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Crypto dominates price action
Headline this week:
Last week was all about crypto as volatility in the traditional asset classes paled by comparison. S&P 500’s volatility index (VIX) is back above the 20 levels but Bitcoin’s volatility over the last month is almost five times that. In the past week, Bitcoin has fallen from around the 50k level to around 35k level now (close to a 30% decline) with some wild swings along the way.
The recent peak of around 63k was hit right around the time of Coinbase’s IPO. Twitter appears to have significant influence over price action with Elon Musk and Cathie Wood (ARK) probably moving the market the most. Despite the increase in near term volatility and regulatory scrutiny, one fact that is undeniable is Crypto’s increasing significance as an asset class – both on institutional trading infrastructure and portfolio allocation. A case in point would be speakers like Ray Dalio and Fed Governor Lael Bainard at Coinbase’s conference this week. Whether it manages to eventually become acceptable as currency (rather than a speculative asset) remains to be seen.
It was a relatively quiet week in markets elsewhere – equities were mostly range-bound and unchanged on the week. The US 10Y yield remains firmly in the 1.6-1.7% range with inflation expectations coming off a little. Gold continued to trend higher, heading towards the 1900 level now. Oil was lower for most of the week but closed higher on Friday with new Iran supply expected to hit the market sometime in the next month. The US secretary of state Anthony Blinken stated that they would have no problem rejoining the 2015 Iran Nuclear Agreement and that would lift current US sanctions on Iran as well.
The vaccination drive appears to be on track globally, despite the recent resurgence of the virus in parts of Asia. The UK has seen positive data around the effectiveness of vaccines against the India variant and the reopening of the economy remains on track. Australia announced it should have enough doses to vaccinate the entire population by the end of the year. Limited economic data out this week and the highlight is the Reserve Bank of New Zealand (RBNZ) rate decision – expected to hold on Wednesday.
This blog article has not been reviewed by the MAS. It is prepared solely for information purposes and does not constitute an offer or solicitation for the purchase or sale of units in the funds. This does not constitute any form of investment advice and Kristal Advisors (SG) Pte Ltd does not take into account your personal investment objectives, specific investment goals, specific needs, or financial situation and makes no representation and assumes no liability to the accuracy or completeness of the information provided here. The information and publications are not intended to be and do not constitute financial advice, investment advice, trading advice or any other advice or recommendation of any sort offered or endorsed by Kristal Advisors (SG) Pte Ltd.
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