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Immediately’s Tales:
Crypto Funds See $767M Six-Week Influx, Finest Since 2021 Bull Market: CoinShares
CoinShares Digital Asset Fund Flows Weekly
Hong Kong Now Contemplating Spot Crypto ETFs for Retail Buyers: Bloomberg
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This episode was hosted by Noelle Acheson. “Markets Each day” is govt produced by Jared Schwartz and produced and edited by Eleanor Pahl. All unique music by Doc Blust and Colin Mealey.
Audio Transcript: This transcript has not been edited and should comprise errors.
It’s Tuesday, November seventh, 2023 and that is Markets Each day from CoinDesk. My title is Noelle Acheson, CoinDesk collaborator and writer of the Crypto is Macro Now publication on Substack. On at this time’s present we’re speaking about crypto fund inflows, a growth in Asia, the U.S. lending outlook and extra. So that you don’t miss an episode, you’ll want to observe the podcast in your platform of selection, and activate notifications. And only a reminder, CoinDesk is a information supply and doesn’t present funding recommendation. Now, a markets roundup.
After final week’s pleasure, most markets are extra muted to this point this week, and this is applicable to crypto as properly. Based on CoinDesk Indices, at 9 a.m. Jap time at this time, bitcoin was buying and selling down three quarters of a p.c over the previous 24 hours, at 34,794 {dollars}. Ether was down 1.8%, buying and selling at 1,874 {dollars}. Elsewhere, XRP, NEAR and Stellar’s XLM token are down 6%.
Arbitrum and Maker are down 4%. It’s not all crimson, although. Solana and Toncoin are up roughly 5%, Chainlink is up 2.5%, and Cronos is up 10%.
In macro indicators at this time, I need to discuss a banking report with a cute title that sheds a pointy mild on the U.S. financial outlook. The Senior Mortgage Officer Opinions Survey, often called the SLOOS, is a quarterly survey performed by the U.S. Federal Reserve of as much as 80 massive home banks and 24 branches of worldwide banks. It asks financial institution representatives how they really feel about lending practices, the state of mortgage demand, latest and potential coverage modifications, and different subjects of present curiosity. It’s vital in that it’s the most on-the-ground technique to get a glimpse of simply how a lot banks are keen to lend, and how much demand they’re seeing. If lending dries up, shoppers spend much less, whereas companies can’t develop and should have to shut. Whereas if banks begin lending extra, then we are able to most likely count on extra financial development forward.
Over the previous few quarters, the proportion of banks which were tightening their lending circumstances was rising. Tightening lending circumstances principally means making it tougher for companies and people to get loans, and the information advised that it was getting tougher and tougher. The newest report reveals a flip, nonetheless. Simply over 30% of banks are nonetheless tightening lending circumstances, which appears like rather a lot, nevertheless it’s down from nearly 50% within the earlier quarter.
Demand for enterprise loans fell in Q3 however the internet proportion of banks reporting this dropped from the earlier quarter, so it sounds just like the tempo of the drop is slowing down. Client lending tells a distinct story – the proportion of banks reporting weaker demand for bank card loans, auto loans and different shopper merchandise elevated from the second quarter. In different phrases, the drop in demand for shopper loans is accelerating. That is hardly stunning, given the rise in rates of interest. But once more, the SLOOS report doesn’t paint an amazing image of what’s forward for the U.S. economic system. Lending is a key part of financial development, and banks are largely stepping again from all however the most secure debtors.
The slight flip within the information on enterprise lending, nonetheless, with fewer banks tightening mortgage circumstances to corporates, provides a glimmer of hope that there could possibly be some pickup in exercise by the point the following report comes out. It’s a stretch, nevertheless it’s attainable.
In shares, the main U.S. indices had been largely flat yesterday as treasury yields stopped falling. After opening at slightly below 4.6% yesterday, the U.S. 10-year yields is now hovering at simply above that degree. Futures are pointing to a barely tender opening.
In Europe yesterday, the principle indices had been additionally flat to barely down, and to this point at this time, this unsure pattern is constant.
Asia noticed extra definitive strikes, however not of the nice variety. Japan’s Nikkei index dropped 1.3% at this time, whereas Hong Kong’s Hold Seng index fell by 1.7%. China’s Shanghai Composite was largely flat.
In commodities, oil climbed yesterday however has greater than given up these positive aspects at this time, with the brent crude benchmark falling 1.7% to commerce at 84 {dollars} and 40 cents a barrel. Merchants appear to be focusing extra on the weakening outlook for demand within the face of a worldwide financial slowdown than on the opportunity of provide disruptions as a result of an escalation of the battle within the Center East.
Gold can be pulling again some at this time, buying and selling down greater than half a p.c, at 1,966 {dollars} per ounce.
Stick with us – after the break we’re going to speak about an fascinating growth in Asia, and funding flows into crypto funds.
Welcome again! On this part, we’re going to speak about spot ETFs not within the U.S., however first …
Crypto asset supervisor CoinShares has revealed their weekly abstract of flows of funds into listed crypto autos. Final week noticed the sixth consecutive week of inflows, and right here’s a stunning statistic: the full inflows over the previous six weeks are greater than in all of 2022. But once more, most went into bitcoin, which accounted for over 85% of all inflows.
However right here’s an fascinating twist. Chances are you’ll recall once I spoke about fund flows final week, the second hottest asset was Solana, with ether struggling outflows. Properly, that appears to have modified. This previous week, ether was the second hottest asset, with its largest inflows since August 2022. Clearly, one week doesn’t make a pattern, however possibly we’re seeing the start of a flip in sentiment for ether?
Subsequent, I need to handle a possible huge step for world crypto markets that has triggered some puzzling reactions within the crypto neighborhood. Hong Kong is considering permitting spot crypto ETFs for retail buyers. Based on the top of the area’s securities regulator, that is nonetheless on the proposal stage and no choices have been taken. However they’re at the least excited about it, which might find yourself being a really huge deal.
One set of reactions I’ve seen on X, previously often called Twitter, focuses on how China stepping as much as fill a void left by Gary Gensler’s opposition to identify crypto ETFs. That is puzzling as a result of there are already many crypto spot ETFs listed in non-U.S. markets, so there isn’t actually a void. And anyway, it seems to be just like the U.S. is about to record its first bitcoin spot ETFs, and is way additional forward within the course of than Hong Kong.
Going additional, I don’t suppose the Hong Kong securities authorities see the U.S. market as both a menace or a chance, since they serve very completely different investor bases. And Gary Gensler doesn’t appear to be significantly anxious about what different jurisdictions are doing. If he had been, he’d be extra centered on Canada, which has had spot crypto ETFs for years, and which is way simpler for U.S.-based buyers to entry.
One other set of reactions I’ve heard is that this information is a nothingburger. Hong Kong is a comparatively small market, very separate from China which is a extremely huge market. Hong Kong’s market when it comes to inhabitants is small in comparison with the mainland, with simply over 7 million individuals vs China’s 1.4 billion. Its inventory market is just not that a lot smaller, nonetheless, with a market capitalization of round 50% of China’s.
And right here’s the important thing purpose why this announcement from Hong Kong’s securities regulator is critical: Chinese language buyers have entry to the Hong Kong inventory market by means of agreements between the Hong Kong inventory change and China’s Shanghai and Shenzhen inventory exchanges which permits buyers in both to entry the opposite.
So, crypto spot ETFs in Hong Kong might find yourself being a really huge deal, particularly given China’s historical past with bitcoin. Within the early days of ecosystem development, most bitcoin miners had been based mostly in China, as was most crypto hypothesis. Additionally, even after China’s ban on crypto buying and selling in 2021, many Chinese language have used crypto property as a technique to hedge in opposition to foreign money depreciation.
Because of this, we might even see that there are limits positioned on how a lot Chinese language buyers can put money into Hong Kong-listed spot crypto ETFs. However the market in China is so massive that even restricted flows could possibly be vital. Mix that with the potential flows into crypto property from the seemingly U.S. itemizing of spot crypto ETFs, and the narratives supporting the market get much more fascinating.