DigitalX Weekly Crypto Update: Market Trends and Analysis

Market Commentary

After 846 days since the last all-time-high, Bitcoin finally surpassed US$69,000 on Tuesday. Simultaneously we observed all-time-highs reached in Bitcoin futures open interest as well as inflated funding rates, indicating an influx of retail interest entering the market. Shortly after the peak, Bitcoin saw a flash crash on some exchanges – flushing out over a US$1 billion in long positions, sending Bitcoin down by 14% before swiftly levelling to around $65,000. The volatility displayed this week is typical for a strongly bullish market with retail speculative flows taking ever larger leveraged positions. Indicative of the bullish sentiment – several ‘memecoins’ have reached all time highs in the past month.

While retail investors are accumulating this week, professional investors are not far behind. Blackrock has filed to include spot Bitcoin products as part of its Strategic Income Opportunities Fund (BSIIX) – with US$36.5b in assets under management. A move like this is transformational for institutional adoption, with the BSIIX being one of many approved product lists. This news comes at a time when professional and institutional investors ponder how Bitcoin fits into traditional portfolios

The SEC has again delayed making a call on spot Ethereum ETF approvals. The original application was filed in November and the March deadline has now shifted. Bloomberg analysts put the odds of an Ethereum ETF approval at 70%, but its potential security implications make it a more difficult proposition for the SEC. In the meantime, alternate chains continue to flourish – most notably Solana briefly trading near the US$150 mark, up 45% year to date. 

CEO Comment

The Gap between Bitcoin and the S&P 500 has narrowed to 9%, further dropping from 17% last week. The closing of the Gap has aligned with Bitcoin reaching all time highs, with an expectation for parity with the S&P 500 any day now – noting that this seemed impossible some months back. We invite you all to register for our analyst information session next week to hear more on the drivers of Bitcoin’s path to US$100,000 (beyond ETFs). 

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. DigitalX makes the shift list this week with our support of Mason Stevens on a new groundbreaking report for the CFA Society. The addition of digital assets into an investment portfolio is crucial for uptake and understanding where they sit individually for asset allocation. In terms of the answer of “not now” for digital assets to have their own asset class we say – the NEXT, NOW.
2. The CFTC advisory committee news is a huge foundational element. The CFTC has long had the stance that digital assets are not unregulated with all cryptocurrencies being classified as commodities. The taxonomy element will be important – as Caroline Pham says “words create worlds” – CFTC advisory committee votes to advance pioneering digital assets taxonomy for agency review.
3. The onboarding of ETF’s onto new platforms we believe will create the next wave of demands – Bank of America, Wells Fargo to offer spot Bitcoin ETFs to clients: Bloomberg.

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 41%. 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. 

• This will certainly be one to watch, with the DePIN space certainly gaining traction as a thematic – Solana-based DePIN io.net hits $1 billion token valuation in latest funding round batch.
• As Bitcoin hits all time highs the set up is there for Alts to outperform – you have not missed the boat.

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

• Bitcoin price breaks above previous all-time high of $69,000 after 846 days
• Bitcoin is hitting all-time highs around the world
• BlackRock’s IBIT spot Bitcoin ETF hits record daily inflow of $788 million
• Bitcoin ETF giant Grayscale introduces a crypto staking fund
• Bitcoin ETF buying led by retail, hedge funds, FAs larger players still to come: Bitwise CIO
• Coinbase ‘Smart Wallet’ feature, so lengthy seed phrases aren’t needed
• Restaking platform EigenLayer ‘flips’ Aave in TVL
• Trading platform Robinhood, layer-2 Abritrum team up to offer swaps to users
• Marathon’s Slipstream mines largest Bitcoin block on record
• DeFi poised for major comeback amid Bitcoin’s rally, predict Berstein analysts
• Solana-based DePIN io.net hits $1 billion token valuation in latest funding round batch
• European crypto exchange Bitstamp receives in-principal approval in Singapore

The Shift List

• CFTC advisory committee votes to advance pioneering digital assets taxonomy for agency review
• Bank of America, Wells Fargo to offer spot Bitcoin ETFs to clients: Bloomberg
• BRICS will create payment system based on digital currencies and blockchain: Report
• BlackRock’s spot Bitcoin ETF starts trading in Brazil
• Prometheum adds Morgan Stanley alum as CFO ahead of trading launch
• BlackRock seeks to add Bitcoin ETFs to its strategic portfolio
• Deutsche Börse exchange debuts crypto platform for institutions

Macro and Regulatory Environment

• SEC delays decision on BlackRock’s spot ethereum ETF proposal, seeks public feedback
• US Supreme Court case could change crypto industry regulation
• Nigeria details Binance executives as it investigates the crypto exchange: Reports
• U.S. House panel votes to disapprove of controversial SEC custody guidance
• Indonesia’s crypto watchdog pushes for friendlier taxes as regulatory overhaul looms
• UK law enforcement will soon have more power to seize crypto assets
• SEC in ‘enforcement-only mode’ for crypto, Commissioner Pierce says at ETHDenver
• State attorneys general argue SEC overstepped in Kraken lawsuit
• BIS issues regulatory recommendations for global stablecoin arrangements
• Hong Kong draws 22 firms seeking crypto exchange licences including OKX, ByBit and HTX
• Hong Kong’s market regulator issues warning against crypto exchange BitForex
• Coinbase counters use of default judgement ruling in SEC lawsuit
• UK launches consultation on implementing OECD crypto reporting framework
• Digital Currency Group files for dismissal of New York Attorney General’s lawsuit
• ShapeShift settles SEC charges it sold crypto securities

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.