city silhouette

Weekly Commentary December 29th

Summarising weekly developments: Macro, TradFi, Crypto and Regulation...

Published in: One Trading · 5 min read
Summarising weekly developments: 1T, Macro, TradFi, Crypto and much more...

Happy Friday One Traders!

We hope you’ve had a great week and that you’ve had fun and some well-earned rest over the holiday season. 

It’s been a fantastic year for us- we spun out from Bitpanda and rebranded to One Trading. We successfully raised our Series A with over €30 million of investment led by Peter Thiels’s Valar Ventures, Speedinvest, MiddleGame Ventures, Keyrock and Wintermute.  We launched Instant Trade, which allows our customers to seamlessly trade a large selection of crypto-assets and fiat currencies at competitive prices. 

We’re on the cusp of launching our new spot trading venue, F.A.S.T., with support from AWS. This  is a next-generation trading venue using cutting-edge technology to lower the latency for the fastest order execution in the market as verified by AWS.

We’ve also been publishing blogs and this weekly newsletter, as well as setting up a Discord community to be able to share more regular updates and hear your feedback. So, if you’re not following us there, be sure to connect! You can find a list of our communities here

We have a lot of exciting plans for 2024 and beyond and we’re delighted to have you along on the journey and appreciate your support. In particular, we are under review for a MiFID II license, which would enable One Trading to offer regulated crypto derivatives to retail and institutionals. So there’s a lot to be excited about!To conclude our newsletter for the year, we’ve decided to mix up the format slightly and look back at some of the most notable events over the course of 2023. 

Before we dive in, a quick reminder that if you’re an existing customer and would like to invest in crypto over the holidays, you can trade seamlessly via Instant Trade here. If you’d like to know more about it first, you can watch a short summary video of our CEO, Josh, explaining the benefits. You can also read a summary of the product here and a comparison of the competitive prices we offer vs other platforms in our blog here

Let’s have a look back at 2023…

General Macro News

Beat from the street…(Tech/Business/Finance/Economy)

  • AI has seen major growth and increased capability in 2023. In response to the Chat GPT phenomenon, Google introduced Bard.A.AI. and more recently launched its largest and ‘most capable’ AI model, Gemini (CNBC).
  • Microsoft also took a significant step launching Bing Search Engine integrated with ChatGPT and Elon Musk has also released “Grok” (Analytics Vidhya). Launched by xAI, Grok's unique character stems from "The Hitchhiker’s Guide to the Galaxy," ensuring it possesses wit and dares to tackle audacious inquiries other AIs’ might shun.  (Promptbox).
  • Elon Musk’s Neuralink is also making progress. Neralink is committed to: Create a generalized brain interface to restore autonomy to those with unmet medical needs today and unlock human potential tomorrow - with potential advancements in human-machine collaboration, memory augmentation, and even the potential for merging human consciousness with advanced artificial intelligence (LinkedIn).
  • While there is a lot of fantastic innovation with AI, there is also concern around security, data use, ethical considerations and job displacement - a Goldman Sachs report concluded that AI could impact more than 300 million jobs in the coming years (Analytics Vidhya).
  • Businesses are adopting it, regulators are regulating it and techies continue to improve it. Debate will intensify over the best regulatory approach—and whether arguments over “existential risk” are a decoy that benefits incumbents. Unexpected uses and abuses will keep popping up. Worries abound about ai’s effect on jobs and potential for election meddling. Its biggest actual impact? Faster coding (The Economist).
  • Robots are also becoming more advanced with the likes of Boston Dynamics, Sanctuary and OpenAI-backed startup 1X all developing robots with incredible capabilities. The latter with robots capable of conducting experiments, working as bartenders, nurses and security guards (Analytics Vidhya).
  • The space race has also heated up. Seventy-seven countries now have space agencies; sixteen countries can launch payloads into space (CFR.org). SpaceX sent 23 Starlink satellites to orbit on the 90th Falcon launch of 2023 (Spaceflightnow) and Jeff Bezos' space company Blue Origin may try to launch its New Shepard rocket again having been grounded since September 2022 after a mid-flight failure. Blue Origin is competing with other companies, including Elon Musk's SpaceX, in the space tourism race (Business Insider).
  • Tesla’s Model Y has led the global sales in the EV market (again) in 2023, followed by the Model 3 (Visual Capitalist). 
  • China is the largest EV market globally (with 55% of global EV sales), followed by Europe (24%) and then the U.S. (13%) (Canalys).
  • While growing, EV's still make up a small portion of the global automotive industry. According to EIA, sales of hybrids, plug-in hybrids, and battery electric vehicles accounted for 15.8% of all new light-duty vehicle sales in the United States in 2023, compared with 12.3% in 2022 and 8.5% in 2021 (Utility Dive).

TradFi pulse:

  • US stock short sellers down $145 billion in 2023 - Ortex (Fin Watch).
  • Twitter/𝕏 acquired a money transmitter license across a total of ten U.S. states (TheStreet).
  • India overtook China as the world’s most populous country (CFR.org).
  • Global inflation looks set to cool but will likely remain above comfort levels at 3% (JPMorgan).
  • Global economic growth accelerated in the first half of 2023, hitting 2.8%. Until now, monetary tightening drags have been offset by fading supply shocks following the COVID-19 pandemic and Russia’s invasion of Ukraine. But since 2022, global policy rates have risen by almost 400 basis points (bps), which is impacting interest-sensitive spending and holding back factory output. Current momentum will not be enough to prevent growth moderation as the global economy’s resilience fades (JPMorgan).

Outlook for 2024

  • Finance - High interest rates may determine the success or failure of almost every part of the financial services sector in 2024. Though painful for borrowers, banks may enjoy strong net interest margins next year (EUI).
  • Automotive - The automotive industry could face another subdued year in 2024, potentially weighed down by slow consumer spending, high interest rates and disruption to supply chains due to geopolitical tensions (EUI).
  • Global Energy - Global energy consumption is estimated to grow by 1.8% in 2024, largely driven by strong demand in Asia. Despite still-high prices and unsolved supply chain disruptions, demand for fossil fuels will reach record levels, but demand for renewable energy is expected to rise by 11% (EUI).
  • Technology - Geopolitics will continue to affect technology in 2024. The tech battle between the US and China are prevalent in areas including AI, chips and quantum technologies. AI might receive further investment, but will encounter geopolitical and regulatory challenges (EUI).
  • Consumer Goods & Retail - There are reports that a slowdown in inflation would bolster retail volume growth by 6.7% in US dollar terms and 2% in volume terms in 2024. However, reduced savings and high food prices, worsened by the effects of climate change, will act as dampeners (EUI).
  • Recession looming? A synchronized global recession may be the consequence of persistently high inflation and further tightening (undermining the health of the private sector), hitting sometime before the end of 2024 (JPMorgan).
  • Global real GDP is forecasted to grow by 2.9 percent in 2023, down from 3.3 percent in 2022. Further slowing to 2.5 percent in 2024 is expected. Economic growth is weighed down by still high inflation and continued monetary policy tightening (The Conference Board).
  • Western economies did better than expected in 2023 but are not out of the woods yet, and interest rates staying “higher, for longer” will be painful for companies and consumers alike, even if recessions are avoided. (Keep an eye on the banks, and their exposure to commercial property, where things could go bad.) China may even fall into deflation (The Economist).

According to CNBC, Geopolitical risks will be the key threat not only in technology but also to the economic outlook for 2024, as large-scale wars converge with a slew of pivotal elections across major global powers.

As the world’s financial institutions map out the investment landscape for next year, they expect an increasingly fraught geopolitical backdrop and greater divergence across key regions, compounding uncertainty and market volatility.

“Globalization and persistently higher oil prices, both of which could be triggered by an intensification of geopolitical tensions, are also fairly prominent in the latest survey,” Oxford Economics researchers said.

The Wall Street giant’s asset management arm noted that concerns over government debt sustainability and the fiscal trajectory in the U.S. may mount in the run-up to the presidential election of next November, while domestic socioeconomic risks — such as strikes in certain industries amid stubbornly high inflation — could persist across major economies and further weigh on growth.

“Rising geopolitical tensions could trigger more trade restrictions across the globe, resulting in further economic fragmentation. We expect economies to continue to invest heavily in their economic security over the next 12 months and beyond,” GSAM strategists wrote (CNBC).

Crypto News

Over the last year, crypto markets have seen 7 big events (The Kobeissi Letter):

  1. Collapse of FTX, the largest fraud in recent history
  2. Collapse of the regional banking system
  3. $2 trillion bear market, its largest in history
  4. Over 500 lawsuits and regulation cases
  5. Multiple crypto lender bankruptcies
  6. Binance fined a record $4.3 billion by US regulators
  7. Increased calls for regulation around the globe 

  • PayPal launched a stablecoin, PYUSD (PayPal).
  • The Fed announced its new system for instant payments, the FedNow (Federal Reserve).
  • Governments all over the world have been testing CBDC’s (Atlantic Council).
  • The European Central Bank is on track to begin its pilot for the digital euro. Over 20 other countries will take steps towards piloting their CBDCs in 2023. Australia, Thailand and Russia intend to continue pilot testing. India and Brazil plan to launch in 2024 (Atlantic Council).
  • Asset Tokenization is well underway. On-chain analytics show that $3 billion in assets are already tokenized. We already see big firms (BNY Mellon, JP Morgan and BlackRock) tout tokenization projects, recognizing the efficiencies they can bring from a payment and settlement perspective. Peter Gaffney ​​from Security Token Advisors expects the tokenization industry to reach $16 Trillion by 2030 (CoinDesk).
  • Institutional involvement in cryptocurrencies increased significantly, particularly through a strategic pivot towards derivatives. The Chicago Mercantile Exchange (CME) led this trend, with notable peaks in open interest, signaling a growing institutional interest in crypto derivatives. Concurrently, investments in crypto-related products experienced a 150% surge in Assets under Management (AUM), indicating strong institutional demand despite market fluctuations.
  • Despite a decline in overall market caps for stablecoins, the Total Value Locked (TVL) in Real-World Asset (RWA) protocols experienced a 700% increase, underscoring significant institutional interest in blockchain applications beyond conventional financial uses. Furthermore, Central Bank Digital Currencies (CBDCs) saw heightened global interest, with an uptick in pilot programs, reflecting a shift in governmental attitudes towards digital currencies.
  • Following the FTX incident, the landscape of centralized cryptocurrency exchanges witnessed considerable changes, influenced by heightened regulatory scrutiny, especially of major entities like Binance (CCDATA Q4 2023 Outlook Report). 
  • The EU implemented the Markets in Crypto-Assets (MiCA) regulatory framework in April 2023, ushering in a new era of comprehensive crypto regulations within the region.
  • The Crypto-Asset Reporting Framework (CARF) and Common Reporting Standard (CRS) amendments gained prominence, with a broad consensus endorsed by the G20 
  • Institutional adoption of digital assets, particularly the crypto-assets Bitcoin and Ethereum has gained significant momentum. The shift in perception was marked by several exchange-traded funds (ETFs) applications of Bitcoin and Ethereum. Enabling regulated avenues for institutional investors to enter the market has signaled a broader acceptance and legitimacy within traditional financial institutions.
  • We have seen major players in the financial industry, including Blackrock, Fidelity Investments, BNY Mellon, JPMorgan Chase, Vanguard, Citigroup and many others, demonstrating growing interest in the digital assets space. This has proven to be a catalyst to the broader retail and institutional investors and has also helped as a form of advertising to the masses. 
  • BlackRock, the world's largest asset manager, partnered with Coinbase, enabling institutional clients to hold and trade crypto through BlackRock's investment management platform, Aladdin. BNY Mellon, one of America's oldest banks, also launched a service in October to hold crypto for clients.
  • Reports state traditional financial institutions, such as K.B. Financial Group, United Overseas Bank, Citigroup, Goldman Sachs, and Commonwealth Bank of Australia, have emerged as the most active investors in blockchain companies. This trend further highlighted the broader acceptance and recognition of the potential within blockchain technology by well-established players in the financial sector. Looking ahead, 2024 promises to be a year of significant innovations in the crypto space (The Economic Times).

American crypto asset management company, Bitwise, released their “bold predictions” for 2024 (Bitwise Investments). So take them with a grain of salt, and not as financial advice: 

  • Bitcoin to exceed $80,000
  • Spot Bitcoin ETFs will be approved
  • JP Morgan will tokenize a fund 
  • Ethereum revenue will more than double, Reaching $5 billion
  • AI assistants will use cryptocurrencies for online payments
  • Taylor Swift will launch NFTs
  • Ethereum transaction costs average below $0.01 
  • One in four financial advisors will allocate cryptocurrencies in client accounts.

Bitcoin Updates

Bitcoin (BTC) demonstrated remarkable resilience in the financial markets, recording a substantial 156% Year-To-Date (YTD) growth. This robust performance notably surpassed traditional financial benchmarks such as NASDAQ, S&P500, and Gold. Factors contributing to this growth include the pending approval of a spot Bitcoin ETF, alongside the emergence of new narratives like Ordinals and heightened on-chain activity (CCDATA Q4 2023 Outlook Report). 

Hash Rate:

  • Multiple records have been set in 2023. Bitcoin hashrate continues rising, now at 447 exahash per second, up 77% year-to-date (Archimed Capital).

Adoption:

  • The Number of Bitcoin addresses with non-zero balances just surpassed 50 million (Bitcoin Telegram).
  • Bitcoin has achieved a new all-time high of 1,022,000 addresses holding 1 or more Bitcoin (CryptoTradingReports).

Long Term Holders:

  • For the first time ever more than 30% of all the bitcoin in circulation hasn't moved in over 5 years (Wicked via X):

Price Predictions (not financial advice):

  • Macro Strategist Dan Tapiero Foresees Bitcoin Surging to Over $100,000 in Upcoming Bull Run (Crypto Crunch App).
  • Standard Chartered Bank stands by its prediction from April that Bitcoin will reach $100,000 by the end of 2024 -  An earlier-than-expected spot bitcoin ETF in the U.S. could be the key catalyst, said the bank (CoinDesk).
  • Samson Mow Predicts Bitcoin Hitting $1 Million, Citing Hal Finney’s Influence (Crypto Crunch App).
  • Vaneck CEO expects all Bitcoin ETFs to be approved at the same time (to avoid an unfair advantage from a policy perspective). He also expects to see a new all time high within the next 12-months. See the interview via the link (Radar via X).
  • Michael Saylor predicted one year ago 3 catalysts that will take Bitcoin to $5 million
  1. Spot ETF approval (possibly January 2024) - According to Bloomberg analyst JSeyff, BitcoinETF approval could be expected on Monday the 8th January, Tuesday the 9th, or, Wednesday the 10th January (X).
  2. Traditional bank custody of $BTC
  3. Fair value accounting rules from FASB 

Moreover, he said he would be shocked if it takes more than 36-months (Bitcoin Telegram).

Trading Highlights of The Year (at time of writing as per CoinGecko)

Top 5 Gainers and Losers (out of the top 100 by market cap only) - as always, this is not financial advice, and past performance is not a reliable indicator of future results.

(CoinGecko)

Thanks for reading! We’d like to pass on our best and sincere thanks from all of the One Trading team and wish you good health, happiness, and good fortune for the year ahead.

If you’ve enjoyed this newsletter and have found it informative please let us know via our social channels and feel free to share it with friends. For any new readers, welcome! You can subscribe for this weekly newsletter here.

Have a great weekend 😃 and for more updates, follow us across our various channels here. We’d especially love to see you and hear from you via our community channels; Discord and Telegram (English) Telegram (German) 👋

This material is for informational purposes only, and is not intended to provide legal, tax, financial, or investment advice. Past performance is not necessarily indicative of the future nor a reliable indicator of the likely performance of any investment. Recipients should consult their own advisors before making these types of decisions. One Trading has no responsibility or liability for any decision made or any other acts or omissions in connection with Recipient’s use of this material. 
In the United Kingdom, this communication may constitute a financial promotion for the purposes of the Financial Services and Markets Act 2000. Accordingly, it is issued only to, or directed only at, persons who are investment professionals within the meaning of Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "FPO").