What’s going on here?

Crypto investors demonstrated just how much they’d value a crypto-focused spot exchange-traded fund (ETF).

What does this mean?

Cryptocurrencies stole some attention from Hallmark movies at the end of the year, with the OG crypto bitcoin climbing over 150% during 2023. That’s at least partly because investors have been enticed by the prospect of a more stable and accessible crypto market: bad actors were locked away last year, regulation was a hot topic, and the Securities and Exchange Commission (SEC) has been expected to approve a spot bitcoin ETF. (You can already buy ETFs that track bitcoin futures, but this would track bitcoin itself.) That anticipation was especially clear on Tuesday, when the SEC took to X, formerly Twitter, to announce that the plan was a go. Investors flocked to bitcoin when the news hit, only to send the crypto’s price back down to sub-$46,000 when the SEC clarified that the “reveal” was nothing more than a social media hack.

Why should I care?

For markets: Gold 2.0.

ETFs do the heavy lifting for their investors. When someone buys into a fund through an exchange, the ETF provider mints new shares, takes the cash, and buys the actual underlying assets. That means investors can own a basket of themed stocks, say, or track one specific commodity – all without having to source and own the asset itself. Now, a laundry list of providers are keen to branch into crypto funds, which would pull in a fresh bunch of crypto enthusiasts who prefer a lower-effort approach. We’ve seen this before: when a major gold ETF started trading in 2006, the precious metal’s price steadily doubled over the following four years.

The bigger picture: Take it to the till.

While ETF approval could make the digital currency more mainstream, the biggest proof of concept would be if crypto coins became legal tender at everyday stores like Walmart and McDonald’s. But ETFs are no use at the checkout, so that price-propelling move will only come with more pushes down the line.

What’s going on here?

Blossom season came early for Japan, with the country’s biggest stock market breaking a 30-year-old record on Wednesday.

What does this mean?

China had overshadowed most of the world’s heavy hitters, save for the US, for the last two decades. But the world’s second-biggest economy still hasn’t recovered its balance after being knocked off-course during the pandemic. Plus, with prices on the descent, the country’s at a higher risk of seeing corporate and personal bankruptcies – two surefire ways to derail an economic recovery. But investors didn’t need to look far to find a promising replacement: with a flourishing export industry, Japanese outlooks are only getting better. So while Chinese stock markets are hanging near their 2020 lows, Japan’s Nikkei index has reached a height not seen in 34 years.

Why should I care?

For markets: You don’t need 99 problems when you’ve got this one.

Deflation is a tough itch to scratch. When prices are rising, shoppers tick off their shopping list sooner in case prices are even higher later. But when they’re on the slope, shoppers keep their wallets shut, waiting for a bigger bargain. The same goes for companies looking to reinvest in themselves. So when it’s getting easier to afford a wishlist, folk and businesses are less likely to rely on cheap loans to fund their spending – and that diminishing borrowing and spending can kick off a nasty downward spiral for a country’s economy.

Zooming out: Japan’s new dawn.

Japan took two whole decades to shake off deflation. After twenty years of ever-shrinking prices, Japanese shoppers are practically programmed to hold back. But if the country’s newfound inflation sticks around, they’ll slowly warm up to more spend-happy ways. That matters: the more money floats around the economy, the more likely Japanese stocks are to hold their own.