This week's latest trends and insights in the digital asset market from our asset management team.
Market Commentary
After five straight days of outflows from the previous week, the US-based spot Bitcoin ETFs saw a reversal in momentum as positive flows returned at the beginning of the week. Monday witnessed a notable positive influx of US$15.4 million, with a significant contribution of US$262 million from Fidelity, signalling renewed investor interest. This positive momentum continued into Tuesday, with a substantial flow of US$255.8 million, including an impressive US$279 million contribution from Fidelity, further bolstering confidence in the market.
Last week’s Federal Open Market Committee’s (FOMC) meeting proved positive for risk markets, despite the dot plot projections indicating ‘higher for longer’ rates. Jerome Powell’s dovish commentary led to markets pricing in a higher likelihood of rate cuts in 2024. Additionally, the US$1.2 trillion spending package approved by Joe Biden also boosted markets while avoiding another US government shutdown.
Amidst these developments however, the cryptocurrency exchange Kucoin faced legal action from the Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC) this week. Kucoin is ranked ninth in the world by assets with US$3.8 billion in client holdings. Concerns about the regulatory scrutiny led to US$170 million in outflows within a 24-hour period.
Ethereum again came under regulatory scrutiny as well this week, as the US House of Representatives committees pressed the Securities and Exchange Commission on the status of Ethereum as a potential security, while the SEC again delayed its decision on Grayscale’s Ethereum Futures Trust ETF. Meanwhile, the CFTC labelled Ethereum as a commodity in an unrelated legal case.
CEO Comment
The Gap between Bitcoin and the S&P 500 has largely shrunk from last week’s 8% to 5%.
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:
- London embracing crypto in this way could be a game changer – London Stock Exchange picks May 28 as start date for crypto ETN trading albeit for a limited investor range, it’s a start.
- In terms of the biggest shift of all (the scaling up of real world asset tokenisation) anything SWIFT is working on is a game changer for the settlement leg – so this is big – SWIFT declares second sandbox connector tests a success for CBDC and more.
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 38%. 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 met with Sergei Nazarov the CEO of Chainlink this week – their plan for global domination of enabling real world asset tokenisation validation is phenomenal – Avalanche and Chainlink collaborate on Australasian on-chain asset settlement.
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 ETFs see full week of net outflows, record low inflows for BlackRock, Fidelity
- BlackRock seeing only ‘a little bit’ demand for Ethereum from clients, says Head of Digital Assets
- Frax Finance targets $100B value locked in singularity roadmap
- BlackRock’s new tokenised fund brings TradFi, crypto closer: Bernstein
- Crypto exchange OKX to end services in India
- True Fi unveils lending protocol for tokenised real-world assets; TRU jumps 14%
- Goldman seeing ‘resurgence of interest’ for crypto options from hedge fund clients: Bloomberg
- CommEX, owner of Binance’s former Russian ops, to close down
- Avalanche and Chainlink collaborate on Australasian on-chain asset settlement
- Binance follows Circle and drops USDC support on Tron
- Bitcoin demand in Argentina reaches highest point in nearly 2 years
- Pakistani university launches country’s first metaverse-based classes
- Worldcoin makes Orb software open-source, implements ‘personal custody’
- NEAR launches multichain transaction from one account feature
- Layer-1 blockchain WAX signs deal with Amazon Web Services
- A16z-backed protocol unveils U.S. dollar stablecoin passing yield from RWA and DeFi
- Bitcoin miner Arkon Energy plans public listing in Amsterdam through merger with shell company
The Shift List
- Google quietly added ENS to Search
- WisdomTree granted trust company charter to offer crypto-related services in New York
- French energy giant EDF subsidiary becomes Chiliz blockchain validator
- London Stock Exchange picks May 28 as start date for crypto ETN trading
- SWIFT declares second sandbox connector tests a success for CBDC and more
- Insurance broker Marsh introduces $825M crypto custody coverage
Macro and Regulatory Environment
- SEC delays decision on Grayscale’s Ethereum Futures Trust ETF, again
- SEC Chair Gary Gensler says crypto markets ‘could use a little disinfectant’
- Binance blocked by Philippines Securities watchdog
- EU markets watchdog steps closer to finalising rules under MiCA
- Nigeria charges Binance with tax evasion after detained exec escapes: Reports
- UAE central bank introduces wholesale, retail digital dirham strategy
- Judge greenlights class suit alleging Silvergate Bank aided FTX fraud
- Hong Kong likely to allow in-kind creations for spot Bitcoin ETFs: Bloomberg
- Crypto exchange KuCoin violated anti-money laundering laws, U.S. charges
- UK Govt-backed report urges firms to execute tokenisation strategies
- SEC seeks $1.95B fine in final judgement against Ripple
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.
