30 Nov 2023
Week 48, 2023 - 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.
Notable news
- FTX Approved to Start Selling $744 Million in Grayscale Assets
- SEC delays Hashdex and Franklin spot Bitcoin ETFs
- CME (where institutions trade Bitcoin Futures) volume surpasses Binance. This could be a bullish indicator for institutional interest in Bitcoin
- CZ Steps Down From BinanceUS Board
Macro
The U.S. economy demonstrated remarkable resilience in the third quarter of the year, growing at an impressive annual rate of 5.2%, which exceeded the initial estimates of 4.9%. This growth, the fastest in nearly two years, was driven by strong consumer spending and a surge in private investment, despite the backdrop of the Federal Reserve's aggressive interest rate hikes aimed at controlling inflation.
This robust expansion is a significant indicator of the underlying strength of the U.S. economy. Consumer spending, which is a crucial component of economic health, increased at a 3.6% annual rate. Additionally, private investment showed a remarkable increase, growing at a 10.5% pace. These figures suggest a solid economic foundation, even in the face of challenges like high inflation and rising borrowing costs.
The implications of this growth extend to the Federal Reserve's future monetary policy decisions. Having already increased the benchmark interest rate 11 times since March 2022 to fight inflation, the Fed's response to this strong economic performance will be closely watched. If the economy continues to exhibit resilience and inflation pressures diminish, the Fed might consider a more cautious approach to future rate hikes. However, if the economy shows signs of overheating, further rate increases could be on the horizon to keep the economy in check.
The impact of this economic growth on risky assets, such as stocks and high-yield bonds, is somewhat complex. On one hand, a thriving economy can bolster corporate earnings, which is beneficial for stock prices. On the other hand, the prospect of continued rate hikes, which can lead to higher borrowing costs, might dampen investor enthusiasm for these riskier assets. Moreover, with economists predicting a slowdown in growth in the fourth quarter and into 2024, investor optimism might be tempered.
In essence, the U.S. economy's better-than-expected performance in the third quarter is a positive development, but it also introduces a degree of complexity, especially regarding the Federal Reserve's interest rate policy and its potential effects on different asset classes. The balance between maintaining economic growth and controlling inflation remains a delicate task for policymakers.
Bitcoin
Bitcoin's market movements this week were characterized by relative stability in its range, with the price exceeding $38,000. With the window for the ETF approvals still open, but the deadline closing in, excitement seems to continue to build up and be priced in.
The U.S. Securities and Exchange Commission (SEC) recently conducted meetings with Grayscale Investments and BlackRock regarding their respective applications for spot bitcoin ETF listings. Grayscale discussed the conversion of its Grayscale Bitcoin Trust into a spot bitcoin ETF, following a new registration statement and a court directive for the SEC to re-review their application. Simultaneously, the SEC held a separate meeting with BlackRock and Nasdaq employees, focusing on the proposed listing of the iShares Bitcoin Trust on the NASDAQ under specific trading rules. These discussions highlight the ongoing interest and developments in the field of cryptocurrency-based financial products.
Top Gainers and Losers
As top performer this week: TerraClassic USD with over a 301% gain. USTC trading volume has soared 2,284% in the said time frame, with $1.21 billion worth traded because of their Binance listing.
The worst performing asset this week is ARK, which blockchain-based development platform allowing anyone to create their own fully customizable and interoperable blockchain.
Global Market cap
The total market capitalization of the cryptocurrency ecosystem has seen a growth in the past week, growing from $1.48 trillion to $1.49 trillion in the past 7 days. Only today, we saw the market cap increase with over 0.5%. This could indicate that new money is flowing into the cryptocurrency ecosystem, contributing to a bullish market sentiment.
Stablecoin Flows
The total market capitalization of stablecoins has remains around its level at $127 billion. The Total Value Locked (TVL) of stablecoins in DeFi has remaind steady at $84 billion for the last 7 days.
Flagship Portfolio Vault Performance
Over the past 7 days, the share price of the Portfolio Vault went from 35.01 to 34.83, which is a 0.3% decrease.
Due to the recent rally and the fact that the Bitcoin ETF is largely accounted for, along with a slowdown in DeFi TVL and market cap during the rally, we have decided to adjust our risk profile from ultra bullish to 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.
