RESEARCH
BEQUANT Crypto&Coffee
In a semi unexpected move, the Bank of England (BoE) cut interest rates in its first emergency move since the financial crisis and announced measures to aid credit flow. The policy makers voted unanimously to cut their main interest rate by 50 basis points to 0.25%, returning it to a record low. The latest action by the Bank came in the last week of Carney’s tenure at the BoE, who will leave the bank on March 15 and be replaced by Andrew Bailey. Carney noted that the economic impact from COVID-19 could be "large and sharp" and economic activity will likely weaken materially in the coming months. The market reaction was similar to that when the Fed cut rates, with initial euphoria and risk on flow proving to be short lived. Bitcoin’s recently discovered correlation to risk on flow also meant that the initial move higher was subsequently reversed. Looking at the price action yesterday, similarly to equity markets which, despite finishing higher, failed to demonstrate any real momentum and instead oscillated for much of the session, Bitcoin failed to hold onto $8,000 level but still managed to finish in the green for the session. Looking at the broader market and in particular the top-25 by market capitalisation, the majority also finished in the green and posted much stronger gains than Bitcoin. Tezos and Chainlink outperformed, both finishing up over 3% on the session. Despite the lacklustre gains by Bitcoin, one positive to takeaway from the bounce is that small-caps outperformed large-cap peers. As per MVIS data, 100 small-caps index finished up over 4%, while the large-cap equivalent was trading higher by 1%. Still, with SPX 1-month vol at 58% vs BTC equivalent at 63%, Bitcoin will find it difficult to stage a recovery until the vol in more traditional assets subsides. In fact, leverage flow remains weak, as evidenced by flattening of the futures curve (March basis 0.2% and June basis 2.0%). Cointelegraph writes that after almost a month following a massive hack, the Iota Foundation has brought their network back online. The Iota network was relaunched on Tuesday following the Feb. 12 attack on the platform’s Trinity Wallet software. Although the network was shut down that same day to prevent further security breaches, 8.55 million MIOTA — approximately $2 million — was stolen from 50 users of the digital asset wallet. Elsewhere, Micree Ketuan Zhan, the co-founder of leading mining hardware producer Bitmain launched another lawsuit in an attempt to regain his position as the CEO of the firm. According to a court filing in Fujan province, Zhan initiated a lawsuit against Bitmain’s subsidiary Fujian Zhanhua Intelligence Technologies and Beijing Bitmain Technologies. Finally, Japan’s financial regulator announced the launch of its global Blockchain Governance Initiative Network (BGIN) on March 10. The BGIN intends to foster the “sustainable development of the blockchain community."
