Daily Market Update: Apr 25, 2023

April 25, 2023

BTC is currently trading around $27,300 and ETH around $1,800. Notable gainers in the last 24 hours are INJ, KAS, and CHZ. The global crypto market cap is ~$1.20T, down ~1.4% over the last day. DeFi Total Value Locked is ~$48b and BTC dominance is around 47%.

Markets are down slightly on a mixed bag of earnings thus far. First Republic was a notably negative standout as the struggling regional bank provided a very brief update and did not allow for any Q&A. The stock fell ~27% this morning as its $100b plunge in Q1 deposits was worse than expected, and weak management signaling did little to reassure investors. Investors now wait for Microsoft, Google, and Visa as today’s headline reports after the close.

Separately, the topic of the U.S. debt ceiling presents an interesting and potentially precarious situation worth calling attention to. The U.S. government reached its borrowing limit earlier in January and has been relying on “extraordinary measures” to manage its cash flow in the absence of new treasury issuance. As a result, the Treasury’s cash balance has been dwindling this year, and markets have begun to display their concerns as funds are expected to run dry by June. Additionally, a divided Congress will make the prospect of a debt ceiling hike particularly challenging for Democrats unless material concessions are offered. Markets have begun to display their concerns via skyrocketing credit default swap spreads – a measure of the cost of insuring against a U.S. government default – as well as in the 1M vs. 3M T-Bill yield spread (~3.4% vs ~5.1%). The latter of which has steepened by nearly ~170 bps this month as investors have piled into 1M T-Bills that will expire before government funds are expected to be exhausted, pushing up the price of 1M T-Bills and decreasing their yield.

Notable news includes: Genesis’s creditors reportedly renegged on the agreed upon restructuring deal, throwing the month’s long bankruptcy process into turmoil; Coinbase filed an action in U.S. federal court seeking to compel the SEC to provide a “yes or no” response to 50 questions about the regulatory treatment of certain digital assets; Bybit will introduce mandatory KYC requirements beginning in early May; Coinbase CEO Brian Armstrong backed the ‘Stand With Crypto’ NFT campaign that will see proceeds accrue to vetted crypto lobbying and educational organizations; a new Visa job posting for a crypto product role sought knowledge of Ethereum account abstraction (ERC-4337); NFT insider trading case against a former OpenSea product manager kicked off in NY district court; Bitcoin Twitter has become spooked after at least four presumably lost whale wallets have recently moved large amounts of BTC that has yet to be explained; new staked ETH deposits more than offset withdrawals as the third sweep through the withdrawal queue began; Arbitrum initiated its token distribution to ecosystem DAOs; and, Terra co-founder Daniel Shin was indicted by South Korea on violations of capital market rules.

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Matt Kunke, Research Analyst | TwitterTelegramLinkedIn
Brian Rudick, Senior Strategist | TwitterTelegramLinkedIn

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