🔔 Ether/Bitcoin Spread Falls To its Minimum: Great News for Altcoins!

🐺 Hi pack-mates,

This is Howling Markets, the newsletter that gives you a relative advantage on your trades even when the market falls! 

Today we will be covering:

• Education: What Is Ether/Bitcoin Spread? 📊

• Higher Borrowing Costs Raise Doubts on Private Credit Surge 📈

• Ether/Bitcoin Spread Falls To its Minimum: Great Nees for Altcoins! 📉

• Equity and Debt Markets Daily Update ⚖️

• And more!

Market Watch 👀

Education: What Is Ether/Bitcoin Spread?

When entering the world of cryptos, there are different levels of depth that a new trader can reach. First, a trader can get started with Bitcoin, the largest token available in this interesting field. Then, one might begin looking into Ether, the largest altcoin, and so on.

All these different tokens have different properties and are developed over time following unique paths. So, in most cases, any trader willing to start their crypto trading career will be able to find something interesting.

However, all tokens, regardless of their type and size, are affected by the market sentiment in the cryptocurrency niche. During economic booms, where people have more disposable money, the cryptocurrency market surges in popularity, whereas during tough times, the crypto trading volumes drop.

The reason behind this behavior is that cryptocurrencies are among the most volatile assets, so as soon as some investors get a glimpse of some bad news, they sell their positions. But what if I told you that there are instruments that can be used to profit regardless of the market direction?

These instruments are called spread and track the difference between the returns of two assets. In the world of cryptocurrencies, the most popular spread is the Ether/Bitcoin spread which is simply calculated by dividing the price of an Ether token by the price of a Bitcoin.

This instrument is a very unique tool that can be used to profit even when the entre crypto market slides down due to the fact that its value is based on the relative price of these two cryptocurrencies and not their actual value.

So, if the prices of both Ether and Bitcoin crash, but Bitcoin falls more than Ether does, the ratio Ether/Bitcoin still appreciates. Were you aware of these types of interesting financial instruments?

Higher Borrowing Costs Raise Doubts on Private Credit Surge

Despite the recent fall in inflation and the restart of economic activity after a couple years of post-pandemic crisis, many financial institutions are starting to worry about a particular industry which has recently skyrocketed in popularity.

The private credit industry has been one of the top picks of many investment funds, especially pension funds, due to their double digit returns and extremely low default rates. However, many analysts have started worrying about these investments as they believe that the elevated interest rates are starting to damage the integrity of these investments.

The opinions about the best course of action for this sector are not unanimous. On the one hand, some investors are calling for an interest rate cut as they believe that only that could be the solution to the imminent rise in defaults.

On the other hand, some other investors are stating that a drop in interest rates could severally damage the integrity of the sector because it would lose its high-profitability appeal that allowed it to thrive in recent years. Which of the two alternatives do you think would most benefit the sector?

Today’s Howling Question

And now, it is time for our howling question!

We have mentioned that the private credit industry has become extremely popular over the past few years, but do you precisely know the market capitalization that this industry has recently reached?

1. $860 million

2. $14 billion

3. $230 billion

4. $890 billion

5. $1.7 trillion

Try to answer the question by yourself, and then check the correct answer after the last interesting news!

Funding Rate Spread Falls to Its Minimum: Great News for Altcoins!

At the beginning of this newsletter we have seen the Ether/Bitcoin spread and how it can be an extremely useful instrument to trade during uncertain market conditions. However, there are other types of spreads that cannot be traded, but which play a pivotal role as informational tools.

One of these spreads is the Bitcoin funding rate minus Ether funding rate, which is also called the funding rate spread.

In the world of cryptocurrencies, the funding rate is the premium that the holders of crypto futures contracts have to pay to (or receive from) their counterpart over time. Funding rates are extremely important parameters to monitor because they reflect market sentiment on the specific underlying that is being exchanged by the future contract.

A high funding rate reflects the idea that the holders of the future contracts are willing to pay a higher premium to their counterpart to hold a long position. If instead the funding rate is negative, this parameter showcases a negative sentiment, and the holders would have to be paid to go long.

So, going back to the funding rate spread, it is the difference between the funding rate of Bitcoin, the world’s largest cryptocurrency, and Ether, the world’s largest altcoin.

Because of this, when the funding rate spread narrows, it is a great signal for the overall market as it demonstrates an increase in bullish sentiment towards altcoins compared to Bitcoin, and therefore, this indicator is a forerunner of a healthy growth of the overall cryptocurrency market.

Recently, Glassnode reported that the funding spread has crashed to one of its lowest values, reaching an annualized -9% change. This change represents the willingness of crypto investors to expand and start experimenting with new alternative tokens, picturing a bright 2024 forecast for the cryptocurrency market.

Equity and Debt Markets Update

And now, our daily markets update!

Once again, the US stock market continued its low-volatility trading even throughout Wednesday’s trading session. The price closed just -0.17% lower after trading within an extremely narrow range. 

However, tomorrow the inflation news should be released, so we can expect slightly more volatility in the upcoming sessions.

On the other hand, bond yields had a slightly more volatile day with the benchmark 10 year US government bond yield closing down -0.86%.

Answer

The correct answer is 5) $1.7 trillion.

The US-based private credit sector has recently surpassed the $1.7 trillion mark, becoming a staple sector in the US’ economy.

Howl-Worthy Memes 😂

🐺 See you next time!

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