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Market Picture

The crypto market is developing a correction at a moderate pace. It has lost 1.3% more over the last day to $2.31 trillion, down around 3% from the recent peak. At the same time, the sentiment of greed persists. The corresponding index is in the 70-73 range for the eighth day.

Ethereum continues to lose market share to Bitcoin and other altcoins. As a result, BTC’s share of all cryptocurrency capitalisation has risen to 57.3%, the highest since April 2021.

But that doesn’t necessarily mean an upward trend for the top cryptocurrency, which has pulled back below $67K, losing 1% in the last day and nearly 4% from its peak on 21 October. The price is now close to a local support level at $66.8K. A break of this support will open the way for a deeper correction to $65.5K, near the 61.8% retracement level from the last rally and the late September top.

News Background

Options traders have increased bets on Bitcoin to rise above $80K following the US election. Donald Trump, who is seen as more friendly to cryptocurrencies, has an estimated 63.5% chance of winning.

QCP Capital sees a high probability that Ethereum will break through the $2800 resistance level and reach $3000 as the US election is just two weeks away.

According to media reports, Indian authorities are considering significantly restricting or outright banning private cryptocurrencies, as unlike CBDC, they do not meet the requirements of financial inclusion and security.

German-listed mining company Northern Data is considering selling its Bitcoin mining division, Peak Mining, to focus on AI.

The Bitcoin miner, which mined its first coins on 13 January 2009, has sold a total of $9.6 million worth of BTC, according to Arkham Intelligence. That old whale still has 1,077 BTC worth $72.4 million.

The Bank of Canada (BoC) cut its overnight rate by 50 basis points, to 3.75%, while stating that it will continue with normalizing its balance sheet.

With inflation having “declined significantly” over the last few months, the bank said it “expects inflation to remain close to the target over the projection horizon.” Notably in the Bank’s Monetary Policy report (MPR), the quarterly forecast for core inflation is unchanged at +2%.

The bank highlighted the moderate pace of economic growth, stating “the economy grew at around 2% in the first half of the year and we expect growth of 1¾% in the second half. Consumption has continued to grow but is declining on a per person basis.” The Bank expected GDP growth to “strengthen gradually” over the coming quarters supported by lower interest rates.

On the future path of policy, the bank noted that “if the economy evolves broadly in line with our latest forecast, we expect to reduce the policy rate further.” However, it also noted that the timing and pace of further reductions will be guided by the data.

Key Implications

Now that headline CPI inflation has dropped below the 2% target, the BoC has gained confidence that it can cut rates at a quicker pace. While there isn’t much in the way of a changing economic narrative – slow GDP growth and core inflation above 2% remain – the central bank is set on doing what it can to boost economic growth. Will a 50 bp move achieve this? Probably not, but the central bank felt it should do something with economic data continuing to show that the country is stuck in a rut. Hopefully we get a bit more clarity on this in the press conference.

This won’t be the end of rate cuts. Even with the succession of policy cuts since June, rates are still way too high given the state of the economy. To bring rates into better balance, we have another 150 bps in cuts penciled in through 2025. So while the pace of cuts going forward is now highly uncertain, the direction for rates is firmly downwards.

Singapore’s GIC and Australia’s Macquarie are looking at selling their stake of roughly 30 per cent in Philippine renewable energy firm Energy Development Corp (EDC), a deal that could fetch US$2 billion (S$2.6 billion, two sources with knowledge of the matter said.

They are in preliminary talks with advisers and no decision has been made, the sources said.

EDC is the Philippines’ biggest renewable energy firm with installed capacity of some 1,480.19 megawatts, most of which is geothermal energy. It accounts for about a fifth of the country’s total installed renewable energy capacity, according to its website.

GIC, a Singapore sovereign wealth fund, and Macquarie Infrastructure and Real Assets invested in EDC in 2017. A press release at the time said they planned to pay US$1.3 billion for up to 31.7 per cent of the company.

The rest of EDC is mostly held by Philippines tycoon Federico Lopez’s First Gen Corp. According to First Gen’s 2023 annual report it holds 65 per cent of voting rights in EDC while GIC and Macquarie’s joint venture, Philippines Renewable Energy Holdings Corp, holds 34.9 per cent of the voting rights.

GIC and Macquarie declined to comment. EDC did not respond to a request for comment.

Renewable energy is attracting increasing investment as countries seek to meet climate goals and cope with growth in electricity demand.

Electricity demand in South-east Asia is set to grow at an annual rate of 4 per cent in the coming years, with clean energy sources such as wind and solar, alongside modern bioenergy and geothermal power, projected to meet more than a third of the growth in energy demand in the region by 2035, according to the International Energy Agency. 

Source: Straitstimes