Market Commentary (January 5th, 2023)

Crypto Market

At the time of this writing, Bitcoin is currently trading at $43,600, with Ethereum at $2,230. The cryptocurrency market recently witnessed an unexpected wave that caught many investors off guard. A sudden selloff wiped out $468 million in open interest, serving as a stark reminder of the swift volatility that can capsize portfolios in moments of market exuberance. The past 24 hours have seen a rebound, reminiscent of December's generosity being briefly taken back and then restored. While some faced substantial losses due to over-leverage, others have demonstrated resilience in the face of adversity.

As we step into the new year, it's essential to shed light on pivotal themes guiding our considerations in the ever-evolving crypto landscape:

  1. Halving Event: Keep a keen eye on the scheduled halving event in late April, historically influencing Bitcoin's supply dynamics and, consequently, its price.
  1. BTC Spot ETF: The anticipated arrival of a BTC spot ETF is generating considerable interest, sparking questions about the potential for an ETH ETF and broader implications for the crypto market.
  1. Political Landscape: Political developments and regulatory changes can significantly impact the cryptocurrency market. Understanding these dynamics is crucial for informed decision-making.
  1. Federal Reserve and Rate Adjustments: Anticipate the Federal Reserve's rate adjustments in 2024, with potential ripple effects on risk assets, including crypto. Lower rates may stimulate the market.
  1. DeFi Sector Resurgence: The DeFi sector has experienced a remarkable ~72% increase in the past three months, signalling renewed interest.  
  1. Crypto and AI in Gaming: High-quality games with crypto and AI-themed narratives are poised to make a significant impact in 2024. Monitor mainstream crypto games and AI-driven applications.
  1. Options Market Dynamics: Recent developments in the options market, including a substantial options expiry event, indicate potential market shifts. Vigilance in monitoring these dynamics is paramount.


Entering the year, investors can expect more favourable macroeconomic conditions from the US. Recent Fed Meeting Minutes suggest a consensus among officials for interest rates to come down in 2024 by at least three-quarters of a percentage point. Keep a watchful eye on indicators such as the Reverse Repo Market and the Bank Term Funding Program, set to end in March, for early signs of changes.


In Canada, interest rates are also expected to decline later in the year, with the Canadian Dollar strengthening against its American counterpart. Monitoring Repo operations by the Bank of Canada and its asset holdings will provide valuable insights into future guidance.

In the macroeconomic landscape, Japan assumes a pivotal role, warranting close observation as interest rates experience an upward trajectory in the region. The implications of this shift are particularly noteworthy for the US markets, given that Japan remains the largest holder of US Treasury Bills. In a scenario where interest rates ascend in Japan, there is the potential for Japanese investors to initiate the selling of US treasuries, reallocating capital back into the Japanese market. This dynamic could introduce pressure on US yields, and thus, it becomes imperative to monitor Japan's monetary policy developments closely.

Equities, Fixed Income, FX and Commodities

Markets have entered 2024 quietly, with major indices starting the year in negative territory. Interest rate decisions are contributing to uncertainty, impacting various sectors differently. Financial services, energy, and utility sectors have found support, while technology and discretionary sectors have lagged, indicating defensive posturing.

Bond yields have rebounded from year-end lows, and the target rate of 2% remains the Fed's goal. Market sentiment has been influenced by Fed minutes from December, suggesting that rate cuts may not be as inevitable as previously thought. The USD/CAD rate is hovering around 1.335, and crude oil prices remain range-bound between $70 and $74.

News We’ve been reading

JPMorgan, Goldman in Talks With Grayscale About Bitcoin ETF Role After years of bashing Bitcoin and cryptocurrency, JPM and Goldman are now interested in supporting the Bitcoin ETFs. - link @Bloomberg

If a Bitcoin ETF Is Approved, Here’s What May Happen The long-anticipated ETF is right around the corner. Will this turn out to be another sell the news event? - link  @Coindesk

Interest rate cuts could come in spring this year, Deloitte says A brief insight into Deloitte's interest rate predictions in Canada for 2024.  - link @GlobalNews

North Korean Hackers Stole $600 Million in Crypto in 2023 With most of the hacked crypto coming from stolen private keys and seed phrases, it’s a reminder to keep your assets and passwords protected.  - link  @TRMLabs