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Welcome to BRC’s Breakdown.
Last week was somber, to say the least. The United States was in Thanksgiving and then Black Friday fever and the Indian markets were recovering from the Diwali wave. In keeping with their respective geographies, the American and Indian markets were collectively up, but not by much.
First, let’s see how the markets fared this week:
Value based on Markets Close On Friday, November 24
Green across the board, but not by much for – equities, bond yields, commodities or currencies. The biggest gainer of the week was Ethereum, the second larger crypto due to rampant activity on the blockchain.
Here’s a preview of what we’ll cover:
Macro: US Markets Shortened, Not Crypto Though
Around The World: India’s Festive Sales The Focus
Crypto The Bitcoin ETF Is Bad For This Bitcoin Asset Manager
AI: Elon’s Chat GPT Competitor Coming Soon
Macro: US Markets Shortened, Not Crypto Though
In the US, the holiday-shortened week saw equities continue to edge up with tech stocks lagging. The S&P500 is up 8.72% so far in November, pushing YTD gains to 18.75%. Indian equities were broadly flat for the week.
Bond yields increased globally, with both US & India 10-year yields increasing 3 bps for the week.
Crypto prices were broadly rangebound with Ethereum outperforming. Bitcoin briefly crossed $38,000, its highest level since April 2022.
Daily price of BTC and ETH [in USD terms] in the past 2 years
Source: Trading View
Around The World: India’s Festive Sales The Focus
Indian assembly election exit poll results will be a key factor in the coming week.
On the economic front, vehicle sales in India will give an indication of how the Diwali festival season shaped up. Based on last month’s data, sales in the personal vehicle segment (primarily two-wheelers and four-wheelers) have lagged last year’s mark. Two-wheeler sales fell by 12% and four-wheeler sales by 1.4%.
The Bitcoin ETF Is Bad For This Bitcoin Asset Manager
The Bitcoin ETF is all any institutional investor interested in digital assets talks about. And one applicant for the Bitcoin ETF could see a two billion outflow if their ETF is approved.
Grayscale, a well-known digital assets manager, has an investment fund that’s popular among institutional investors – the GBTC or the Grayscale Bitcoin Trust. The asset manager wants to convert this fund into an ETF and has submitted a proposal to the Securities and Exchange Commission (SEC) for the same.
Source: Ycharts
Between 2021 and 2023, GBTC shares traded at a discount to the fund’s net asset value (NAV). This discount was as high as 50% to the NAV earlier this year. However, due to Grayscale’s move to convert the fund to an ETF, the discount has narrowed to less than 10%
The discount between the GBTC shares and the NAV of the fund is because the GBTC shares cannot immediately be redemmed for an equivalent number of Bitcoin. To redeem the dollar value of these shares, investors need to sell them to other prospective buyers. During heightened demand for Bitcoin (2020-2021), these shares traded at a premium.
JP Morgan analysts estimate that GBTC shares worth $2.7 billion were bought during the deep discount days. The bank’s analysts further add that this buying interest was because of Grayscale’s ETF ambitions. If these ambitions turn out to be correct, investors would take profits on $2.7 billion worth of GBTC. In other words, this would be a capital outflow from Bitcoin.
Interesting times are ahead for institutional investors who hold their Bitcoin indirectly through asset managers.
Elon’s Chat GPT Competitor Coming Soon
The second richest man in the world is launching a chatbot competitor to ChatGPT. Elon Musk’s new company xAI is set to launch Grok, an AI chatbot built on top of X (formerly Twitter).
Grok’s main differentiator over Chat GPT is – distribution and discovery.
Distribution: All X users will have direct access to Grok as a separate tab within the social media app
Discovery: Grok’s intelligence farming will happen directly through X i.e. through people’s feeds
Given that X already has a subscription plan, Grok will be bundled with X in a $ 16-a-month subscription.
Top Headlines Of The Week:
