Invictus Capital: Weekly Wrap 09.07
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Market News
Bearish sentiment once again prevailed in crypto markets despite a bullish weekend, with Bitcoin dipping to around $32k — driven by weak macro sentiment (see below) and yet another announcement from Chinese regulators; this time that the People’s Bank of China has ordered the shutdown of a Beijing-based software maker suspected of crypto trading — continuing the country’s nationwide anti-crypto campaign. In keeping with the government FUD trend of the last couple of weeks, Thailand and the Cayman Islands each also announced different crackdowns on Binance. Despite this, the fierce support at $30k continues to hold up. Notably, the amount of Bitcoin held on exchanges is now at a 6-month low, potentially signalling that institutional accumulation continues.
The newsflow also suggests rapid mainstream adoption continues, with VISA’s crypto-linked card service being revealed to have generated $1 billion worth of crypto card transactions in the last 6 months from the 400,000-large user base. Furthermore, Crypto.com, has collaborated with the UFC in a $175 million partnership that will showcase the crypto exchange’s brand worldwide. Finally, Circle, the providers of stablecoin USDC, announced they would become the second largest crypto company to go public following the Coinbase IPO, with Circle opting for a SPAC (Special Purpose Acquisition Vehicle) reverse listing — the first crypto company to jump on the craze. Circle targets a post-deal valuation of $4.5 billion.
In traditional markets, global equities underwent a sell-off this past week as risk-off sentiment flourished on the back of disappointing US manufacturing data and uncertainty in oil markets generated by turmoil amongst OPEC members. Market uncertainty was further stoked by threats of a Chinese crackdown on foreign listings of Chinese companies, and the results of an ECB strategy review in which a new inflation target of 2% was set (as opposed to the previous “close to, but below 2%”). While adding to uncertainty, the latter dovish move is likely a positive development for risk assets, even if the region has failed to meet its inflation target in over a decade.
While stocks generally suffered, US exceptionalism continued with the S&P500 flat as a result of tech stock strength that saw the Nasdaq up on the week. Gold was a standout performer as it reclaimed the $1,800 level helped by dollar weakness and declining bond yields.
The oil debacle is one to watch closely, as it has great implications for the future path of global inflation. The UAE is upset with unofficial leader Saudi Arabia because they feel their output is being unfairly restrained as a result of their official production capacity being measured by now-outdated data, with added gripes over the fact that OPEC ally Russia has not been meeting their production restraint pledges. Oil prices are up as a result of the failure to reach agreement on increased production quotas, however, should the disagreement spiral out of control and result in a collapse of the OPEC cartel, the trajectory for medium term oil prices is certainly down.
Indicators (2 July— 9 July)
- Invictus Margin Lending (IML): $1.26, +5.25% (weekly compound annualized rate)
- Invictus Gold Plus (IGP): $1.11, +1.40%
- Emerging Markets Solar (EMS): $1.28, +0.07%
- Crypto10 Hedged (C10): $5.61, +1.06%
- Crypto20 (C20): $2.80, -1.72%
- Invictus Bitcoin Alpha (IBA): $1.81, -3.04%
- Invictus Hyperion Fund (IHF): $0.248 (Updated Q1–21)
- BTC: $32,859.11, -2.18%
- ETH: $2,120.39, +0.22%
- GOLD: $1,804.24, +1.62%
- S&P500: 4,320.82, +0.02%
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Other News & Links
- Invictus in the Press/News
1. Invictus blog: The Invictus Yield Vault: Bounds Ahead of the Competition - OPEC agreement at risk as UAE prepares to open the taps
- Digital currency company Circle to go public via SPAC at $4.5 billion valuation
- Syntropy News
1. Recap of the DeWeb Virtual Hackathon 2021 - Visa says crypto-linked card usage tops $1 billion in first half of 2021
- Crypto.com extends sponsorship drive with UFC partnership
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