Market Commentary - May 6th, 2024

Crypto Market

‍Today in the trading trenches, Bitcoin and ETH are clawing their way back from significant sell-offs that had the market bracing for a deeper correction. So far, Bitcoin has rebounded from $56,500 to $63,000, while ETH has risen from $2,800 to $3,060, spurred by a dovish turn in the Fed's latest rate policy and weaker-than-expected non-farm payroll and unemployment data. This pattern echoes historical reactions to FOMC outcomes—initial drops followed by swift recoveries post-Powell's calming commentary.  

Zooming out to the broader crypto landscape, a pivotal legal showdown is taking shape that could define the future trajectory of the sector. The SEC's recent actions against MetaMask, branding it an unregistered broker-dealer, signals a significant regulatory stance—deeming all supported assets as securities needing registration. The outcome of this battle could either pave the way for crypto assets to be treated as commodities, potentially lining them up for inclusion on platforms like the CME and future ETFs, or, if the SEC prevails, could severely constrict the market. This case, crucial for every crypto enthusiast's radar, promises to be a drawn-out saga given its far-reaching implications.  

On another front, INJ is tearing it up, logging a new record with 2.4 million daily transactions and keeping gas fees almost laughably low. Post-community thumbs-up for the INJ 3.0 update has introduced a burn auction mechanism that’s got everyone from solo crypto enthusiasts to major dApps contributing to the burn making it a star child for deflationary assets.  


‍Globally, the usual suspects—interest rates, liquidity, and exchange rates—remain at the forefront of our monitoring. The Fed has signaled a slowing in quantitative tightening, reducing monthly cuts from $60 billion to $25 billion, a move that should bolster USD liquidity. Meanwhile, Japan's aggressive interventions in currency markets, termed "Yentervention," (could make a meme out of this) aim to stabilize the soaring USD/JPY rates, impacting U.S. interest rates and Fed policies indirectly.  

Back in North America, Canada's new tax strategy is ruffling feathers, with increased capital gains taxes sparking fears of capital flight. Crypto is under the microscope too, as Ottawa reconsiders the eligibility of crypto-backed ETFs in tax-advantaged accounts—a potential blow to investors seeking exposure in a tax-efficient manner. These unfolding regulatory and fiscal policies demand vigilant tracking for any investor impacted by North American markets.

Equities, Fixed Income, FX and Commodities

Last week's markets reflected a risk-off mood leading into and following the Fed's announcement, pinned under the cloud of persistent inflation—"higher for longer" remains the refrain. However, a surprise in employment stats—a dip in job openings to a three-year low—coupled with Canada's potential shift towards rate cuts painted a mixed picture of North American economic health.  

In corporate maneuvers, Exxon Mobil's acquisition of Pioneer Natural Resources highlighted significant consolidation in the oil sector, while Apple's hefty share buyback announcement spurred its stock upwards. Globally, currency and commodity markets saw the U.S. dollar retract some gains against the Canadian dollar, while gold hovered near record highs, underscoring ongoing market volatility and investor caution amidst fluctuating economic signals.  

As we navigate these choppy waters, keeping an eye on regulatory shifts, market responses, and economic indicators will be key to understanding the broader financial landscape and positioning for the shifts ahead. Stay tuned, stay informed, and, as always, trade wisely.  

News We’ve been reading ‍

Industry fears Ottawa's 'overreach' could limit crypto access after Budget 2024 – Ottawa is re-evaluating the qualification of crypto-backed ETFs in Registered Accounts - link - @Yahoo Finance

Posthaste: Capital gains tax hike will hit more Canadians than we thought - “The change proposed in this year’s federal budget will increase the capital gains inclusion rate from 50 per cent to two-thirds for corporations and individuals with gains over $250,000.” - link - @Financial Post

Tether Holdings Reports Record-Setting $4.52B Profit in Q1 2024, Discloses Net Equity for the First Time – Reverting back to a commitment Tether made, we may see up to 15% of Q1 Profits moved into purchasing Bitcoin – link - @Yahoo Finance

Even as He Faces Prison Time, Binance’s Founder Plans a Comeback - Changpeng Zhao, who ran the giant crypto exchange Binance, has networked across the United States to set up his next act – link - @New York Times