DigitalX Weekly Crypto Update: Market Trends and Analysis

Market Commentary

Bitcoin took a slight breather starting the week at US ~$69,000 after reaching an all-time high (~US $73,000) in the previous week. Volatility continued into the early stage of the week, however, the dip was short-lived and completely retraced after the Federal Reserve met and reported to the market that it still expects three rate cuts this year.  This led to a rally in several assets including Bitcoin and Ethereum, with most of the demand seemingly appearing from the spot market as funding rates in the futures market remained subdued.

The Ethereum Foundation, a Swiss non-profit central to the Ethereum ecosystem, is reportedly under scrutiny from an undisclosed “state authority,” as indicated by information found on the organisation’s GitHub repository. This inquiry arises amidst significant technological shifts within Ethereum and a potential turning point for its native cryptocurrency, ETH. American investment firms are showing interest in offering ETH as an exchange-traded fund, but the US Securities and Exchange Commission (SEC) has been cautious, in contrast to its recent approvals of Bitcoin. 

Solana continued to make new all-time highs in terms of number of transactions on the network along the total volume traded, largely attributed to the meme-coin frenzy. In an interview with CoinDesk, Solana Labs CEO Anatoly Yakovenko said that it is a welcome stress test for the fast-growing network.

CEO Comment

The Gap between Bitcoin and the S&P 500 has widened to 8% this week, expanding from last week at 1%. This was a function of broader weakness in Bitcoin which continues to remain volatile. There was no one narrative for the weakness, it was a combination of the broader macro environment with rates being held flat, and uncertainty surrounding the recent outperformance of the digital asset space.

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. 1. When we speak of 2024 we often say it is the year of scaling up for Real World Asset Tokenisation – and here BlackRock comes leading the charge – BlackRock to launch tokenised investment fund with Securitize.
   2. If the Japanese State Pension Fund invested in Bitcoin we may as well abolish the shift list as it would mean we have reached the mainstream – world’s largest pension fund is considering investing in Bitcoin.

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 42%. 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. 

1. There were some big advancements in tokenisation infrastructure post last week’s Ethereum Dencun upgrade, with MATIC making a whole lot of announcements around parallelisation and we think winning this innovation award is well deserved
2. The inevitable gaming fund between Immutable and King River could be the beginning of a wave of capital into the smaller blockchain gaming space.

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

• Standard Chartered raises year-end BTC forecast to $150K, sees 2025 high of $250K
• Grayscale CEO believes Bitcoin ETF fees will drop over time: CNBC
• Ethereum could top $14,000 next year alongside Bitcoin boom: Standard Chartered
• MicroStrategy now holds over 1% of Bitcoin’s total supply after latest purchase
• Bitcoin ETFs’ hot start seems largely driven by retail investors
• Gold investors aren’t switching into Bitcoin, JPMorgan says
• Ether ETFs could be bigger than Bitcoin ETFs, says VanEck
• Tether’s USDT gets delisted on crypto exchange OKX for EU users
• Binance crypto exchange users’ assets surpass $100 billion
• Mike Novogratz’s Galaxy Digital should be a ‘core holding’ for digital asset investors, Stifel Canada says
• Binance spun off venture capital arm earlier this year
• Ethereum activity drops ether supply to lowest levels since August 2022
• Starbucks shutting down Odyssey Beta NFT program
• Immutable, King River Capital, Polygon Labs set up $100m web3 gaming
• Kraken unveils qualified custody for institutions in crypto-friendly Wyoming
• Lithuania-licensed crypto bank meld to offer tokenised RWAs to retail investors

The Shift List

• Goldman Sachs head of digital assets: The future is on public blockchains
• Fidelity amends spot Ethereum ETF to include staking
• Following Fidelity’s lead, Grayscale looks to add staking for its proposed Ethereum ETF
• Financial advisory network Cetera approves the use of 4 spot Bitcoin ETFs
• BlackRock to launch tokenised investment fund with Securitize
• Citi and Brazilian Development bank join Hyperledger Foundation
• Galaxy Digital to introduce exchange-traded products in Europe in ‘matter of weeks’
• Polygon-based tokenisation platform Libre goes live for Brevan Howard, Hamilton Lane funds
• World’s largest pension fund is considering investing in Bitcoin
• Grab’s Singapore users can now use crypto to make payments
• Bitwise CIO says ‘we’re probably a few weeks away’ from first wirehouse to support spot Bitcoin ETFs

Macro and Regulatory Environment

• Federal Reserve keeps interest rates, rate cut outlook steady for this year
• Democrats ask SEC’s Gensler to block approval of more crypto ETPs
• SEC committed ‘gross abuse of power’ in suit against crypto company, Federal Judge rules
• SEC delays making a decision on the Hashdex and Ark 21Shares Ethereum ETFs
• Crypto-friendly Rep. French Hill seeks to lead the House Financial Services Committee
• Dubai’s tax-free economic zone DIFC enacts new Digital Assets Law
• UK regulator FCA plans to deliver a market abuse regime for crypto this year

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.