DigitalX Weekly Crypto Update: Market Trends and Analysis

Market Commentary

This week the market witnessed the price of Bitcoin rally to a 2 year high at US$53,019, with Bitcoin futures open interest surging to US$22.7 billion at the beginning of the week, the highest since November 2021. Consistent spot Bitcoin ETF inflows and the upcoming Bitcoin halving event were major factors behind these moves. On the 20th February, the daily trading volume for combined US-based spot Bitcoin ETFs also reached its highest level of US$2.58 billion since mid-January. VanEck’s Bitcoin ETF witnessed a spike in trading volume of more than 20 times what it traded on its second highest performing day. This occurred a day prior to VanEck’s planned fee cut from 0.25% to 0.20%, with the main driver of inflows reporting to have originated from individual or retail investors rather than institutions, as reported by Bloomberg ETF analyst Eric Balchunas. This indicates a widespread bullish public sentiment around Bitcoin.

Ethereum’s price reached US$3,000 for the first time in nearly two years amid speculation regarding an eventual approval for spot Ethereum ETFs in the U.S as early as May 2024. Last week Franklin Templeton followed in the footsteps of BlackRock and Fidelity by filing an S-1 registration for a spot Ethereum ETF, becoming the eighth player in the race to introduce this new product to the market. However, analysts continue to remain divided on the possibility of spot Ethereum ETFs being approved this year.

CEO Comment

The Gap between Bitcoin and the S&P 500 has gradually risen to 30% this week, compared to last week’s gap sitting at 29%.

As for the shift list, which we define as the major events and announcements facilitating the broader market’s transition to Web3 financial rails or the internet of value, the top shifts for this week include:

• Crypto rewards– now that’s a shift – Mastercards move is interesting, especially in a light regulation market. Africa has been the test ground for many of the OG tech breakthroughs!

• ETF buying is really building up – this is true ownership.   

• An ETH ETF could very well be on its way, with the market looking to factor it into the price.

Our Top “alts shifts” for this week, featuring shifts in our altcoin universe that drive our thematic approach, saw the second Gap, or the broader digital asset market, remain flat at circa 61%. There is a big opportunity here, as we see this as a selective opportunity to identify and grow our alts portfolio via our “alThematics” work.

• Polygon and Starknet teaming up for this ZK project is truly amazing – this tech has so much potential and they managed to put together the dream team.
• It’s interesting to see issuers expanding into altcoin Exchange Traded Products so early. This could help smaller sectors and innovations including scaling, or in this case Celestia’s modular blockchain.

What are our favourite thematics for 2024? We continue to like any infrastructure plays of the shift from Web2 to Web3 financial rails and any plays in the real world asset tokenisation infrastructure, data validation and decentralised  storage, as well as scale up technologies such as ZKrollups. We are closely following all the ”de’s” – DeFi, DePin, DeSoc – (want to know what that means? – message us). 

Lisa Wade, CEO DigitalX

CRYPTO TOP 20 7 DAY PRICE CHANGE

*All figures throughout are in USD unless otherwise specified

Market Updates

• Michael Saylor not interested in selling: ‘Bitcoin is the exit strategy’
• Y Combinator, startup incubator behind Airbnb, Coinbase, and Stripe, looks to invest in stablecoin finance
• JPMorgan analysts criticizes Coinbase’s lack of insights into its ETF business
• Binance to shut down multiple leveraged token services
• VanEck admits ETF marketing violation, agrees to SEC fine
• Jupiter cancels Ripple XRP ETP investment after self-compliance inspection: FT
• Celsius distributed $2 billion of crypto to creditors, court document shows
• Mastercard’s latest crypto loyalty scheme aims to plug Google Play gaps
• Galaxy Digital is one of the ‘most diversified’ ways to play crypto, analyst says
• MetaMask monthly active users near all-time high – over 30 million

The Shift List

• Bitcoin ETFs see record $2.4B weekly inflows; BlackRock’s IBIT leads: CoinShares
• Ether could be the next ‘institutional darling’, Bernstein says
• Big bank, broker interest in Bitcoin is ‘accelerating’, says ETF issuer VanEck
• Australians more likely to invest in spot Bitcoin ETFs after U.S. approval: study
• Ether hits $3K for first time in nearly 2 years amid rising ETH ETF excitement
• MetaMask monthly active users near all-time high – over 30 million
• Revolut to introduce crypto exchange targeting ‘advanced traders’
• Sports Illustrated tickets moves NFT service to Avalanche

Macro and Regulatory Environment

• UK Minister expects stablecoin and staking legislation within six months: Bloomberg
• Japan moves closer to allowing venture capital firms to hold crypto assets
• ECB execs respond to banks’ objections to digital euro, suggest priorities
• Japan and South Korea want more control over crypto transactions: Law Decoded
• Japan opens up Web3 investments for local VCs
• South Korea’s ruling party considers allowing spot bitcoin ETFs in election pledges: report
• Virginia subcommittee proposes modest $17,192 yearly funding for state’s blockchain and cryptocurrency commission
• Pro-XRP lawyer John Deaton may run against Elizabeth Warren in 2024 elections
• Hong Kong’s central bank issues guidance for firms offering crypto custodial services
• U.S. bans crypto addresses tied to LockBit ransomware group from financial system
• Turkey’s upcoming crypto rules will protect users while fostering innovation, lawmaker say

About DigitalX

DigitalX Ltd (ASX:DCC) is a leading ASX-Listed Bitcoin and digital asset funds management business. The Company has a 9 year track record mining Bitcoin, blockchain and smart contract development. DigitalX Asset Management is the investment manager of digital asset investment products that provide qualified investors with highly secure and streamlined access to digital asset exposure. To learn more contact the team at [email protected] or visit our website https://digitalx.fund/.

Disclaimer:

DigitalX Asset Management Pty Ltd is a corporate authorised representative (CAR) of Boutique Capital Pty Ltd (AFSL 508011), and True Oak Investments Ltd (AFSL 238184). To the extent to which this document contains advice it is general advice only and has been prepared by the CAR for individuals identified as wholesale investors for the purposes of providing a financial product or financial service. The information herein is presented in summary form and is therefore subject to qualification and further explanation. The information in this document is not intended to be relied upon as advice to investors or potential investors and has been prepared without taking into account personal investment objectives, financial circumstances or particular needs. Recipients of this document are advised to consult their own professional advisers about legal, tax, financial or other matters relevant to the suitability of this information. Past performance is not indicative of future performance.