Market Commentary

The eleven new spot Bitcoin exchange-traded funds have now amassed more than US$7.6 billion in assets under management, excluding Grayscale’s converted GBTC fund. BlackRock’s U.S. spot Bitcoin ETF also surpassed the assets under management of all Canadian Bitcoin ETFs combined, reaching 56,621 Bitcoin — currently worth around US$2.5 billion. The number of Bitcoin whales, wallets holding over 1,000 tokens (roughly US$44 million), rose to a multi-month high of 73, according to data from Glassnode.

Spot trading volume across centralised crypto exchanges continued its upward trajectory for the fourth month in a row in January, climbing to a level last seen in June 2022 as the approval of Bitcoin ETFs sparked renewed interest in digital assets. Tether, the leading stablecoin issuer, booked a record US$2.9 billion net profit in Q4 2023  as per its latest attestation report conducted by BDO. The report highlights an all-time-high increase in excess reserves backing Tether’s tokens in circulation. The company had close to US$1 billion in net operating profit, which was mainly from US t-bill interests, and around US$1.85 billion from gold and Bitcoin. Tether also acquired an additional 8,888 Bitcoin in Q4, increasing its total holdings to about 66,465 Bitcoin — currently worth around US$2.8 billion. Tether’s net profits are now 10% of JPMorgan’s despite having only 50 employees compared to JPMorgan’s 250,000.

CEO Comment 

The Gap between Bitcoin and the S&P 500 has largely declined 7% to 38% from last week’s 45% difference. The recent increase in Bitcoins price is largely being attributed to the outflow from Grayscale’s GBTC ETF beginning to slow down. The consistent inflows into the competing ETFs will start to push price pressure to the upside, with a report today stating that BlackRock and Fidelity now own a combined 144,640 Bitcoin worth US $6.5 billion for their spot Bitcoin ETFs or 0.74% of the total circulating supply.

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. This Metamask deal is a true shift – it brings Web 2 to web3 in a novel way – MetaMask deal with Robinhood broadens crypto access
2. Again although the Metamask back end has been doing this for a while it is the Web2 – Web3 partnership that matters here – ENS partners with GoDaddy to enable users to link wallets to domains
3. Fidelity adding up to 3% of Bitcoin to their traditional ETF offering may be the story of the year as far as shifts go.

Our Top “alts shift” list featuring shifts in our Alt universe being game changing shifts that drive our thematic approach – A second Gap where the broader digital asset market has circa 65% to close so there is a big opportunity here, we see this as a selective opportunity to select and grow our alts portfolio via our “alThematics” work.

• Farcaster DeSoc app is getting some traction as the “new crypto twitter” and an airdrop on the way. I highly recommend signing up simply to see the mind blowing Web2/Web3 payment rail where a $5 cash Subscription is processed from an Apple wallet on-chain in seconds. Witnessing tech like this is a vision of the future of finance.
• Although not an Alt specific update, this Bitgo move into real world asset tokenisation shows the potential in this nascent space – BitGo looks to jumpstart RWA tokenisation segment via acquisition

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, and scale up technologies such as ZKrollups – anything Crypto identity realty, 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 mean ‘substitution’ from gold into BTC will continue, says Cathie Wood
• Bitcoin ETFs lead to record miner reserve BTC outflows
• Ether tops $2.4k as Cathie Wood’s Ark, 21Shares amend Spot ETH ETF filing
• MetaMask deal with Robinhood broadens crypto access
• A Crypto Carbon Credits exchange is created in Germany
• Binance to delist Monero privacy token
• ENS partners with GoDaddy to enable users to link wallets to domains
• Hashnote’s U.S. Treasuries token now available through crypto custodian Copper
• Former Terraform Labs CFO Han Chang-joon extradited to South Korea by Montenegro
• MicroStrategy buys $37M in Bitcoin, bringing holdings to 190,000 BTC
• BitGo looks to jumpstart RWA tokenisation segment via acquisition
• Helix brings Japanese Yen on-chain
• UBS Hong Kong tokenises warrants on Ethereum with OSL
• BlockFi and 3AC settlement deal gets judge’s go-ahead but remains sealed
• Polish town adopts stablecoin for local commerce

The Shift List

• BlackRock’s Bitcoin ETF inflows climb to fifth-highest among all ETFs in 2024
• ProShares embraces spot Bitcoin ETF impact on BITO futures
• Prometheum, the only U.S. registered crypto platform, picks Ether as its first product

Macro and Regulatory Environment

• SEC delays another Ether ETF application
• Treasury Secretary Yellen says U.S. needs better stablecoin regulation
• Ripple must share financial statements requested by SEC, court rules
• South Korean regulator to discuss spot Bitcoin ETF with U.S. SEC
• El Salvador’s Bitcoin-friendly President Nayib Bukele wins re-election
• Treasury says cash is still the primary tool used for money laundering
• SEC votes to expand ‘dealer’ rule to rope in crypto firms
• South Korean authorities probe OKX over alleged unregistered services
• US Virginia bill seeks working group to study crypto, blockchain
• Federal Reserve drops enforcement action against FTX-linked US bank
• Fed’s Powell says US on ‘unsustainable fiscal growth’ as debt burden grow

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.