This week's latest trends and insights in the digital asset market from our asset management team.
Market Commentary
A stellar way to end the week and the month – Bitcoin hit an all-time high in Australian dollars (and in currencies of at least 14 other countries). Spot Bitcoin ETFs are accumulating up to ~2,800 Bitcoin each day whilst only 900 are produced; and with the upcoming halving (expected in late April) the amount of Bitcoin produced daily will halve. Spot Bitcoin ETFs also broke their daily trading volume record this week with more than US$6 billion trading on Wednesday; this beat the volume record previously set on the ETF’s launch day. The increased volume of the products is piquing the interest of many asset allocators.
MicroStrategy’s Bitcoin portfolio briefly exceeded US$12 billion in value, the highest since the firm began buying Bitcoin in 2020. MicroStrategy’s total Bitcoin holdings reached 193,000 after buying another 3,000 BTC worth US$155 million on February 26; this follows a purchase of 850 BTC for US$37.2 million in the previous month. As of 27 December, 2023, the average Bitcoin purchase price for the firm’s holdings stood at US $31,170 per Bitcoin.
CEO Comment
The Gap between Bitcoin and the S&P 500 has sharply dropped to 17% this week, narrowed down from 29% last week. This is a significant jump and the lowest we have seen since tracking it from the 2022 lows which was 66%. The reason for this is probably the most significant as outside of normal market options expiries etc., we have an increase in real, persistent, consistent if not relentless net buying from the new US ETF’s. All-time highs may lead to some higher volumes for the time being, however if we continue along the current trend Bitcoin may break through ATH’s quite quickly, with its next level potentially being US$100,000.
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:
- ETF’s still making headlines – with recent average daily buying volumes of ~2,800 Bitcoin each day whilst only 900 are produced.
- This Mirco-strategy trade of US$155 million in one clip, was a big trade in the market we observed as potentially taking out significant supply. Why is this a shift? MicroStrategy is now the 477th largest company in America, overtaking United Airlines.
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 60%. 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.
- As previously mentioned in our AltThematic push we expanded our modular blockchain strategy investing in Celestia.org – the big story in this space, as the second gap continues to close, is the increase in airdrop opportunities with the current narrative surrounding EigenLayer gaining momentum this week. Interestingly this is ETH based, so it could act as an increased source of demand for ETH going forward.
- Chainlink offers exposure to RWAT infrastructure and now they have found a way to make themselves relevant for ETFs too! Ark and 21Shares are to disclose spot Bitcoin ETF reserves via Chainlink integration.
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
- Retail investors were likely behind the crypto market rally in February, JPMorgan says
- Bitcoin ETF price/flow correlation is declining: JPMorgan
- Ether demand is driven by U.S. investors, data shows
- Uniswap DEX to launch web wallet extension
- Reddit discloses Bitcoin and Ether holdings in IPO filing
- OANDA opens FCA-registered crypto trading platform in the UK
- Tornado Cash reportedly suffers backend exploit, user deposits at risk
- HTX withdraws Hong Kong crypto exchange application
- Crypto exchange OKX enters Turkey as part of global expansion plan
- Bitcoin-focused payments app Strike rolls out services to Africa
- U.S. government crypto wallets transfer nearly $1B of Bitcoin seized from Bitfinex hacker
- El Salvador’s Bukele says value of country’s Bitcoin holdings up over 40%
- Crypto custodian Finoa offers Centrifuge’s tokenised T-Bill fund
- Hut 8 to deploy bitcoin reserves in new treasury strategy
- HashKey OTC secures in-principal licence approval in Singapore
- IRS hires 2 private-sector crypto experts to prep for tax season
- Kraken launches institutional arm aiming to cash in on Bitcoin ETFs
The Shift List
- Bitcoin soars to $A record ahead of supply crunch
- Ether’s Bitcoin beating rally not just because of potential ETF approval: Bernstein
- Ether tops Bitcoin as the largest crypto asset for institutions: Bybit Research
- Morgan Stanley evaluating spot Bitcoin ETFs for its giant brokerage platform: Sources
- MicroStrategy is a timely play on Bitcoin halving; initiate at buy; Benchmark
- VanEck starts digital asset management platform and NFT marketplace
- Ondo Finance integrates tokenised treasuries onto Aptos
Macro and Regulatory Environment
- Frankfurt to host new EU Money Laundering watchdog tasked with monitoring crypto
- Judge signs off on Binance’s $4.3B plea deal with prosecutors
- Crypto exchange Kraken files to dismiss SEC lawsuit against it
- Texas Blockchain Council, Riot Platforms sue Dept. of Energy, OMB over ‘emergency’ survey
- Crypto, tokenisation, AI are priorities for monitoring, FSB says ahead of G20 meeting
- Republican lawmakers introduce legislation to ban a CBDC in the U.S. … again
- Senator Warren hits out at crypto again, says the industry needs to follow the same rules as TradFi
- Gemini settles with NY regulators, will return $1B to Earn customers via Genesis bankruptcy
- IMF urges careful design, slow introduction for Pacific Island digital currencies
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.