Market Commentary

Bitcoin’s market cap exceeded US$1 trillion for the first time since December of 2021 – accounting for more than half of the US$1.9 trillion market cap of the total digital asset sector. The strength in Bitcoin’s price has been largely driven by the increasing net inflows into U.S. spot Bitcoin ETFs, with outflows from Grayscale’s GBTC subsiding. Shortly after launch of the products, GBTC experienced significant outflows with profit taking from those who bought the closed-ended trust at discount and forced sales from bankruptcy holdings. Monday saw outflows reduce to as little as US$65.9 million, while the competing ETF products experienced net inflows of US$418.96 million. Blackrock remains the main beneficiary of these inflows, now capturing a third of the spot Bitcoin ETF market share, overtaking Grayscale’s GBTC. 

On the supply side, bullish expectations from reductions in the supply Bitcoin from the upcoming ‘Bitcoin halving’, scheduled to occur on 22 April 2024, have also helped sustain the current rally. The halving event will mark a reduction from 6.25 BTC to 3.125 BTC in all newly minted Bitcoin paid to miners per every 10 minutes. These supply side expectations were somewhat tempered this week by US bankruptcy judge Sean Lane who has now granted a motion from Genesis, allowing the bankrupt lender to proceed with sales of up to US$1.4 billion in GBTC shares. The impact of these sales will be decided on the debtor’s decision to convert the shares into Bitcoin or cash, with the judge allowing both options. If the current interest in the Bitcoin ETFs continues, these sales could quickly be absorbed. 

CEO Comment 

The Gap between Bitcoin and the S&P 500 has continued to significantly fall – now sitting at 29%, compared to last week’s 38%. This trend, of course will fluctuate, as it is a function of the supply and demand dynamic which is gaining momentum. We expect parity on both over the next twelve months. Please reach out if you’d like clarification. 

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:

1. Citi – may seem like a POC with Wellington and this is a huge shift – Citi collaborates with Wellington Management and WisdomTree to explore tokenization of private markets. 
2. The acceleration of ETF demand needs to be noted as a shift – Bitcoin ETF inflows pick up again, with BlackRock leading the way. 
3. In our investment process we put a lot of emphasis on sentiment and this is interesting in terms of broader sentiment – Crypto Fear & Greed Index hits highest level since Bitcoin’s 2021 record high. 

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 64%. 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.

• We believe the second gap will begin to close as Bitcoin reaches new highs – contact us at [email protected] for more details.  

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 believes demand for Bitcoin products is 10x the supply
• Citi proof-of-concept tokenizes private equity funds on Avalanche
• Crypto.com president talks up MiCA, allowing exchanges to expand across Europe
• Chainalysis, Fireblocks, Gauntlet make Forbes’ Fintech list
• Ledger, Coinbase Pay integrate to give users direct access to buy, sell crypto
• Banxa, payments partner for Binance and OKX, lands on UK crypto register
• Ripple to buy New York Crypto Trust company to expand U.S. options
• Cryptodollar minting protocol M^0 will allow institutions to issue stablecoins backed by U.S. treasuries
• Ethereum developers target March 13 for milestone ‘Dencun’ upgrade on mainnet
• OKX rolls out crypto exchange services in Argentina
• Crypto fear & greed index hits highest level since Bitcoin’s 2021 record high
• Tether and Circle stablecoin purchases dominate in Argentina
• Ethereum validator entry queue signals renewed interest in staking
• Genesis gets court approval to offload $1.6B Grayscale shares

The Shift List

• Citi collaborates with Wellington Management and WisdomTree to explore tokenization of private markets
• Franklin Templeton joins Ethereum ETF race
• Bitcoin ETFs (Ex-GBTC) now hold more BTC than MicroStrategy
• BlackRock, Fidelity Bitcoin ETFs see largest debut month of any ETF in 30 years
• Bitcoin ‘stronger’ ahead of halving: Grayscale
• Gerber Kawasaki advisor says a lot of clients are interested in spot Bitcoin ETFs
• Risk assets like Bitcoin are defying low Fed rate cut expectations: Analyst

Macro and Regulatory Environment

• Australian judge hands split decision in Market’s Regulator vs Block Earner
• New Zealand central banker Adrian Orr says stablecoins aren’t stable
• UK’s planned stablecoin rules need reworking, crypto advocates say
• NY attorney general triples her accusations against Gemini, DCG, seeks $3B
• Nigeria urged to regulate cryptocurrency to tackle financial crimes
• UN probes $3B North Korean cyberattacks on crypto firms
• Philippines rules out blockchain for wholesale CBDC seen likely by 2026: Report
• FCA issued 450 warnings to crypto firms in the final months of 2023
• Upcoming high-level EU financial policy talks could steer crypto oversight: Source
• Indonesia picks crypto-friendly team in presidential election

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.