Crypto markets witness heightened volatility as ETF rumors take center stage

Hola folks!

Hope the first week of the new year was productive and peaceful for you all. Crypto markets were volatile even as a BTC spot ETF approval appears likely. On the economic front, the National Statistical Organization forecasted a 7.3% GDP growth rate for the Indian economy during 2023-24. 

Today's newsletter brings you the crypto market updates and some personal financial tidbits to help you build and organize your investment portfolio. Read on to gain an understanding of personal finance that will help you achieve financial independence. 

How much money will you have to invest monthly to get Rs. 1 crore at the end of 30 years at a 12% rate of return? According to you, the answer to this question might be Rs. 10,000, Rs. 15,000, or even more since Rs. 1 crore is a huge amount. 

But what if we were to say that you will only have to invest Rs. 3,500 per month to get Rs. 1 crore at the end of 30 years at a 12% per annum rate of return? 

This is the magic of SIP.  Click on the video below to learn more about the concept of SIP and how it is a disciplined and convenient investment approach. SIPs allow you to invest a fixed amount regularly in mutual funds, regardless of market fluctuations, enabling you to benefit from averaging and compounding.

Do your research and start your investment and growth journey this year by starting an SIP in a mutual fund that suits your investment goals.

Portfolio Building in your 20s and 30s - Part 7 

Retirement Planning 

In your 20s and your 30s, retirement might seem like a distinct event of the future. You might have never thought of it seriously, but with advances in medical science leading to increased life expectancy, retirement planning is becoming increasingly important. 

The earlier you can start saving for retirement, the better. If you start saving for retirement in your 20s, you will have 30+ years of consistent contributions to your funds by the time you retire. The more time you give to your savings to grow, the more you will benefit from compounding. Therefore, it is never too early to start saving for your retirement. 

At the same time, if you are already in your 30s, you haven’t missed the train, as it is never too late to start saving for your retirement. The watchword is to start as soon as you can, and there is no specific age to start. 

Generally, the older you are, the more you should aim to contribute to your retirement fund. However, a good rule of thumb is to save around 10%–15% of your post-tax income annually in a retirement savings account. 

Take a close look at your portfolio to check if it needs consolidation. Also, work on your retirement time frame and your retirement objectives.  In the meantime, we will bring you some important retirement investment options in the coming week. 

Crypto markets gyrated last week with lots of volatility driven by speculations around spot Bitcoin ETF approval. A report by an analyst from MatrixPort suggested that the approvals would be delayed further to June, which sent the entire market into a downward spiral. The move was led by BTC suddenly dropping to under $42k and sending liquidation shockwaves across leveraged long positions. Over $600 million leveraged longs were liquidated within a few hours. 

The markets stabilized after digesting the gravity of the report and witnessed a recovery, even as the speculative drama around the spot BTC ETF approval lingers on. All eyes are on the January 10th deadline now! 

Overall, the crypto market cap continues to hover around the $1.7 trillion level, with market leader BTC posting weekly gains to trade back to $43.5k levels, while Ethereum lagged in the recovery and is down for the week, anchored around $2.2k levels

Amid the anticipation for the ETF, it must be highlighted that the chances of approval, as per Bloomberg analysts, are as high as 90%, as they have witnessed major last-minute changes and meetings of the relevant stakeholders to pacify the SEC's concern. Even JP Morgan, whose CEO had recently bashed Bitcoin, has been named as an authorized participant for Blackrock's application.

In another major development, the Indian government issued compliance show cause notices to nine offshore crypto exchanges, including Binance, Kucoin, and Huobi. The notices were issued by India's Financial Intelligence Unit (FIU), which falls under the nation's Finance Ministry.

For the broader crypto markets, the liquidation event following BTC's price drop resulted in a lot of leverage getting flushed out of the system and a sharp fall for most assets. 

However, unlike BTC's bounce back in prices, the broader crypto markets didn't post a strong recovery and were a sea of red in terms of weekly price returns. There were certain outliers, though, that have continued to trend higher, backed by token-specific developments. 

Aptos's APT token was one of them, recovering strongly after the fall as transaction activity on the network continued to increase rapidly, sending token prices higher (which later saw some profit booking).

Several narrative-based price pumps continued to gain investor attention, including Lido's LDO with respect to restaking and Celestia's TIA on the back of Modular blockchains. 

Layer 2 giant Arbitrum's ARB is trading at record highs as its TVL crossed $2.5bn, while DeFi protocol Maker's MKR reached 20 20-month high on whale accumulation.

• BTC $43,956 ⏫ 3.45%

• LDO $2.83 ⏫ 2.57%

• ARB $1.70 ⏫ 10.88%

• APT $8.28 ⏬ 11.32%

(All data here is as of 2.15 p.m., 8 January 2024)

Before we conclude, here’s a quick look at some important news from around the crypto world.

• US spot BTC ETFs appear to be on the verge of launching after the exchanges that will list them filed amended documents, suggesting they expect US SEC approval in the coming days. The amended 19b-4 filings, filed on behalf of BlackRock, Grayscale, Fidelity, and other issuers, join last month’s amended S-1 filings, addressing feedback from the US SEC. The regulatory agency needs to approve both the 19b-4 filings and the S-1 filings before the ETFs can launch. Read more here. 

• Investors poured over $2 billion into digital asset investment exchange-traded products (ETPs) in 2023, making it the third largest year for net inflows dating back to 2017, according to data provided by CoinShares. At $2.2 billion, 2023 inflows were more than double that of 2022. Read more here. 

If God Was Your Financial Planner

Author: Suresh Sadagopan

An entertaining and informed read that delves into financial planning through sublime storytelling. Suresh Sadagopan, an investment professional and a SEBI-registered investment advisor, attempts to explain personal finance concepts through storytelling and relatable examples. You will learn the essentials of personal finance such as: 

• personal finance

• financial planning

• retirement planning

• asset allocation concepts

• risk management and much more in this book. 

This gripping story takes you on a ride through the lives of various protagonists. It shows life up-close of a family that deals with the calamity of the head of the family passing away and how they pick up the pieces.

The story also deals with people In various other situations–like someone who is facing a relationship crisis due to financial mismanagement, another who picks up the pieces after losing his job, a third who is not able to put aside money for retirement, and many more.

You would now know the mistakes that people make with their money and what worked for them. Read this book as you start your journey of financial independence. 

Before you get on with your day, don’t forget to flex those brain muscles with our weekly crypto crossword.

That’s it for now. Thanks for sticking around.

See you later, folks! 👋

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