Weekly Pulse #9: April 29th – May 5th

Mark Vermeulen, 3 min read
Last Updated: 6 May, 2024

Crypto Market Weekly Summary

Overview

Major stories this week included:

  • 4-month sentence for former Binance CEO Changpeng Zhao
  • ETF outflows
  • Bitcoin rebounding after a shaky week
  • a blowout earnings report from Coinbase

CZ Receives 4-month Sentence

The crypto industry faced increased legal scrutiny, with major figures receiving convictions or charges for alleged wrongdoing.

Changpeng Zhao (CZ), former Binance CEO, received a 4-month prison sentence for money laundering charges this week. Despite initially facing a 36-month sentence, CZ’s positive reputation and support from the crypto community likely contributed to the lenient ruling. The outcome demonstrates crypto leaders are not above the law, but goodwill can still pay dividends.

Bitcoin Price

Action Bitcoin experienced volatility this week, with prices dropping below $56k briefly before recovering towards $63k.

ETF Outflows

Precede Drop Earlier in the week, a record $534 million exited US spot bitcoin ETFs, likely contributing to bitcoin’s dip below $56k. However, the price drop appears relatively contained, especially considering the news.

Macroeconomic Factors In Play

Bitcoin’s rebound aligns with recent employment data missing expectations. With signs that rate hikes are slowing the economy as intended, the Fed could moderate tightening policies that have pressured crypto prices. Still, continued monitoring of macro conditions remains prudent.

ETFs Launch Strong in Hong Kong

This week also saw new Bitcoin and Ethereum ETFs launch in Hong Kong, gathering $292 million in assets rapidly. The successful debuts showcase crypto’s continued momentum in Asia.

Coinbase Crushes Expectations

Despite Wall Street doubts, Coinbase delivered extremely strong Q1 earnings results this week.

Revenue Soars Coinbase generated $1.64 billion in revenue for Q1 2023, handily beating expectations of $1.36 billion. The 112% year-over-year growth demonstrates crypto market expansion continues fueling the company’s ascent.

Income Hits New Highs With Q1 2023 profits of $1.17 billion, Coinbase achieved record net income, reversing last year’s net loss of $79 million. The impressive earnings beat even the most bullish Wall Street predictions.

Retail Adoption Still Lagging

While undeniably positive, Coinbase’s earnings largely stem from volatile crypto prices rather than retail adoption. Mainstream crypto integration remains gradual, signaling substantial long-term growth potential still lies ahead.

The Bottom Line

This week’s developments highlighted increasing oversight of the crypto industry alongside its continued expansion. Bitcoin and Coinbase showed strength despite legal troubles and Wall Street pessimism. Of course, risks remain, but measured optimism seems appropriate given recent resilience. The road ahead likely contains both hurdles and opportunities.

Legacy Markets

Markets Rally on Tech Optimism Before Jobs Data

Stocks climbed higher this week ahead of Friday’s U.S. jobs report, with optimism fueled by Apple’s strong earnings. Pre-market on Friday, Apple shares rose over 6% after announcing record stock buybacks and upbeat guidance, lifting tech stocks and broad market futures.

The S&P 500 and Nasdaq 100 futures indicated a higher open, following the lead of Europe’s Stoxx 600 index which also edged up. Market drivers included a dip in the U.S. dollar and steady Treasuries, while investors looked ahead to the critical April jobs figures, expecting a slowdown in hiring gains.

With stagflation risks in focus, markets could see volatility if the data disappoints. Bank of America analysts warned that weaker jobs growth could derail the economic outlook. The upcoming jobs and ISM services reports will influence rate hike expectations.

Solid Earnings Lift Stocks

A busy week of corporate earnings saw mostly upbeat reports from big tech and consumer staples companies. Apple led the pack after fiscal Q2 profits topped views despite a slight revenue drop. The tech giant also announced a $90 billion share buyback, its largest ever.

Meanwhile, Coca-Cola and Kraft Heinz posted estimate-beating earnings, joining 10 out of 12 consumer staples companies in the S&P 500 that exceeded Q1 consensus. While sectors like communication services and industrials fell short generally, stocks were underpinned by solid results.

Elsewhere, Novo Nordisk shares declined after the drugmaker’s earnings call spurred competitive concerns. Credit Agricole and Societe Generale rallied on surging profits, although Danske Bank slipped lower on softer net interest income.

Buybacks in Focus

Warren Buffett’s Berkshire Hathaway was also in focus, revealing it trimmed its Apple stake by 22% last quarter. However, the conglomerate remains bullish on Apple based on strong operating performance and record buybacks. Apple’s own massive repurchase plan underscores its buyback firepower.

Meanwhile, surging commodity prices supported materials and energy stocks. Dry weather and supply shortages lifted corn, soybean and wheat futures throughout the week. However, treasury yields dipped Friday as markets weighed an uptick in the U.S. unemployment rate against slower job additions.

Event Risks Loom

Next week’s calendar brings further event risks, including the RBA and BoE policy meetings. While rates are seen on hold, any hints of further tightening could spur volatility. Meanwhile China’s April trade figures may show an export rebound as Shanghai’s lockdown eases.

On the earnings front, Disney’s Q2 results are in focus along with BP’s Q1 announcement. Disney faces downside risks from falling consumer sentiment, while BP contends with margin pressures from lower oil prices. Reports from Uber, Airbnb and other travel-exposed firms will also draw attention.

Earnings Spotlight

Notable companies reporting earnings next week include:

Tuesday: Disney, Electronic Arts, Coupang

Wednesday: Uber, Anheuser-Busch, Airbnb, Shopify

Thursday: Warner Bros. Discovery, Roblox, Nippon Steel

Friday: AMC Networks, Enbridge

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.