Market update - September 15th 2023

Could there be trouble ahead for the US?

Transcript

Today, we look into the latest developments that are shaping finance and digital assets, with a focus on bitcoin and Ether.

Let’s start with the US: a government shutdown next month is becoming increasingly likely, primarily due to internal conflicts within the Republican party.

If the shutdown occurs, it won't just halt the release of essential economic data. It will also showcase the deep-seated dysfunction in US politics on a global scale. While the discord mainly stems from the Republican side, international investors may perceive it as a general breakdown of the US political system. This could potentially have a negative impact on Treasuries and equities - but we could see Bitcoin benefitting from this.

Switching gears to crypto, Bitcoin is making waves: volumes have been picking up, averaging $4.5 billion a day over the last two days, the highest in two weeks. Moreover, we've seen 25 million inflows into BTC shorts this month. The question on everyone's mind is, is it time to go long? Investors since late August are beginning to accumulate Bitcoin once again. Suggesting some investors see recent price movement as a price opportunity.

Meanwhile, the Binance saga continues to unfold. Binance US has reportedly cut a third of its staff, with President and Chief Brian Shroder also leaving amidst ongoing suits from the SEC and CFTC.

Finally, let’s shift our focus to Ethereum. The Ethereum validator queue has reduced to 13 days from 19 days just last week, suggesting the queue will reach zero earlier than expected. Take note that the validator entry queue has been much more congested than the validator exit queue, implying a strong appetite for ETH yield. But why is there a sudden wave of scepticism surrounding ETH? We've seen 100 million outflows year-to-date - nevertheless, Ethereum remains attractive, boasting a staking yield of 4%, well above the 2.8% seen for the average tech stock. It has successfully transitioned from PoW to PoS, while doubling the number of validators from 350,000 to 700,000 since the merge.

That’s a wrap for this week - follow CoinShares for more insights.