Weekly Pulse #8: April 22nd – 28th

Mark Vermeulen, 3 min read
Last Updated: 29 April, 2024

Crypto Market Weekly Summary

SEC & FBI Launch Assault on Crypto

It was a bold week for the U.S. government’s overreach in going after the crypto industry.

As the SEC guns for Ethereum, declaring it a security, Consensys struck back with a lawsuit to counteract the SEC’s overreach. This came amid their disclosure that Consensys had received a Wells Notice from the SEC claiming Metamask operates as an unregistered securities exchange.

Everything happens at once, it seems, with the FBI also issuing a warning, urging Americans only to use crypto services registered as Money Services Businesses under federal law — i.e. No self-custodial services. The government recently seems to have accelerated its war on crypto and privacy overall to the extent that even courts have called their behavior in crypto cases a “gross abuse of power.”

Franklin Templeton’s Onchain Fund

In more positive news, Franklin Templeton, the asset manager known for their crypto-friendly stance on Twitter, announced on Thursday the launch of an onchain money market fund.

Sized at $380M, the Franklin OnChain U.S. Government Money Fund has now been enabled on both Stellar and Polygon blockchains, with its BENJI token representing a direct claim on government securities, cash, and repurchase agreements. This innovative fund signals the continued maturation of DeFi infrastructure.

DOJ Wants CZ to Serve 3 Years

The legal woes for Binance’s former CEO, Changpeng Zhao, have escalated as the U.S. Department of Justice pushes for a three-year prison sentence over allegations of sanction violations and anti-money laundering failures at the exchange.

Despite CZ’s defense claiming ignorance of the particular transactions flagged, the prosecution argues that his oversight led to significant compliance failures for which he must be held responsible.

In response, CZ issued a heartfelt apology letter, expressing commitment to correcting the compliance shortcomings at Binance. Additionally, 161 letters from family, friends, and influential figures, such as the former U.S. Ambassador to China and members of the ruling family of the United Arab Emirates, supported his plea for a lessened sentence.

Stripe Announces Crypto Push

Fintech titan Stripe announced its reentry into crypto payments, demoing its upcoming support for USDC on Solana, Ethereum, and Polygon.

Stripe aims to position crypto as a viable medium of exchange by leveraging improved transaction speeds and reduced costs — (Solana, cough cough) — underscoring its belief in crypto’s maturing infrastructure and its potential to streamline online payments.

This move signals a significant endorsement of stablecoin utility in bridging Tradfi with crypto.

Legacy Markets

Major Index Performance

The S&P 500 rose over 3% last week, marking its best performance since November 2021. Gains were driven by strong earnings reports from major tech companies like Microsoft and Alphabet. The tech-heavy Nasdaq saw an even larger jump of almost 4% for the week. Meanwhile, the Dow Jones Industrial Average lagged slightly behind, rising just under 3%.

Key Market Drivers

Robust earnings reports boosted investor sentiment after recent concerns over high inflation and rising interest rates. Microsoft and Alphabet both reported earnings and revenues that handily beat expectations, largely driven by the strong performance of their cloud computing and AI initiatives.

However, reactions were mixed for other major companies reporting earnings. While the likes of Skechers and Snap saw their shares surge on better-than-expected results, Intel and Exxon Mobil disappointed investors with weaker outlooks.

On the economic front, newly released GDP data showed inflation accelerating to a 40-year high annual rate of 3.4%. This has intensified worries that the Fed may need to raise rates more aggressively to tame rising prices.

Winners and Losers

Among the S&P 500, clear winners this last were Microsoft and Alphabet. Microsoft’s shares jumped over 7% while Alphabet’s were up close to 10%. Strong growth in their cloud and AI units led both tech giants to smash earnings expectations. Cloud rival Amazon also gained almost 5% heading into its own earnings report this week.

On the flip side, energy giant Exxon Mobil dropped around 3% after missing Q1 profit forecasts on surging operating costs. Chipmaker Intel plunged over 12% to a two-year low after issuing a downbeat full-year revenue outlook amidst production delays. Roku also tumbled 10% as user growth slowed despite an earnings beat.

Global Spotlight

Across global markets, the Japanese yen hit lows against the dollar not seen since 1998. The yawning gap in monetary policy between an ultra-dovish Bank of Japan and a hawkish Federal Reserve continues to batter the yen. There is growing speculation that Japan may intervene directly in currency markets to support the struggling yen.

In Europe, the region-wide Stoxx 600 index rose almost 1% for the week, led by a near 2% jump in technology shares. Strong earnings from the likes of Spotify and STMicroelectronics helped boost the sector. Meanwhile in commodities, cocoa prices experienced extreme volatility last week, with supply tightness exacerbating already unstable markets.

The Road Ahead

All eyes are now on the Federal Reserve’s policy meeting this week, where more details on their approach to taming inflation are hotly anticipated. Key consumer spending and sentiment data will also provide insight into how higher prices are impacting average Americans.

In corporate earnings, Apple and Amazon will be the highlights. With Apple struggling amid supply shortages, its Q2 results and forward guidance will significantly sway its near-term outlook. Amazon’s thriving cloud business is expected to lead profitable growth, but investors want color on slowing e-commerce trends.

Mark Vermeulen

A native of the Netherlands with a degree in finance, Mark has emerged as an avid crypto enthusiast and expert. His dedication to blockchain technology and bitcoin adoption has made him the driving force behind the Dutch content of Ecoinomy. Mark's adventure began during college, where his passion for decentralized finance quickly caught his eye. His ability to simplify complex concepts around crypto has earned him prestige among Dutch investors and far beyond.