CCM Blockchain Markets Newsletter (November 2023)
Cohen & Company Capital Markets
A full-service, boutique investment bank with differentiated product expertise and bulge bracket DNA
Since our last newsletter in early October, the price of BTC has moved from ~$26k to ~$36k today, or ~38%. Executives and investors that we speak to daily are excited about the current environment and what’s to come in the near-term. Let’s double click on what’s driving market sentiment and what could potentially dampen the excitement.
NABS CONFERENCE IN DALLAS: If you’ll be at the North American Blockchain Summit this week, let’s catch up! I’ll be there Thursday – Friday
Spot Bitcoin ETF Approval in Sight
The Landscape: There are 12 applications for spot BTC ETFs with the SEC, including from major players like Blackrock, Wisdom Tree, and Franklin Templeton. The SEC has until January 10th to approve or reject the applications.
Past and Present: Despite previous denials and delays by the SEC, recent court rulings against the SEC's decisions (see: Grayscale) have increased pressure for approval. However, the presence of a potential government shutdown has some industry participants worried that it could further delay the process.
Signs of Progress: Speaking of Grayscale, CoinDesk reported that the SEC initiated talks with Grayscale on its attempts to convert their BTC trust into a spot Bitcoin ETF. “Grayscale has been in contact with both the SEC's Division of Trading and Markets and the Division of Corporation Finance since winning its court fight”.
Implications: Approval of an ETF would enable institutional assets, who currently have difficulty investing directly in BTC, to flow into the asset class (Essentially, the a spot BTC ETF means that institutions and traditional investors will be able to invest in Bitcoin as an asset class without the technical of barriers set up a wallet or exchange account).?Industry pundits often draw comparisons to the launch of the first ever gold ETF in 2006, which saw a 250% increase over the span of 5 years.
Bitcoin Halving Event
The Cycle: Occurring every four years, the issuance of new BTC will be cut in half in what is known as the “halving”. The next bitcoin halving is expected to occur in April/May 2024 where the block reward will be cut from 6.25 to 3.125 BTC per block. Since BTC’s inception, the halving has been a significant catalyst for price appreciation.
Historical Trends: Past cycles have consistently led to significant price increases, with the market setting higher lows than in previous cycles.
Geopolitics and Inflationary Pressures
At a Crossroads: Amidst rising geopolitical instability and as central banks have responded to inflationary pressures by raising interest rates to their highest levels in two decades, there's a re-emerging interest in bitcoin as a safe-haven asset.
Economic Factors: Despite the Fed raising rates, the US government and the Fed find themselves in a delicate balancing act. The continued deficit spending by the US government fuels the need to borrow even more to fund the budget deficit, which is further exacerbated by high interest rates and the ensuing interest payments.
Industry Insight: The Fed’s attempt to cool inflation by raising rates may be causing monetary debasement by forcing the government to borrow more just to pay interest payments. Investors are now steering capital towards traditionally safe assets, including potentially bitcoin.
领英推荐
He said that? Blackrock CEO Larry Fink recently referred to the BTC rally as a “flight to quality,” likening it to “digital gold” in the context of current global conflicts.
Capital Markets Update ??:
Highlighted Deals:
Other Top Nuggets:
Thanks - feel free to shoot me a note. Always happy to chat and share industry insights.
Christian J. Lopez ?- Head of Blockchain
(m)?646.863.0924 | (e)?[email protected] | (w)?https://www.cohencm.com?