional investors or central banks. Instead of some huge movements in the price, small investors and crypto enthusiasts should expect a lower BTC volatility in the future period, which is actually, the best thing which could happen to the BTC. Total crypto market capitalization decreased by 1% on a weekly basis, with an outflow of 21B in the value of the market. This week`s decrease was led by ETH, and not BTC. Daily trading volumes further decreased to the level of around 85B on a daily basis, from 99B traded two weeks ago. Total crypto market capitalization decrease since the beginning of this year stands at 4%, with a total $ 70B lost in value of the market.
BTC was not the coin which led the total crypto market value decrease during the previous week. It was actually ETH, with a loss of 24B or 8% on a weekly basis. The SEC issued an official letter that the decision on the approval of the first ETH ETF is postponed for March this year, which impacted market sentiment for this coin. Regardless of a drop in the price during the week, BTC ended it by 0.8% higher from the end of the week before, adding $ 6B to its market cap. Other altcoins were traded in a mixed manner. Highest gainers in a relative terms were Miota, with an increase of more than 10% in value, Maker was up by 4% on a weekly basis, while Bitcoin Gold and Bitcoin Cash were traded higher by 2.6% and 2.3% respectively. Among altcoins which lost in value during the week were Litecoin, with a drop of 5.14%, LINK was down by around 10%, Uniswap decreased its value by 8.8%, while ZCash was traded lower by 5.3%.
Increased activity with coins in circulation continues from the start of this year. Tether gained 1.0% during the previous week, increasing its total value by this percentage. Miota also continued to increase the number of coins in circulation by 0.6% during the course of the previous week, while Filecoin`s coins increased by 0.5% w/w. Litecoin was one of rare coins on the market which decreased its circulating coins by 4.0% compared to the week before.
Crypto futures market
Although usually the crypto futures market reflects developments on the spot market, during the previous week ETH short term futures experienced higher drop in prices from the actual developments on the spot market. One of the reasons could be found in the fact that the SEC made an official postponement of its decision for the first ETH ETF. ETH short term futures ended the trading week less than 10% lower from the week before. Long term futures also dropped by more than 9%, for all maturities. Regardless of a drop, futures maturing in December this year are still holding above 2K level, with last traded price at $2.341. Futures maturing in December 2024 were last traded at price $2.474.
In line with the spot market, short term BTC futures ended the week 0.9% higher from the week before, while long term futures experienced a drop in prices by more than 2% for all maturities. December 2024 futures were last traded at price $42.700, while December 2025 continues to hold above 45K, with last traded price at $45.870.
A new week and a new ATH for the S&P 500 during the first trading month in a year. Positive market optimism continues to be supported with expectations on forthcoming Fed rate cuts. On the other hand, the ECB meeting held during the previous week revealed potential for April`s rate cuts in the Euro Area. At the same time, USD, US Treasuries and Gold were holding relatively steady, while the crypto market increased its weekly volatility. Bitcoin ended the week with a bounce above the $ 41K, after shortly testing the 38K support.
The market optimism which is reflected in the value of US equity indices continues to be supported by relatively solid US economic data. The preliminary US GDP growth rate for Q4 of the previous year reached 3.3% for the quarter, which was still above forecasted 2.0%. A drop in inflation has fueled consumer spending, supporting the economic output of the county. Although figures are showing improvement of the economy, there are analysts who are pointing to potential risks that might impact the economic output in 2024, which are related to geopolitical issues and potential other supply-chain disturbances which might trigger another surge in inflation and slow-down of economic growth. Still, considering a new ATH of the S&P 500 it seems that the market is currently not pricing any of these potential risks.
The European Central Bank held a meeting during the previous week, where it left Euro rates unchanged, at 4,5%. In an after the meeting speech of ECB president Lagarde, market expectations were heated regarding the ECB`s possibility for its first rate cut from April this year. This was supported by the positive outlook for the EU economy, as perceived by ECB members. However, President Lagarde did not comment on any potential rate cuts for the moment.
First data related to the BTC ETF show that BlackRock's ETF is currently the first one to reach $2 billion in value of assets under management. Total tokens held by the IBIT is currently around 50.000. The fund is followed by Fidelity's ETF (FBTC), which already reached $2 billion in value of assets. As per available data, the Grayscale`s ETF currently manages $30 million value of funds, after experiencing high outflow for the last two weeks. Analysts from Bloomberg Intelligence are reporting a net outflow of funds from all BTC linked ETFs by $158 million on Wednesday. As reported, the inflows of funds are modestly weakening during the last couple of days.
The SEC`s approval of the first ETH Ethereum is still pending, and will be so for some time in the future period, based on SEC`s response to BlackRock`s and Fidelity`s filings. Namely, the SEC officially published that it needs a longer period of time and cannot provide an accurate answer at this moment. The date mentioned in SEC`s official letter, published on their website, is March 10th 2024, as the date of the final decision for the first ETF Ethereum.
Crypto market cap
While the US stock market continues to rally, the majority of crypto investors are asking what is going on with the crypto market after the approval of the first BTC ETF. There are several issues related to BTC`s increased volatility during the previous weeks. On one side it should be considered speculative money which strongly flowed to the BTC market on the first news that an ETF might be approved. These funds are now moved from the crypto market, after the collection of short term profits. The second topic which should be considered is that investors, who wanted to have an exposure toward crypto, already had an opportunity for that through BTC-linked ETF`s and other derivative products. Predictions of several analysts prior to the SEC`s approval were quite positive, noting that the price of BTC will skyrocket. However, the reality check showed that BTC entered into the mainstream, and is there to stay, in which sense, it cannot be expected in the future the same behavior as BTC did in the past. The higher adoption by the mainstream means a higher inflow of funds, higher availability of coins which all decreases the potential for higher fluctuations in the price of BTC. Same like with the FX market, if someone wants to make a significant move in this market, it will need to have a substantial amount of funds to make a difference in price. At the bottom line, that means huge institutional investors or central banks. Instead of some huge movements in the price, small investors and crypto enthusiasts should expect a lower BTC volatility in the future period, which is actually, the best thing which could happen to the BTC. Total crypto market capitalization decreased by 1% on a weekly basis, with an outflow of 21B in the value of the market. This week`s decrease was led by ETH, and not BTC. Daily trading volumes further decreased to the level of around 85B on a daily basis, from 99B traded two weeks ago. Total crypto market capitalization decrease since the beginning of this year stands at 4%, with a total $ 70B lost in value of the market.
BTC was not the coin which led the total crypto market value decrease during the previous week. It was actually ETH, with a loss of 24B or 8% on a weekly basis. The SEC issued an official letter that the decision on the approval of the first ETH ETF is postponed for March this year, which impacted market sentiment for this coin. Regardless of a drop in the price during the week, BTC ended it by 0.8% higher from the end of the week before, adding $ 6B to its market cap. Other altcoins were traded in a mixed manner. Highest gainers in a relative terms were Miota, with an increase of more than 10% in value, Maker was up by 4% on a weekly basis, while Bitcoin Gold and Bitcoin Cash were traded higher by 2.6% and 2.3% respectively. Among altcoins which lost in value during the week were Litecoin, with a drop of 5.14%, LINK was down by around 10%, Uniswap decreased its value by 8.8%, while ZCash was traded lower by 5.3%.
Increased activity with coins in circulation continues from the start of this year. Tether gained 1.0% during the previous week, increasing its total value by this percentage. Miota also continued to increase the number of coins in circulation by 0.6% during the course of the previous week, while Filecoin`s coins increased by 0.5% w/w. Litecoin was one of rare coins on the market which decreased its circulating coins by 4.0% compared to the week before.
Crypto futures market
Although usually the crypto futures market reflects developments on the spot market, during the previous week ETH short term futures experienced higher drop in prices from the actual developments on the spot market. One of the reasons could be found in the fact that the SEC made an official postponement of its decision for the first ETH ETF. ETH short term futures ended the trading week less than 10% lower from the week before. Long term futures also dropped by more than 9%, for all maturities. Regardless of a drop, futures maturing in December this year are still holding above 2K level, with last traded price at $2.341. Futures maturing in December 2024 were last traded at price $2.474.
In line with the spot market, short term BTC futures ended the week 0.9% higher from the week before, while long term futures experienced a drop in prices by more than 2% for all maturities. December 2024 futures were last traded at price $42.700, while December 2025 continues to hold above 45K, with last traded price at $45.870.
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