This week's latest trends and insights in the digital asset market from our asset management team.
Market Commentary
It has been a short week but the market witnessed a notable change in market sentiment. With the stronger-than-expected Manufacturing Purchasing Managers’ Index and higher inflation readings from the sector, the expectation is now leaning towards the Fed retracting its forecast of three 25-basis point rate cuts for 2024. The probability of the Fed implementing the first rate cut in June has dipped below 50%. This shift sent the U.S. 10-year Treasury yield to its 2024 high of 4.43% and the U.S. dollar to its highest level since last November. Bitcoin price fell to US$66k with the broader crypto market concluding the week in red.
Despite the negative market sentiment, the new spot Bitcoin ETFs attracted positive net inflows of ~US$100 million over the last five trading days from the 28th of March to the 3rd of April.
There are six weeks until 23 May, when the U.S. Securities and Exchange Commission (SEC) is expected to make a decision based on the current state of the spot Ethereum ETF applications. Yesterday, the SEC opened a window for comments on three spot Ethereum ETF applications associated with Grayscale Investments, Fidelity, and Bitwise who will undergo a three-week comment period. Other than this, there has been no other known engagement from the SEC on the matter. This lack of engagement from the SEC caused some analysts, including the crypto market maker GSR, to revise its estimate of the likelihood to a mere 20% for a spot Ethereum ETF approval in May.
CEO Comment
The Gap between Bitcoin and the S&P 500 has widened to 20%, a massive jump from last week’s 5%. This is a common theme when the market is in risk-off mode and continues to highlight that volatility surrounding Digital Assets will be an enduring theme. We expect the Gap to close again as we enter the Bitcoin halving cycle in a matter of weeks.
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:
- Our very own interview on the Street platform highlights the data opportunity that we see will one day underpin the shift into real world asset tokenisation.
- The SEC calling for broader feedback on the Ethereum ETF’s is a great step in consultation and we found the comments from Consensys to be powerful (remembering that their CEO Joe Lubin is a co-founder of Ethereum).
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 37%. 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 evolution of smart contracts is literally mind blowing for Web3 financial infrastructure – if you want to know why? Listen to this, and call us!
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 halving could bolster ETF tailwinds for the cryptocurrency: Canaccord
- Spot Bitcoin ETF trading volume tripled in March to $111 billion
- Goldman Sachs clients not interested in crypto, says Chief Investment Officer: WSJ
- Galaxy plans to raise $100m for crypto venture fund
- Digital asset platform with ex-Goldman partner as co-founder gets Bahrain crypto license
- Australia poised for ‘inflection point’ of crypto demand – Kraken Aus MD
- Silk Road Bitcoin worth $2B moved by U.S. government: On-chain data
- 21Shares list ETP for staking Telegram-endorsed token TON
- Crypto exchange Deribit’s Dubai-based unit wins conditional VASP license
- Thai crypto exchange Bitkub plans 2025 IPO: Bloomberg
- Custodia Bank loses lawsuit challenging Fed rejection of master account application
- Over $1B in U.S. Treasury Notes has been tokenised on public blockchains
- Ondo Finance to move $95M to BlackRock’s tokenised fund for instant settlements for its T-Bill Token
- Van Eck heir to launch new USD stablecoin with $12M VC backing
- Crypto.com expands in South Korea despite increasing regulatory scrutiny
- Tornado Cash co-founder requests dismissal of money laundering charges
- Nansen integrates blockchain data from SportFi chain Chiiz and Ethereum rollup zkSync
- Coinbase, Circle challenge Basel committee’s stablecoin requirements
- FTX bankruptcy estate aiming to begin repaying creditors by the end of 2024
- Consensys urges SEC to recognise Ethereum’s better-than-Bitcoin qualities in considering ether ETF applications
- Galaxy Digital-owned crypto custody specialist GK8 unveils tokenisation wizard
- Robinhood initiated as market perform at KBW as retail trading returns
The Shift List
- Central Bank group starts tokenisation project to enhance monetary system
- Telegram enables Toncoin payments for in-platform ad purchases
- Grayscale launching proof-of-stake investment fund for millionaires
- Chinese gov’t launches public blockchain infrastructure with Conflux Network
- U.S. has its 11th spot Bitcoin ETF after Hashdex Fund conversion
Macro and Regulatory Environment
- Fewer than 30% of jurisdictions globally have started regulating crypto: FATF Chief
- Singapore enacts licensing requirements for crypto custody services and others
- Argentine government passes registration requirements for crypto firms
- Binance executives file suit against Nigeria: local media
- Indonesia will require crypto products to pass through regulatory sandbox or be deemed illegal
- UK ad rules apply to influencers, crypto memes, regulator confirms in new guidance
- Tron argues SEC ‘not a worldwide regulator’ and lawsuit goes ‘too far’
- SEC Commissioner Hester Pierce denounces SAB 121 and criticises her agency’s regulatory approach
- Push for anti-CBDC bill could detail stablecoin bill support, says TD Cowen
- CFTC Commissioner Pham says agency may be infringing on SEC’s authority in KuCoin charges
- Taiwan’s crypto sector receives government approval to form industry association
- U.S. SEC calls for comments on Spot ETH ETFs
- UK regulators publish draft guidance on digital securities sandbox open to DLT
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.