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Today’s Stories:
Here's Why Bitcoin's Famed Bull-Market Pullbacks Have Been Elusive During the Recent Price Surge
Binance, SBF, ETH and Gensler Get Mentions at Republican Presidential Debate
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This episode was hosted by Noelle Acheson. “Markets Daily” is executive produced by Jared Schwartz and produced and edited by Eleanor Pahl. All original music by Doc Blust and Colin Mealey.
Audio Transcript: This transcript has not been edited and may contain errors.
It’s Thursday, December 7th, 2023 and this is Markets Daily from CoinDesk. My name is Noelle Acheson, CoinDesk collaborator and author of the Crypto is Macro Now newsletter on Substack. On today’s show we’re talking about market moves, presidential debates, the European economy and more. So you don’t miss an episode, be sure to follow the podcast on your platform of choice, and turn on notifications. And just a reminder, CoinDesk is a news source and does not provide investment advice.
Now, a markets roundup.
In crypto markets today, prices are mostly trading slightly lower. According to CoinDesk Indices, at 9 a.m. Eastern time this morning, bitcoin was trading down 1.8% over the past 24 hours at 43,301 Ether is down half a percent, trading at 2,249 dollars.
Elsewhere, dogecoin was retracing some of its recent surge, down just over 9%. Toncoin was down 6%, Chainlink and Shiba Inu were down 5%.
CoinDesk’s Omkar Godbole reports this morning that the recent rally has been largely spot driven. Key indicators from the derivatives market such as implied volatility and futures premiums are not showing significant gains. This suggests that recent price jumps have been driven by actual accumulation rather than leveraged speculation, something we did not see in similar jumps earlier in the year.
In macro matters today, we head over to Europe, where we’ve had some data and some statements that point to an overlooked economic shift. We are likely to see the European Union cut rates before the United States.
Yesterday, European Central Bank Governing Council member Francois Villeroy de Galhau did not mince words. I quote: “Barring any shock, there will be no further increase in our rates — the question of a reduction may arise in 2024, but not now.” End quote. In contrast, the language that we are hearing from U.S. Federal Reserve officials is full of waffle.
Yet both the European Central Bank and the Fed have to contend with over-excited markets. In the U.S., futures are signaling the first rate cuts in May. European traders are discounting an initial cut by the end of March, just three months away.
Both expectations are probably unrealistic – but the relative timing could be directionally accurate.
Euro-area annualized inflation is down to 2.4%, and it’s not just due to lower energy prices. Core inflation is down to 3.6% year-on-year and is negative on a monthly basis. Meanwhile, data out this morning shows that German industrial production has fallen to its lowest level since August 2020. The 0.4% October decline was the fifth consecutive monthly drop.
Economic weakness in Germany, Europe’s largest economy, is likely to exacerbate an already grim outlook. This morning, we got the final figures for eurozone GDP for the third quarter, and the news was not good. Eurozone GDP shrank by 0.1% in Q3 vs Q2, bringing year-on-year growth for the region down to 0%.
So, the ECB has the margin to start cutting soon, with inflation apparently under control. It also has the incentive, in this case an alarmingly weak economy. The same cannot be said for the Federal Reserve – not yet, anyway.
In stocks, U.S. sentiment was weak yesterday. The S&P 500 dropped four tenths of a percent, Nasdaq was down six tenths, while the Dow Jones lost two tenths. Futures are pointing to a more positive trading session today.
In Europe, the main indices were up yesterday. The FTSE 100 rose three tenths of a percent, the German DAX three quarters and the broader Eurostoxx 600 index was up half a percent. Trading so far today is flat to down.
In Asia, sentiment weakened in trading today as Chinese economic data showed an unexpected drop in imports. This was not helped by Moody’s downgrading its view on eight Chinese banks, just a day after lowering its outlook for the country's sovereign bonds. Japan’s Nikkei index fell 1.8%, the Shanghai Composite was flat while the Hang Seng dropped seven tenths.
In commodities, oil prices are bouncing off recent lows, as Russian president Vladimir Putin visits Saudi Arabia in a rare visit outside his homeland. Saudi Arabia is one of the few places he can visit without being arrested under an order from the International Court of Justice, and he and Saudi Crown Prince Mohammed Bin Salman took advantage of the occasion to urge all OPEC+ members to join the oil production cuts. The Brent crude benchmark was up 1.7% this morning, trading at 75 dollars and 35 cents a barrel.
Gold continues to trade rangebound, at 2,030 an ounce.
Stay with us – after the break we look at how far crypto has come in political circles.
Welcome back!
Last night saw the fourth Republican presidential debate, which delivered the usual lineup of insults, one-liners and wacky claims. Crypto seemed to have a stronger presence than in previous editions, however.
This is worth highlighting because if you had told me a few years ago that in 2023 we would have presidential candidates from more than one party strongly advocating for cryptocurrencies, well, I would have raised a skeptical eyebrow.
Crypto does not seem to be at all a priority for two key figures in the Republican race. Not for Nikki Haley, who is now in second place, according to opinion polls. And not for frontrunner for the Republican nomination Donald Trump, who wasn’t even present. You may remember that a few years ago, Trump tweeted that he was not a fan of bitcoin.
But crypto does seem to be a topic of keen interest for Vivek Ramaswamy, who has presented the concept as necessary to ensure economic freedom for Americans.
When a moderator asked him whether his support for crypto was implicitly supporting fraudsters and terrorists, he responded that criminals have been defrauding people for a long time, and that the main problem was the current legal framework.
He lashed out at the treatment of crypto by SEC Chair Gary Gensler, saying that it was an embarrassment that Gensler could not say in front of Congress whether ether was a security or not. He also highlighted the power that unelected officials such as the SEC have under the current administration.
Candidate Ron DeSantis limited his crypto comments to a rant against the potential dangers of a retail central bank digital currency, saying that it would be the government’s way of removing financial privacy and controlling purchases.
Now, I’m not a political analyst and I’m not American. But the crypto posturing seen on the stage does not feel politically significant.
Practically, both Ramaswamy’s promise to reduce the scope of the SEC and DeSantis’ plan to try to ban CBDCs are likely to end up as ineffectual campaign promises that, in the unlikely event either actually win the nomination and then get elected, would be very difficult to implement.
However, that’s not really the point. What the candidates who talk about crypto are doing is triggering conversations that will help to further spread awareness of what cryptocurrencies really stand for: the American values of innovation, choice and independence.
It’s early in the election cycle still, and one thing we know is that things can change in politics. Meanwhile, I’m making popcorn because the discussions and debates are more interesting and more relevant than they may at first seem.
