Right Time for Bitcoin ETF?
Author: Marco Santanche
USD falls after CPI surprise
The dollar fell after US CPI data yesterday. All the major currencies are trading at higher levels against the dollar: since Monday USDCHF has lost 3.3%, EURUSD has gained 1.8%, USDCAD has lost 1.5%, and GBPUSD has gained 1.5%. And the same move has been seen generally across all currencies.
The move seems to be an overreaction to positive sentiment following a lower-than-expected CPI (3.0% compared with an expected 3.1% YoY), the lowest level since February 2021. Crypto and gold were also at highs.
While the CPI data is definitely encouraging, it still seems unlikely that the Federal Reserve will completely stop their hiking campaign, or even slow it down further. Another hike is expected on the policy side by the end of this year, and geopolitical risks (China) still cast a shadow on this year's performance.
However, regardless of the hiking cycle being finished, the outlook for markets in general this year remains positive and bullish.
Bitcoin ETF - the right time?
Jacobi Asset Management, a London-based multi-asset platform, is going to release the first EU Bitcoin ETF about a year after the scheduled date.
The crash of Terra and the liquidity drought that followed delayed the launch, which was planned for July 22, and further delays followed with the collapse of FTX.
The current market, however, shows more interest in the product, and the YTD performance of BTC (88.87% up as of July 13) does help. Is this the right time to launch a BTC/USD ETF?
By coincidence, the Chicago Mercantile Exchange (CME) is also listing an ETH/BTC futures contract to allow investors to profit from the relative moves of the two main cryptocurrencies by market capitalization.
Momentum is picking up again in the digital asset space, but risks remain on the horizon, with Binance (marking its 6th year this week) losing a major portion of its management due to allegations from the SEC, and other collateral issues (concerns surrounding Arkham's data-collection practices).
Although the picture remains positive here as well, the risk is probably much bigger than in other spaces, as has often been the case.
Saudi Arabia's plan to lessen oil dependence
Many sports fans might have noticed how Saudi Arabia is heavily investing in sports, football being the first. This is in line with a national strategic development plan, "Vision 2030", which aims to reduce the country's dependence on oil.
But the Public Investment Fund (PIF) has been recording huge losses, amounting to $11bn in 2022. Oil dependence remains strong, and since prices are cooling down, the outlook does not seem to be very positive over the short term, especially since it is a struggle to attract foreign investors.
What is next for the PIF? The plan will still need time to develop, and holdings are in health, education and entertainment above all. A sector the fund has been strongly investing in is gaming, including Japanese company Nintendo. But dependence on oil exports makes it vulnerable to Russia's manipulation of their supply on the market, and this is probably the most negative contribution to their portfolio.
The road is still long before the country can truly become independent from its commodities business.
This content is for educational purposes only and is NOT financial advice. Before acting on any information you must consult with your financial advisor.