Market Commentary - March 8th, 2024

Crypto Market

Bitcoin printing new highs at $70,000, and Ethereum isn't far behind, standing tall at $4,000. The crypto scene is buzzing, particularly with moves like the approval of Uniswap’s fee switch, which sent UNI rocketing by about 50% in three days. This isn’t just numbers, it is a monumental shift in how we view DeFi. Uniswap isn’t just another platform, it is the king of all DEX’s, which handled over ~$8.7B in trading volume last week alone and raking in about ~$14M in fees. And now, a slice of that revenue will go to UNI holders, marking a significant milestone that’s got everyone's attention.  

Speaking of milestones, let's talk about ETFs and the Bitcoin party. Bitcoin’s ascent to ~69.7K can be traced back to the net inflows of the recently launched Bitcoin ETF, which have amassed nearly ~$9B. This reminds us of the early days of the Gold ETF, which took three years to hit similar total flow numbers. And just as gold soared from ~$450/oz to ~$782/oz within that period, Bitcoin has seen an approximate increase of ~46% since the ETFs debut. The big boys, like JP Morgan and Wells Fargo, are now getting in on the action, signalling net inflows could continue to increase.

In addition to the ETF flows, MicroStrategy and Tether have both created perpetual Bitcoin buying machines. MicroStrategy’s recent announcement of a U$700M note offering, earmarked for – you guessed it – buying more Bitcoin, is just the latest in a series of moves made by Michael Saylor to capitalize on the company's valuation. He can issue debt or equity whenever he feels that the company's valuation has gotten too high and use the proceeds to purchase more Bitcoin. The endgame here is pretty slick: get MSTR listed added to the S&P 500 index. Why? Because that’s when the magic happens – investors start passively buying up shares of MSTR without second thought. This opens up the floodgates for MSTR to double down, issuing more debt and equity which means more cash to funnel into Bitcoin. It’s a self-feeding Bitcoin buying program that has been cleverly leveraging the stock markets mechanics to fuel crypto ambitions. Tether, on the other hand, plans to allocate up to 15% of it’s profits to Bitcoin purchases. Given the opaque nature of what backs USDT, it could be a bit of a wild card, but it is clear they’re playing to win big in the Bitcoin arena. If we assume that a portion of the $100 Billion under management is held in debt paying a minimum of 5% annually (current UST rates), they will likely be buying hundreds of millions, likely billions of dollars' worth of Bitcoin in years to come, as long as it remains operational.  

Now, let’s not forget the altcoin focus, led by meme maestros like DOGE, PEPE, and SHIB. These coins have seen incredible gains, sparking debates on the market frothiness and investor sentiment. Are investors shifting from Bitcoin to chase higher returns, or is this the beginning of a broader market shift? Only time will tell, but one thing’s for sure: meme coins are not for everyone. They are volatile, and investors should exercise caution when planning those trades.  

As for Ethereum, it is standing its ground, especially with the buzz around a potential ETF approval. The ETH/BTC chart has been flirting with 0.05 mark since October, hinting at ETH’s resilience and potential growth. And now let’s not overlook ETH beta plays like OP and ARB, which could be poised for success as ETH continues to gain momentum.  


The financial world has been a bit of a roller coaster since we flipped the calendar. In North American, there was this buzz that we might see interest rate cuts in the US come in March. But the US dropped some inflation numbers, and Fed Chair Jerome Powell was quick to throw cold water on those rate cut dreams with his latest remarks. Even with that, markets globally have continued to push to near or new all-time highs, all except China, which has struggled as of late. The rally in equities is similar to other periods of history when markets were anticipating interest rate cuts, resembling a buy the rumour sell the news type of sentiment, where interest rate cuts are seen as a sign of weakness in the economy.  

Now, this month, several events should be on everyone's radar. Just the other day, Canada decided to keep interest rates steady at 5%. Looking ahead, we’ve got the US Federal Reserve wrapping up its Emergency Bank Term Funding Program on March 11th with US Inflation Data released the next day. The Fed’s next move on interest rates is due on March 20th, and to top if all off, we’re expecting to see the US GDP numbers for the quarter on the 28th with the market betting on a 3.2% annualized growth. Needless to say, this month will be important for those looking for clues as to how the year will play out.  

And let’s not forget about Japan - it's grabbing headlines with the Bank of Japan gearing up to say sayonara to negative interest rates in April, taking a hawkish stance on policy. The USD/JPY rate is another one to watch, hovering just around 150 mark against the dollar – a line in the sand that the BOJ is keen to defend. Further weakness could signal more selling of US treasuries by the BOJ to maintain exchange rate stability.  

Equities, Fixed Income, FX and Commodities

March has kicked off with a bang, with markets flexing their muscles across the board. The S&P and Nasdaq at the time of writing are both trading at or just below all-time highs thanks to Jerome Powell playing the confidence card in his recent chats with Congress. There was a bit of a reaction initially, but markets quickly shook it off and marched on after Powell hinted that rate cuts are still on the horizon.  

And who’s leading the parade in the S&P bull run? None other than the magnificent 7, with Nvidia not just participating but taking the lead. As for the earnings front, it’s been a week of nodding heads with Scotia Bank and CIBC both coming in at, or above expectations, and Costco dropping its numbers after bell.

Meanwhile, the price of gold has reached new all-time highs, while Treasury yields fell., and silver futures experienced a nine-week high.  It’s not all about the economy though, geopolitical tensions are adding their spice to the metals rally. Oil prices are trading at higher prices due to US crude inventories rising less than expected. The US Dollar, feeling the heat from sagging treasury rates, trended lower on week.

US non-farm payrolls reported for February came in flaunting job growth figures that didn’t just beat expectations – they came in far above expectation and should provide further insight into the Federal Reserve's policy trajectory in the coming months.  

News We’ve been reading

Pantera launches fundraise to buy $250 million of SOL from FTX estate: Report – Pantera Capital is hoping to stave off fears of FTX owned Solana tokens from hitting the market by trying to buy them directly from the bankrupt entity- link @Cointelegraph

FDIC Says ‘Problem Bank List’ Grew By 8 Lenders Last Quarter – US banks are seeing more stress due to the higher interest rate environment, the list totals 52 banks that are now seen as “troubled” - link @BNNBloomberg

Grayscale® Advisors New Investment Opportunity Aims to Capture Staking Rewards – Grayscale is looking to launch an actively managed staking fund with APT, SOL, ETH, TIA, ATOM, OSMO, DOT, NEAR, and SEI. - link - @YahooFinance

Coinbase Upgraded to Neutral as Goldman Sachs Ends Bearish Stance – In light of Bitcoin approaching all time highs, price targets on the stock have been raised to $282 from $170 by heavyweight Goldman Sachs. - link - @coindesk

Scoop: Senate stablecoin bill in the works from Sens. Lummis and Gillibrand – A long awaited Stablecoin bill may be ready to hit the floor backed by Senator Lumis and Gillibrand. link - @axios