Germany Begins Selling Its Bitcoin Billions, Triggering Volatility Fears

Cryptocurrency

Summary:

The German government is starting to sell off its stockpile of over $3 billion in seized Bitcoin, says Arkham. Will it tank the market?

The German government is starting to sell its sizable stash of Bitcoin that was seized from the operators of a movie piracy website, sparking concerns about its potential impact on the cryptocurrency market.

The government has apparently sold over $195 million in BTC within the past 24 hours, according to blockchain analytics firm Arkham, and had moved around even larger sums on Wednesday between multiple wallets.

This significant move follows a recent pattern of large-scale Bitcoin transactions initiated by German authorities, with substantial amounts being funneled to major exchanges such as Coinbase, Kraken, and Bitstamp. That could suggest even more selling to come.

In the latest transactions, the German government transferred $65 million worth of BTC to likely exchange deposits, adding to the $130 million moved yesterday. Despite these massive apparent sales, German authorities still hold a substantial $3.05 billion worth of Bitcoin.

This extensive Bitcoin cache, nearly 50,000 BTC, was originally seized from the operators of Movie2k.to, a film piracy website that was last active in 2013. The Bitcoin was transferred to the German Federal Criminal Police Office (BKA) in mid-January following a voluntary handover from the suspects, per Arkham.

The large-scale sale has already had a noticeable impact on Bitcoin’s market price, according to Robert Quartly-Janeiro, chief strategy officer at crypto exchange Bitrue. He also believes that it suggests a bearish perspective for the German government.

"Having seen a slippage in the price of BTC, the German government is releasing significant tranches of BTC and has taken a view that the price of BTC is to soften for a while to come,” he told Decrypt. “It’s worth remembering that the BTC being sold was seized due to illicit activity, so what’s more interesting is what the German government is planning to do with the capital once sold."

He added that the size of the sale has dragged BTC lower as a result. Bitcoin is down about 0.5% over the past 24 hours to a current price of about $64,700, pushing its 14-day dip to nearly 9% as of this writing. Quarterly-Janeiro believes there’s clearly a strategy at play, and that the timing of the next tranche to be sold will be telling.

“Could they close the position completely? Maybe so," he said.

Ben Kurland, CEO of token management platform DYOR Labs, highlighted the historical implications of such sales in a comment to Decrypt.

"Historically, significant Bitcoin sales by governments lead to immediate price declines and short-term volatility,” he said. “Mid-term effects can vary, however prolonged selling would cause further slumps as negative sentiment grows. It’s wise to exercise caution until the remaining BTC is either sold off or moved off exchanges, as government-held BTC is unlikely to remain on centralized exchanges for long."

The ongoing liquidation by the German government has injected a dose of volatility into the crypto market, with investors and market analysts watching for further movements and potential impacts on Bitcoin’s price.

James Davies, co-founder and Chief Product Officer of Crypto Valley Exchange, told Decrypt that he doesn’t believe that there is “any market sentiment behind” the selling, and that it’s probably “more a function of not holding assets in Bitcoin” with the police department “simply slowly liquidating this seizure.”

In any case, he expects it to be a “boon time for over-the-counter traders,” but will result in “some short-to-medium-term volatility for the rest of us.”

Source:decrypt

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Alex

Economic

Japan's factory activity expanded for a second straight month in June but the pace of growth eased as orders weakened and cost pressures intensified, a business survey showed on Friday.

The au Jibun Bank flash Japan manufacturing purchasing managers' index (PMI) stood at 50.1 in June, down slightly from 50.4 in May, but still above the 50.0 threshold separating growth from contraction on a monthly basis.

"Japan's private sector expansion stalled midway into the year," said Jingyi Pan, economics associate director at S&P Global Market Intelligence, which compiled the survey.

But growth in the manufacturers' output offered some room for optimism, she added.

The key subindex of output expanded in June for the first time since May 2023, the survey showed.

However, an index of new orders dipped in June from the previous month.

The pressure on margins for Japanese firms was concerning, Pan said.

Price pressures strengthened in the manufacturing sector as the average input costs and output prices increased at a faster pace in June than the previous month.

Manufacturers' optimism in the next 12 months rose despite the slowdown in new orders, according to the survey.

Service sector business activity fell in June for the first time in about two years amid subdued new business.

The au Jibun Bank flash services PMI shrank to 49.8 in June from 53.8 in May. The index contracted for the first time since August 2022.

Japanese service providers suggested that output was limited due to labour constraints even as they continued to hire more staff.

The sector's input cost inflation also rose in June but firms raised average charges at the slowest pace in seven months to support sales.

The au Jibun Bank flash services PMI shrank to 49.8 in June from 53.8 in May. The index contracted for the first time since August 2022.

Japanese service providers suggested that output was limited due to labour constraints even as they continued to hire more staff.

The sector's input cost inflation also rose in June but firms raised average charges at the slowest pace in seven months to support sales.

Source:Reuters

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Samantha Luan

Economic

South Korea’s early trade data showed that growth in exports moderated so far this month, cooling a rally that’s boosted optimism over the outlook for economic growth.

The value of shipments increased 8.5% from a year earlier in the first 20 days of June, according to data released Friday by the customs office. That compares with an 11.5% rise for the full month of May. Imports edged down by 0.6%, resulting in a trade surplus of $1.5 billion so far in June.

South Korea’s Early Trade Data Show Softer Export Momentum_1

Continued strength in exports is key to South Korea’s economy, which expanded in the first quarter far faster than expected. The government expects the trade rally to help economic growth narrowly avoid a contraction this quarter versus the previous period, keeping the economy on track for a mid-2% level expansion in 2024.

The customs data showed semiconductor sales rose 50.2% from a year earlier so far this month, continuing to lead the gains in exports as prices pick up thanks to demand from smartphone makers, data-center operators and artificial intelligence developers.

A strong US economy has helped offset slowing demand from China. Exports to the US increased 23.5% from a year earlier in June while those to China rose 5.6%, the customs office said in a statement. South Korea’s Early Trade Data Show Softer Export Momentum_2

South Korea’s Early Trade Data Show Softer Export Momentum_2

South Korean firms are part of a wide range of global supply chains, especially in industries including semiconductors, automobiles and batteries.

Strong exports have had little impact on the moderating trend in domestic prices so far, allowing the Bank of Korea to keep its inflation forecast steady. That opens the room for the central bank to consider a policy easing in the second half of this year.

Headwinds remain for South Korea. Developers continue to struggle with debt that piled up during a pandemic-era construction boom. China, South Korea’s biggest trading partner, has yet to recover fully from a housing slump that continues to weigh on activity.

The exchange rate remains a source of concern as South Korea relies heavily on imports of energy and raw materials to assemble products destined for shipment overseas. The won has been one of Asia’s worst-performing currencies this year.

Export growth normally helps the won appreciate, but growing investment among South Korean retail investors in US markets is lessening the effect while rising tensions with North Korea further weigh on the won, said Ryu Jinlee, an economist at SK Securities.

Source:Bloonberg

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Glendon

Economic

In the fast-paced world of financial markets, having access to real-time data and advanced analytical tools is crucial for investors and traders looking to make informed decisions. FintechZoom, a leading finance research platform, offers a suite of real-time data tools that can be particularly useful for tracking and predicting the performance of major market indices like the Dow Jones Industrial Average (DJIA). This article explores how FintechZoom's capabilities can be applied to analyze and forecast movements in the Dow Jones, providing valuable insights for market participants.

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Glendon

Economic

FintechZoom is a premier financial analysis platform that has become an essential tool for investors and traders. Known for its real-time data, detailed market analysis, and AI-driven insights, FintechZoom offers valuable predictions and recommendations that significantly influence investment decisions. This platform is particularly useful for analyzing high-profile stocks like Tesla (TSLA), providing a wealth of information to help investors make informed choices.

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FastBull: An Alternative Financial Analysis Platform

FastBull is another leading financial analysis platform that offers a comprehensive suite of tools and real-time market data for investors and traders. While it shares many similarities with FintechZoom, FastBull also provides unique features that set it apart.

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Conclusion

Both FintechZoom and FastBull offer valuable tools for investors interested in Tesla stock and other financial instruments. The choice between the two platforms would depend on an investor's specific needs, preferences for certain features, and overall user experience.

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Alex

Economic

Bond

Sustainable debt issuance has hit a record level this year, as investors pile into green bonds and other debt tracking similar themes as a way of signalling their environmental credentials while also locking in an attractive yield.

Debt including green, social, sustainable and sustainability-linked bonds, raised $273bn in the first quarter of this year, according to a report published on Wednesday by the non-profit Climate Bonds Initiative.

Issuance of green bonds — used by countries or companies to pay for environmental projects — jumped 43 per cent on the previous quarter to $195.9bn, attracting higher inflows than newer forms of sustainable debt. Green bonds are on track to hit a total of $1tn of issuance this year, CBI predicted.

Like more conventional fixed income, demand for sustainable debt has been boosted by high interest rates. But it has also been helped by what some fund managers argue is the erosion of the so-called “greenium” — a discount in the cost of borrowing that issuers of green bonds can enjoy.

This means that, in many cases, investors can put money into sustainable debt without sacrificing much, if anything, in terms of yield.

“Investors want this, because even if you’re getting it [the green bond] at the same price . . . you’re getting the green label for free,” said Alan Siow, co-head of emerging market corporate debt at asset manager Ninety One.

“For these issuers, it’s rational. They’re printing at the same price or better in green,” he added.

After a sluggish 2023, the US was the largest single-country source of green bonds in the first quarter of this year, according to CBI, with a combined $27.6bn in issuance. In March, Baltimore-based Constellation Energy became the first US company to issue a green bond that could be used to finance nuclear energy. Constellation planned to use proceeds from the $900mn, 30-year green bond to back investments such as maintaining and expanding its nuclear reactor fleet, the company said.

Emerging markets have also listed more green debt. In January, Ivory Coast priced a $1.1bn sustainable bond maturing in 2033, marking its first issuance of a dollar-denominated liability in seven years. The world’s largest cocoa producer also issued $1.5bn in conventional bonds due in 2037, as frontier markets have sought to lure lenders with fresh issuances of high-yield debt.

The rush into sustainable debt contrasts sharply with investor outflows from stock funds focused on environmental, social and governance (ESG) metrics.

Poor performance, greenwashing scandals and a political backlash have caused many investors to sour on ESG-labelled equities, with such funds suffering their first year of net outflows. Higher interest rates may also help to explain the rout, since early-stage green companies lack the cash flow to sustain high valuations.

For issuers, green bonds are still attractive, even if the price discount on such bonds is smaller than in the past.

“There’s a running debate whether there is a greenium or not. I would say there isn’t sufficient greenium to issue purely based on the pricing,” said Viktor Szabo, an investment director at Abrdn. But green issuers can lure a different profile of lender, he said — “more sticky investors, more stable hands”.

Nicolas Jaquier, a portfolio manager in emerging-markets fixed income at Ninety One, pointed to the costs associated with such bonds for issuers, in the form of the extra documentation.

But he added: “What’s important is the signalling. It really establishes the sovereign has a serious commitment on transition and climate.” When a country invested in the reporting framework and state capacity to issue a green bond, he added, it could support more issuance from corporates in that region.

However, Caroline Harrison, author of the CBI report, said the greenium had not disappeared. Roughly 30 per cent of green bonds priced at yields lower than their vanilla equivalents, she said.

Some fund managers are unconvinced by green bonds.

“Money is fungible. Yes, you can have a green bond that has monies ringfenced for a specific project, and as great as that is, there is other cash in a corporate treasurer’s bank account to finance all the other activities,” said Stephen Snowden, a fixed income manager at London-based Artemis. “Taking a view on the company, rather than specific green or non-green bonds, probably delivers a better sustainable outcome.”

One instrument aimed at fixing that problem has been the sustainability-linked bond, which holds companies to their climate transition targets by punishing them with higher interest rates if they miss pre-agreed goals.

But many of them have faced criticism, including for failing to set a big enough “step-up” in coupon payments for failing to hit green performance indicators. SLB issuance declined in the first quarter of 2024, according to CBI.

Social bonds have also struggled due to increased scrutiny and as Covid-related social spending packages wound down, said David Oelker, BlackRock’s head of ESG investment for fixed income in Emea. But green bonds would continue to grow, he predicted, because companies in high-emitting sectors, such as cement, had increasingly tapped them to finance decarbonisation projects.

Use-of-proceeds green bonds could provide visibility into companies’ long-term capex plans, he said. “A lot of these transition plans, they’re far in the future . . . and in some instances rely on technologies that are perhaps nascent or to be developed.”

Source：Financial Times

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Warren Takunda

Economic

Forex

The odds of an August cut rose after it was revealed the decision to hold interest rates unchanged was "finely balanced" for three of the members of the Monetary Policy Committee (MPC) who voted to hold.

This information suggests the decision to hold was close. Reflecting the higher odds of an August cut, the Pound to Euro exchange rate fell to 1.1826 and the Pound to Dollar rate fell to 1.2690.

The Pound rose on Wednesday after UK services inflation - which the Bank wants to see fall before cutting interest rates - came in at a stronger-than-expected level at 5.7%. But, the minutes of the meeting suggest members of the MPC are increasingly confident it will continue to fall from here.

"The upside news in services price inflation relative to the May Report did not alter significantly the disinflationary trajectory that the economy was on," said the meeting minutes, referring to the thinking of a group of MPC members. "For these members, the policy decision at this meeting was finely balanced."

With the odds of an August interest rate increasing, the Pound might find it difficult to print fresh highs against the Euro. Trade against the Dollar will, meanwhile, continue to be heavily influenced by developments regarding the U.S. economy and interest rates.

"We stick with our view that a lot of positives seem to be in the price of the GBP and see downside risks for the currency vs the USD and the EUR from current levels," says Valentin Marinov, Head of FX Strategy at Crédit Agricole.

However, other analysts don't think the Bank of England poses a material headwind to GBP performance.

"We still feel the UK’s likely persistent rate advantage is helpful for GBP at a time when UK data are improving as real incomes slowly start to rise," says Shahab Jalinoos, a currency analyst at UBS.

Michael Brown, Senior Research Strategist at Pepperston, says an August interest rate cut is unlikely to be a unanimous decision, with the MPC's hawks likely still concerned about intense earnings pressures, and sticky services prices.

"These concerns should, more broadly, see the pace of policy normalisation after the first cut remain relatively gradual, with just one further 25bp cut, probably in November, the base case for the remainder of 2024," says Brown.

This underscores a general consensus amongst currency analysts that it is the quantum of rate cuts that are due, rather than the start date of a cutting cycle, that truly matters for FX direction.

"From a markets perspective, such a pace of easing, if delivered, would see the BoE normalising policy at a rate roughly equivalent to that of G10 peers, likely insulating the GBP from any significant medium-term headwinds, at least those stemming from a policy perspective," says Brown.