SignalPlus Macro Research Report (20240119): GBTC Continues to Experience Outflows, Crypto Market Will Face Short-Term Selling Pressure

After a chaotic repricing of short-term yields the previous day, long-term yields also experienced repricing against the backdrop of strong real estate data, initial jobless claims hitting a one-year low, and issues related to bond supply digestion in European and American markets. The market reacted lukewarmly to the latest bond issuances from Spain and France, while approximately $35 billion in bonds have been issued this week so far from U.S. investment-grade corporates and SSA (supranational, sub-sovereign, and government agencies), dragging long-term yields up by about 6 basis points.

Initial jobless claims in the U.S. fell sharply to 187,000 (previous value was 202,000), marking the lowest point in over a year, and will serve as a reference for non-farm payroll data calculations. The data initially caught the market off guard, and subsequent releases of new housing starts and building permits also exceeded expectations, indicating that housing demand remains strong at the start of the new year, partly due to declining mortgage rates.

The stock market rebounded, driven by technology stocks, with TSMC expecting to return to "healthy growth" in 2024, boosting the Philadelphia Semiconductor Index. The company anticipates a 20% increase in revenue for the 2024 fiscal year and plans to invest $28 to $32 billion in its global expansion plans in Japan, Arizona, and Germany.

Additionally, later in the afternoon yesterday, Chinese stock indices also saw a rebound, with some large ETFs experiencing massive trading volumes, sparking market speculation that state funds may be entering the market to support and curb the recent decline. Several Chinese ETFs saw their trading volumes jump to the largest increase since 2015 (!!), while the CSI 300 Index also experienced a reversal of about 3% (from -1.8% to +1.4%).

In the cryptocurrency space, as GBTC funds continue to flow out and excitement over ETF approvals has waned, cryptocurrency prices have declined since the ETF launch. The reversal of GBTC's discount (falling back to -0.956%) also indicates some short-term selling pressure.

On a positive note, the Coinbase vs. SEC case seemed to favor the former during the oral arguments on Wednesday. Some commentators pointed out that the judge was very well-prepared, knowledgeable about the relevant issues, and had drafted over 14 pages of content for the hearing, being familiar with various cryptocurrency terms and technologies. Coinbase presented strong arguments that the cryptocurrency assets traded on its platform do not meet the elements of the Howey test, and there seems to be a general consensus that the tokens "themselves are not securities."

However, Judge Failla also appeared reluctant to dismiss the case purely on the "major questions doctrine" (major issues should be raised by Congress rather than agencies like the SEC), and the case may continue to develop, potentially taking several more months to reach a conclusion.

In short, this case seems to have a chance to become another victory against the SEC, although the delay may be longer than many hope.

(This article's views are for reference only and do not constitute any investment advice)