Good, but not Great, Data Fuels Market Rally

Weekly News Wrap Up

It was a positive week for markets as US 4Q22 GDP grew 2.9%, beating estimates of 2.6%, but exhibited the slowdown signs wanted by the Fed from its 3.2% growth in 3Q22. Elsewhere, the Bank of Canada raised rates to 4.5% and became the first major central bank to indicate a pause (see chart below to see how far global central banks have come this tightening cycle). Lastly, anti-competitive regulation against Big Tech resurfaced after the U.S. Department of Justice set its sights on Google’s online advertising business monopoly – GOOGL closed ~2.5% lower on the day. 

All 3 major U.S. equity indices ended in the green: SPX +2.47%, DJIA +1.81% and NASDAQ +4.32%, fueled by TSLA’s +33% rally.  In crypto, BTC +4.58% continued its upward trend since the start of 2023, pushing above $23,000. ETH +1.03% had a relatively more volatile week, falling below $1,600 on 24 Jan but recovering above that a day later to approach resistance at $1,660..

This week will see the U.S. Federal Reserve’s first interest rate decision in 2023 on 01 Feb – CME shows a 99.9% probability of a 25bps hike and futures indicate the current rate hike cycle may end in June.

chart patterns bitcoin 30 jan chart patterns ethereum 30 janCryptocurrency News

  • The UK government is looking to hire a Central Bank Digital Currency (CBDC) lead for its Treasury team, a job posting on LinkedIn shows. The team lead will determine the “strategic direction” for Treasury’s efforts to develop a digital pound, in line with the U.K. government’s agenda.
  • Binance mistakenly mixed customer funds with B-token collateral in the same wallet, Bloomberg reports citing an unidentified Binance spokesperson.
    Our View: this raises concerns on the internal controls within Binance, and the proper segregation of assets within the company – something that has come into sharp focus after FTX’s collapse.
  • Date set for Grayscale’s appeal of SEC’s decision against its Bitcoin ETF. The arguments will begin on 07 March, sooner than Grayscale had anticipated. The company’s application to convert GBTC into an ETF was rejected by the SEC in June. GBTC currently trades at a ~42% discount, according to ycharts.
    Our View: the appeal, while welcome news, shouldn’t change the situation drastically. Especially given the events in 2022, regulators are likely to adopt a more cautious stance when it comes to investment vehicles open to retail trading. Additionally, SEC’s recent rejection of ARK’s and 21Shares’ Bitcoin ETF proposal on 26 Jan 2023 is further indication they are not going to budge. In the unlikely event that some clarity emerges, the discount could narrow but is unlikely to disappear entirely. 
  • According to Blockworks, Amazon announced that it would be pushing toward a new initiative for NFT-based gaming. The project is still in development and is expected to launch in April
    Our View: given Amazon’s size and scale, a foray into Web3 would be beneficial for the industry by driving mass adoption and awareness.

Investment Consideration

Our best strategy for medium to long term investment is to take at least 1-3 years in Moderate Portfolio because it has a good defense with 50% Fixed Deposit , 30% In DCD and 20% in Staking because we still have potential return in DCD and Staking especially in BTC.

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