Invictus Capital: Weekly Wrap 18.06

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Market News

This week saw the much-anticipated quarterly FOMC statement from the Fed’s Jerome Powell. After last week’s slump in bond yields — despite the high inflation reading — it appears as if the Fed has used this opportunity to tone down the dovishness on display at previous meetings. The new consensus amongst committee members (as measured by the dot plot) now sees tighter financial conditions in 2023, with two rate hikes pencilled in, up from one in March. In the wake of the announcement, US bond yields spiked sharply, but have since retraced most of the move. While inflation expectations also picked up, these were outpaced by the rise in yields, with real yields ticking up significantly over the week. The dollar benefitted from a combination of heightened safe-haven demand and higher yields driving capital flows into the US. Equities and gold both slumped under the weight of higher yields and a stronger dollar — however the markets held up well all things considered, though the path forward is just as murky as ever.

This uncertainty spilled over into the crypto markets, evidenced by boiling market volatility this week, despite Bitcoin closing up. The looming death cross (a cross-over of the 200- and 50-day moving averages) adds fuel to the argument for a potential sharp downturn as Bitcoin fails to break cleanly above the 42k level of resistance.

On the institutional front, Wells Fargo Wealth & Investment Management, which manages around $2 trillion in assets, showed an evolution in their stance on crypto with the announcement of a new cryptoasset investment platform offering for qualified investors. MicroStrategy also filed to issue $1 billion worth of shares this Monday in pursuit of funding even more Bitcoin accumulation for the largest corporate holder of Bitcoin. Furthermore, in what is unofficially referred to as “the great mining migration”, more than half of China’s Bitcoin miners are now looking elsewhere to set up shop after China began cracking down on mining operations and retail trading. In a similar vein, Pieter Hasekamp, director of the Dutch Bureau for Economic Analysis, broke headlines with the release of an essay titled “The Netherlands must ban Bitcoin”. Claiming that the asset has no intrinsic value. However, the Dutch finance minister Wopke Hoekstra confidently contends that supervision is far more effective than purely banning Bitcoin.

The week also saw Mark Cuban, reputable billionaire investor and owner of the NBA team Dallas Mavericks, find himself among the likes of many uninformed retail investors in falling victim to the Iron Finance stablecoin protocol’s collapse. Cuban has called for more stablecoin regulation after Iron’s native token TITAN plummeted from $64 to near zero in what is informally known as the ‘Cuban Missile Crisis’.

Indicators (11 — 18 June)

Invictus Crypto Vault

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Our highly competitive interest rates are open to qualifying individuals willing to lend crypto to Invictus for a fixed duration.

Read the article here.

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