Mar 15
Week 11, 2024 - Weekly Market Outlook
The weekly market outlook article provides a brief analysis of the past week's market performance and an outlook for the upcoming week.
Introduction
In this weekly market outlook, we examine the most recent updates in the cryptocurrency ecosystem. With an emphasis on Bitcoin and the macro environment, we analyze recent price action. We evaluate the global cryptocurency market cap, DeFi stablecoin flow and do a short review of the crypto market's biggest gainers and losers. Finally, we evaluate the performance of the Flagship Portfolio Vault.
Macro
The U.S. market for junior subordinated debt, a particularly risky type of corporate bond, is experiencing a resurgence. This trend is driven by companies seeking to capitalize on investor demand for assets that offer high yields over extended periods, especially in anticipation of a potential decrease in interest rates. These bonds, which sit low in a company's capital structure, offer higher yields than senior bonds for terms up to 40 years, despite typically being called within five to ten years. They share similarities with stocks in terms of their position in the capital hierarchy but function like bonds with their interest payments.
The expectation that the Federal Reserve will reduce interest rates later this year has sparked a rush among investors to secure securities that promise current high-interest rates for the foreseeable future. This year, the issuance of junior subordinated debt has accelerated, with five companies issuing $4.6 billion worth of these bonds. A sixth company entered the market recently, marking a significant uptick from the past two years. In 2023, the total issuance was $8 billion, according to Barclays.
The attractiveness of these hybrid bonds has increased, partly due to Moody's decision to adjust its rating methodology, allowing companies to count a larger portion of their subordinated debt as equity capital. This change enables firms to raise capital through hybrid bonds without negatively impacting their credit ratings. Companies like NextEra Energy Capital and Energy Transfer have utilized the proceeds from these bonds to refinance more expensive or less favorable debt, highlighting the financial strategy behind these issuances.
The strong demand for hybrid bonds is evident in the tightening of credit spreads and the yields they offer, which are only slightly higher than those of senior bonds. This demand was underscored when Energy Transfer expanded its offering due to overwhelming interest, indicating a robust appetite for these riskier assets among investors.
For risk assets, this trend signifies a broader willingness among investors to take on higher risk for the potential of greater returns, especially in a climate where interest rates are expected to decline.
Bitcoin
The Bitcoin ETF market in the United States experienced a notable surge in inflows, with BlackRock's IBIT and Fidelity's FBTC ETFs leading the forefront, collectively attracting nearly $870 million. This influx of funds into the U.S. Spot Bitcoin ETF, amounting to about $700 million, underscores the growing interest from institutional investors in the cryptocurrency space. The substantial inflow of $684.7 million into the U.S. Spot Bitcoin ETF on that Wednesday alone, as reported by Farside Investors, highlights Wall Street's strong inclination towards Bitcoin amidst its remarkable price rally.
BlackRock's IBIT saw an impressive inflow of $586.5 million, while Fidelity's FBTC garnered $281.5 million, showcasing their dominance in the Bitcoin ETF arena. However, the VanEck Bitcoin ETF (HODL) experienced a decrease in inflow, settling at $16.5 million, a drop from $82.9 million the previous day. Despite this, VanEck had seen over $200 million in inflows earlier in the week, following its decision to eliminate fees for the first $1.5 billion in assets until March 2025. Conversely, Grayscale's Bitcoin ETF (GBTC) faced an outflow of $276.5 million, marking a significant increase from the $79 million outflow observed the day before.
Top Gainers and Losers
As a top performer this week: ZRX with over a 144.8% gain. ZRX is the governance token for the 0x protocol. ZRX holders have the authority to influence the direction of the protocol by voting on proposals.
The worst performing asset this week is MAGA, one of the many trump memecoins.
Global Market cap
The total market capitalization of the cryptocurrency ecosystem remained stable this week at $2.7 Trillion
Stablecoin Flows
The total market capitalization of stablecoins has risen to around $145 billion.
Flagship Portfolio Vault Performance
Over the past 7 days, the share price of the Portfolio Vault went from $67.74 to $72.06, which is a 6.37% increase.
We have decided to remain ultra bullish Bitcoin as our indicators are flashing an ultra bullish crypto environment. While it's not an alt season, we are observing certain altcoins outperforming Bitcoin. Consequently, we have rebalanced our vault slightly and letting our winners ride. Therefore, our risk profile can be classified as ultra bullish.
If you’d like to access Flagship’s portfolio Vault, click here.
Disclaimer: Nothing on this site should be construed as a financial investment recommendation. It’s important to understand that investing is a high-risk activity. Investments expose money to potential loss.
