Australia Joins the Race

Biden's Veto and ECB Rate Cuts

Hello Investors!

Let’s see what’s moving the markets today.

Australia Joins the Race - Spot Bitcoin ETFs Go Live Today

Australia's first spot Bitcoin exchange-traded fund (ETF) is set to launch on the Cboe Australia exchange on Tuesday, June 4.

Monochrome Asset Management is the first to receive approval under new crypto asset licensing rules in Australia.

Monochrome’s CEO claims Australia is a crypto-heavy country and expects local ETFs to generate between $3 billion to $4 billion in net inflows within the first three years.

Learn more: Cointelegraph, Coindesk

Thoughts

In Hong Kong, four Bitcoin ETFs were approved on April 30, and three of them struggled to gain traction - partially due to missing approval for mainland investors to participate.

Australia is 5 times bigger than Hong Kong in terms of GDP and is the 12th largest worldwide.

Canada’s crypto ETFs hold $4,864m with BTC accounting for 73%, and ETH for 25% (the remaining are multi-crypto funds).

Assuming similar interest, the $3-$4 billion range in three years seems likely.

Markets Anticipate ECB Rate Cut This Week

Money markets indicate a 93% chance of an ECB rate cut at this week's meeting.

Bitfinex's Head of Derivatives, Jag Kooner, believes that “in a stimulus-driven environment with lower rates, bitcoin may benefit alongside equities due to increased liquidity.

Bitcoin is also seen as a hedge against inflation, so if the ECB rate cut raises inflation expectations, it might attract more investment as "digital gold."

Learn more: Theblock

Thoughts

We have been talking over and over about the liquidity cycle - and it is still one of the most important forces in the market.

Once the central banks start lowering rates, there should be more liquidity coming into risky assets - both stocks and crypto.

While the real effect of new liquidity should occur closer to Q3-Q4 2024, the market sentiment takes effect much sooner.

On June 12 we will have another FOMC meeting where we will learn more about how the US counterpart (FED) sees the market and possible rate cuts.

Biden’s Veto

President Joe Biden vetoed Congress’s vote repealing the SEC’s controversial Staff Accounting Bulletin 121 (SAB-121) on Friday afternoon.

The president announced in May he would support SEC Chair Gary Gensler’s rule, which requires custodians to keep crypto on their balance sheets.

The SEC's motivation behind SAB 121 is to highlight the higher risk associated with providing custody for digital assets.

However, the SEC did not consult banking regulators before issuing SAB 121, which negatively impacts banks' ability to provide custody for cryptocurrencies and tokenized securities.

Thoughts

President Biden was facing a difficult choice, and he made a decision.

Instead of speculating what were the reasons behind it, let’s think of the impact.

This resolution had bipartisan support in Congress and the Senate, and by vetoing it, Biden showed his stance on crypto and Gary Gensler as a chairman of the SEC.

I believe this decision will cost Biden votes on both sides, and the fact that Trump’s recent conviction did not impact his odds of winning the election on prediction markets, signals we have a favorite right now.

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Elsewhere…

All the best,

Matt Curda




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