Weekly Pulse #10: May 6th – 12th

Mark Vermeulen, 4 min read
Last Updated: 12 May, 2024

Crypto Market Weekly Recap

A Turbulent Week for Crypto Regulation and Policy

This past week saw several major developments at the intersection of crypto and politics, sparking heated debate.

It began with a congressional vote on a bill to overturn an SEC accounting bulletin requiring banks to classify crypto assets as liabilities. In an unprecedented move, the Biden administration publicly opposed the bipartisan bill just hours before the vote. Nevertheless, 21 House Democrats broke ranks to support the repeal, demonstrating crypto’s growing appeal across the political spectrum. The bill passed the House.

The political drama continued at a dinner event hosted by Donald Trump, where he explicitly endorsed crypto and criticized the Biden administration’s stance. Video captured Trump pledging support for the industry if elected in 2024, while attacking SEC Chair Gary Gensler.

Trump’s vocal support adds to the perception of crypto becoming a partisan issue aligned with Republican politics. However, Democrats have also championed crypto, and bipartisan support remains vital for the industry’s growth. Still, crypto may play an outsized role in the 2024 presidential race.

Surprise Recovery for FTX Claimants

In a shocking development, a draft restructuring plan for FTX showed creditors could recover around 118 cents on the dollar. The high recovery rate sparked a surge in claim buying from creditors concerned about tax liabilities and seeking to exit positions. FTX claims now trade between 101-112% as buyers bet on the upside.

Of course, as claims are denominated in Bitcoin’s current value, the raw recovery values remain lackluster for most. But for traders able to realize gains by selling claims, the developments represent a remarkable reversal of fortune.

Bitcoin Struggles to Sustain Momentum

Bitcoin faced selling pressure late last week despite starting around $63.5k. By Friday, it had fallen sharply to ~$60k, driven by disappointing economic data and over $56 million in liquidations. This week’s consumer price index release may further impact Bitcoin’s price. For now, bulls are struggling to regain control of the market.

Nigeria Holds Binance Executive

Tensions flared last week between Nigeria and Binance, the world’s largest crypto exchange. Binance CEO Richard Teng called for Nigeria to release a detained Binance executive, Tigran Gambaryan, sparking an international incident.

Nigeria banned crypto trading in its local currency earlier this year over currency control concerns. Binance alleges Nigeria demanded a $150 million ransom in crypto for Gambaryan’s release. The situation underscores growing geopolitical risks as crypto penetrates new markets globally.

The past week contained no shortage of crypto drama on both the political and economic front. While prices currently sit below recent highs, developments like the FTX payouts demonstrate the industry’s resilience despite market turmoil. Nevertheless, regulatory uncertainty persists, ensuring crypto’s path forward remains complex.

Legacy Markets Weekly Recap

Overview

Last week saw a rally in global stocks, driven by earnings optimism and economic data supporting interest rate cuts. The S&P 500 closed within 1% of its all-time high, while Treasury yields and the dollar remained stable. Key events that shaped markets included U.S. jobless claims data, upcoming inflation figures, Fed speeches, and earnings reports.

Stocks

Stocks Rally on Earnings and Economic Data

The Stoxx 600 index gained 0.9% last week, logging its best weekly performance in over three months. S&P 500 futures also rose 0.4% after the index nearly reclaimed its record high. The optimism stemmed from strong U.S. jobless claims data backing the case for rate cuts as well as earnings positivity.

Earnings Beats for Most Consumer Staples Stocks

The consumer staples sector saw earnings beats for 10 out of 12 S&P 500 companies, led by Coca-Cola and Kraft Heinz. The Consumer Staples Select Sector SPDR ETF (XLP) consequently rose during the week. However, Novo Nordisk stock declined 2.5% following its first-quarter report.

Apple Stock Surges 6% Post-Earnings

Apple shares jumped 6% after the company posted better-than-expected earnings despite a 4% revenue decrease. Analysts remain bullish given Apple’s record $110 billion share buyback plan. Our buybacks portfolio is worth a look.

Currencies

Yields Drop as Jobs Data Disappoints

U.S. Treasury yields dipped after April’s employment figures showed weaker job growth and a 3.9% unemployment rate. The 10-year yield declined to 4.5% as a result.

Dollar Gains Against Yen’s Volatility The Japanese yen whipsawed last week, surging to 160 against the dollar before retreating to 156 on suspected intervention. Estimates show Japan may have deployed $32.7-39.2 billion to curb excessive strengthening.

Commodities

Grains Rally on Global Crop Concerns Corn, soy, and wheat futures rallied to multi-month highs owing to supply issues from weather problems and disease in key exporters like Brazil, Argentina, and Russia.

Oil Extends Gains on Technical Tailwinds

Oil prices extended their 3-day winning streak, finding support at key technical markers. Investors continue monitoring geopolitics and global demand trends for further direction.

Gold Reclaims $2,370 Level

Gold prices bounced back above $2,370 an ounce as markets parsed the outlook for rates, risk asset sentiment, and the economy. Our technical analysis helps traders navigate shifts.

The Week Ahead

Earnings due this week include Disney and BP, while market-moving events feature Chinese trade data, Bank of England and Reserve Bank of Australia policy decisions, U.S. jobless claims, and Canadian jobs data. Disney’s attendance and profit trends will draw attention amid macro uncertainty, while BP faces scrutiny on cash returns and costs.

This week’s rally brought several key indexes near record highs on the back of earnings and data boosting the case for accommodative policy. Treasury yields declined in response, while commodities wrestled with weather and supply problems. Upcoming figures on jobs, trade, and inflation should spur further positioning across currencies and equities. Our research helps guide traders on technical and fundamental shifts.

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.