Gemini Markets: Rising Bond Yields Halt Crypto Rally

*Welcome to Gemini Markets, your read on crypto, prediction markets, and stocks, all in one place. Gemini Markets is your single weekly briefing on everything financial markets, reflecting Gemini’s push to become an all-in-one super app. This is the newsletter that will help inform you about what’s driving crypto and stock prices, tradfi market trends, and prediction market trends. *

📈 Crypto Markets Overview

Bitcoin drops back to $84,000 after latest crypto rally: The price of bitcoin dropped to $84,000 on Wednesday as bond market struggles increased, with the 10-year US Treasury yield jumping to 5.127%, the highest mark since 2007. Still, the crypto market has been on a roll over the past few weeks, with bitcoin up approximately 7% over the past month and privacy-focused token Zcash increasing 95% during the same period. The rally for digital assets has come despite the Federal Reserve’s decision to hike interest rates at their most recent meeting and signaling they need to hike more to rein in inflationary pressures.

BlackRock predicts AI will drive stablecoin growth: Asset management giant BlackRock released an analyst report this week forecasting an increase in crypto and stablecoin usage from autonomous AI agents in the coming years. Dubbed the “Machine-Native Economy,” the report explores how agentic commerce may be driven by machine-native payment rails, increasing the demand for blockchain and programmable payments including stablecoins. Additionally, it projects that rising compute costs could be another use case for digital assets. Read the full report here.

Canadian banks weigh tokenized deposit system: Canada’s six largest banks have begun jointly exploring shifting over to a Canadian Dollar-based tokenized deposit system. The initiative “seeks to deliver faster, more efficient and programmable payments to Canadian customers while preserving safety, stability, and effective regulatory oversight.” Banks participating in the initiative include Bank of Montreal (BMO), Canadian Imperial Bank of Commerce (CIBC), National Bank of Canada (NBC), Royal Bank of Canada (RBC), The Bank of Nova Scotia (Scotiabank), and TD Bank Group (TD).

📊 Stocks & Equities

Markets retreat as rate hike fears increase: The three major indices retreated on Wednesday as the treasury selloff intensified, with traders pricing in the possibility of a more prolonged rate hiking cycle to deal with persistent inflationary pressures. The S&P 500 dropped 0.8%, the NASDAQ fell 1.1%, and the Dow Jones Industrial Average dipped 0.7%. The NASDAQ had closed at an all-time high Tuesday, but that rally was stifled Wednesday when Fed Governor Michael Barr said more monetary adjustments will be needed (see rate hikes) to tamp down inflation.

Paramount clears way for Warner Bros. takeover: Paramount earlier this week struck an agreement to clear a lingering antitrust lawsuit delaying the studio’s $111 billion acquisition of Warner Bros. Discovery. Paramount CEO David Ellison said the deal will close in two weeks, thus creating an entertainment juggernaut across television, film and other multimedia. The two sides originally agreed to the deal in February before a group of states led by California and others sued to block the deal.

🔮 Prediction Markets

Rams re-emerge as NFC favorites after win in home opener: The Los Angeles Rams have pushed ahead as the slight favorites to win the NFC (20%) after a convincing home win over the New York Giants on Monday Night Football. Los Angeles was considered the preseason favorite before getting crushed in a Week 1 matchup with the division rival 49ers. Now entering Week 3, the Rams are the favorite in the NFC again, followed by San Francisco (19%) and the defending champion Seahawks (13%). Trade the NFC Championship winner here.

Traders split on continued bitcoin rally: While the last month has yielded calls that the crypto bear market has finally come to an end, traders are still taking a cautious view for bitcoin headed into the end of the month. As of Wednesday, there was a 46% chance bitcoin would end September with a price of $85,000 or higher, a 9% shot of the currency hitting $90,000 and a 73% chance it stays at $82,500 or above. Trade bitcoin prices here.

Democrats pull ahead in US Senate predictions: With the midterm elections looming in November, the consensus view for most of the year was that Democrats had a good chance of retaking the House of Representatives and a hard road in the Senate. But their odds in the Senate have risen over the past few months. As of Wednesday, the predictions traders pegged their chances of winning the Senate at 60%. Trade the US Senate here.

Onward and Upward,
Team Gemini

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