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Hi Everyone,

The only real way to describe it, a total buzzkill.

Just as Telegram was set to release their newly minted Gram tokens into the world, the SEC in the United States has halted them in their tracks.

The Durov brothers who founded Telegram and managed to raise $1.7 billion for this specific project were hoping to avoid complications with the US justice system and their strategy to do so did seem pretty sound until last Friday.

Telegram never held a public ICO and instead raised funds directly from 171 private investors, each of whom were verified as “professional clients,” meaning that they have sufficient wealth to avoid the usual level of protection provided by the SEC.

Nevertheless, the government claims that the distribution of those tokens itself should be considered as a public offering of securities, even though Gram tokens are clearly meant to be used as money and not as shares in the Telegram app.

Of course, I’m no legal expert but it seems I’m not the only one who is more than a bit confused when trying to determine exactly what precedent the United States is trying to set by allowing EOS to continue with an infinitesimal fine but trying to stop Gram entirely. ¯\_(ツ)_/¯

eToro, Senior Market Analyst
Tomorrow there will be no daily market update as I’ll be attending the Hard Fork conference in Amsterdam and my schedule is pretty tight. Will have one for you on Thursday.

Today’s Highlights

  • Traditional Markets
  • Bank Earnings
  • Crypto Lull
Please note: All data, figures & graphs are valid as of October 15th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Everything seems smooth on the surface for traditional markets. Volatility has come down over the holiday, trade talks between the US and China seem bright for the moment, the Fed has managed to beat the repo markets into submission, and even the yield curve is looking a bit less inverted.
There is one wall of worry still on markets minds though, and that’s Brexit. It seems the clock is winding down and though Johnson and Varadker maintain they’ve got some sort of solution to the Irish border, the rest of us are yet to see the details on that.

At this point, Eurozone leaders are itching for a deal but they would probably much prefer a time extension, something PM Johnson would rather die than give them.

Bank of England Governor Carney was on TV this morning reaffirming that he will be leaving his post in January. Through all this, the Pound remains strong, somehow holding onto its gains from last week.

My theory and the reason I’ve been bullish on the pound for the last month or two is that this is less about Brexit and more about monetary policy. The rest of the world’s major central banks are all in the process of injecting or preparing to inject cash into their local economies. The BoE is not.

Everything is relative. Supply and demand always wins.

Bank Earnings

Goldman Sach, Citigroup, Wells Fargo, Blackrock, JP Morgan Chase, Charles Schwab, and other financial institutions will announce their third-quarter earnings today before the New York Stock Exchange opens for business.

That’s just a whole lot of information to process all at once. An interesting thing to discover for many New York traders who will be just waking up after a long Columbus Day weekend.

Overall, bank earnings have been depressed over the last few years due to artificially low interest rates, which have a way of cutting into banker margins.

Here we can see the @TheBigBanks CopyPortfolio in eToro (blue line) against the S&P 500 benchmark index. As you can see, not so hot right now.

Crypto Lull

Over the last year and a half, this space in the daily market updates has been strictly reserved for crypto market action. Well, if things continue the way they are that might have to change. The simple fact is, there isn’t any action.

Ever since the launch of Bakkt’s new futures contracts, it seems like the party has left the crypto markets. I’m still not quite sure where it’s gone to yet but I can say that at least for the time being crypto volumes are flatlining.

Let’s start with Messari’s reading of the top ten exchanges, which is showing less than $200 million bitcoin traded in the last 24 hours. Probably the lowest number I’ve ever seen.\

The futures contracts on the CME group are bad too but not as bad. Here we can see that yesterday’s action was the lowest in almost a month.

As of this writing, Bakkt’s new futures contracts have traded exactly 2 BTC so far today.

Over at BitMex, where traders are known to go nuts with too much leverage, volumes are lower than they’ve been in a very long time.

Infamous John McAfee, the unwanted father figure of the crypto community, has recently opened his own decentralized exchange. The place is a ghost town at the moment.

The kicker though, is the bitcoin blockchain itself. Yes, the transaction rate is holding steady at more than 300,000 transactions per day, but the estimated volume is in the dumps, now at an average of $800 million per day. Far from dead, but certainly not as lively as it’s been in the past.

Yet one more depressing graph, and I’m sorry to do this to the bitcoin fans among you, but here’s the peer to peer trading site, which is often an indicator for bitcoin’s actual use in troubled markets, is just marked its third-lowest weekly volume since August 2017.

Have a good day.
Best regards,

Mati Greenspan
Senior Market Analyst

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