In Markets
Bitcoin officially broke through the A$100K barrier yesterday, and it’s at all-time highs against 14 of the world’s top 20 fiat currencies, including the euro, yen and pound. The ATH in USD is just above US$69K (A$106K), and the inflation-adjusted high is around US$78.5K (A$120.6K). At the time of writing, Bitcoin was up 24% on the same time last week and 57% for the month, to trade around A$103,850 (US$67,882). Ethereum gained 13.3% this week (55.9% for the month) to trade around A$5,506 (US$3,603). Everything else was up, including Solana (20%), XRP (18%) and Cardano (25%). Memecoins are flying with Dogecoin doubling, Shiba Inu gaining 241%, and the best-performing categories of the past seven weeks are “cat-themed memecoins” (up 199%), “fractionalised NFTs” (161%), “dog-themed coins” (164%) and “Elon Musk inspired coins” (108%). The Crypto Fear and Greed Index is at 90, or Extreme Greed. Traditionally, money has flowed from Bitcoin to Ethereum and then Altcoins; however, the Bitcoin ETFs may change that equation.
From the IR OTC Desk
BTC ETF demand continues to swamp mining supply, and this will likely continue into the halving. While the expectation has always been for an increasing price of BTC to buoy lesser market-cap cryptocurrencies, some of the moves this week have been truly wondrous, particularly in the meme coins.
Major tokens and other assets like equities tend to exhibit pricing ‘tangibility’. And what I mean by this is that a discounted cash flow, revenue projection or protocol utilisation model is often overlayed as a metric to attain a ‘fair value’ price. This naturally sees demand increase when fair value moves materially above the market price, vice versa. This causes a natural and very fundamental increase in the supply side dynamics as prices accelerate higher (all inputs remaining constant).
The dynamic of many of the meme tokens and NFTs, is that an accurate forecasting model quite simply can’t be derived. This can create a marketplace where pricing can quickly and violently move in either direction – a purely speculative marketplace. In times of euphoria, it makes sense that these tokens (without a pricing rudder and denominated in retail size) can significantly outperform. In times of lethargy, the opposite will most likely endeavour to be true. Either way, expect market volatility to continue in these cryptocurrency tokens. It is sure to be a wild ride!
One of the more interesting discussions this week has been whether the fall in ETH/BTC has been driven solely by BTC. This seems to be most likely; however, with positive price action, there is sure to be additional attention on any chance in the ETF application process for ETH. Currently, ETH/BTC is trading at 0.0535 versus 0.0570 this time last week.
Additionally, what has been telling for macroeconomic markets, is the lack of pricing influence changing bond yields are having on both equity markets and cryptocurrencies. That is, cryptocurrencies are behaving as their own market, and are currently agnostic to inflation and monetary policy. Watch this space.
On the OTC desk, USDT is trading well over par. This is a sign of market euphoria as on-ramping into cryptocurrencies through USDT continues. As we translate this to the activity on the desk over the week, altcoin enquiries have spiked. While cryptocurrency has been broadly balanced in the stables, opportunistic buying of alternative layer 1s (outside of ETH and SOL) have gained traction. For the time being, BTC and ETH ‘hodling’ appears to be broadly taking place. Continue to track ETF inflows relative to BTC mining supply.
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In Headlines
Insanely bullish facts and figures
February saw the biggest monthly candle in Bitcoin’s history. Veteran analyst Peter Brandt said, “My bet is that this is a ‘starting’ candle.” Bitcoin influencer Dylan LeClair says that history suggests that after Bitcoin breaks ATHs, the price will double. In December 2020, it took 18 days, in March 2017, it took 84 days, in November 2013, it took 10 days, and in March 2013, it was 18 days. Bitcoin Archive adds that the last time Bitcoin broke into new highs, it tripled in just 103 days. MicroStrategy’s share price also hit a new ATH for the first time since the dot-com bubble and has outpaced AI darling Nvidia in gains since the end of 2022. It’s just announced it will raise another US$600M (A$921M) to buy more. Trader Jacob Canfield argues that Bitcoin ETFs have changed the unit bias for Bitcoin. Instead of US$68K (A$104K) for one Bitcoin, retail can buy one share of BlackRock’s Bitcoin ETF for just US$39 (A$60). “This can easily double. $40 -> $80 is #Bitcoin over $100k,” he wrote. El Salvador president Nayib Bukele posted a picture of a skeleton looking out the window waiting for mainstream media to write an article pointing out how successful its Bitcoin bet has been: “When Bitcoin’s price was low they wrote literally thousands of articles about our supposed losses,” he said. The dark side of Bitcoin mooning is that some suggest it indicates TradFi is headed to the lifeboats, with the US national debt rising by US$1 trillion (A$1.5T) every 100 days at present.
Bitcoin ETFs
BlackRock’s Bitcoin ETF crossed the US$10B (A$15.3B) mark in Assets Under Management after just seven weeks. It’s the fastest time to the milestone in ETF history, with less than 4% of all ETFs ever reaching the figure. It took the Gold ETFs two whole years to top the amount (although $10B was worth more back then). There were three days of inflows above half a billion USD, though Grayscale outflows ramped up toward the end of the week, leading to a net negative day. Monday’s inflows had yet to come in, but reports suggest it was the second-highest trading volume for the ETFs since launch.
JPMorgan forecasts doom
The party poopers over at JPMorgan released a report this week suggesting the Bitcoin price could drop toward US$42K (A$64.5K) after the halving in April. The analysts say the reduction in the block reward to 3.125 BTC would increase the cost of production to $42K per Bitcoin, assuming 20% of the hashrate goes offline. “This $42,000 estimate is also the level we envisage Bitcoin prices drifting towards once Bitcoin-halving-induced euphoria subsides after April,” the analysts said.
Gemini Earn customers made whole
In some unexpected good news, Gemini Earn customers will receive 100% of the US$1.1 billion (A$1.7B) of assets that have been locked on the platform since the great crypto meltdown of 2022. Even better, they’re getting the funds back in crypto — so if they had 1 Bitcoin in the scheme back when the underlying crypto lender Genesis halted withdrawals in 2022 — they’ll get 1 BTC back today. Gemini says 97% will be returned within two months. The plan still has to be approved by a bankruptcy court.
SBF asks the court to go easy
Disgraced FTX and Alameda founder Sam Bankman Fried has asked a court to go easy on him and is looking for a sentence of 6.5 years for his part in the multi-billion dollar fraud. Prosecutors will submit their sentencing request on March 15, with sentencing occurring on March 28. Friends and family have submitted 29 letters to the court painting SBF as a naive, neurodivergent kid who just wanted to do the best for everyone due to his effective altruism belief system and took a wrong turn.
State AGs against SEC
A group of eight US state attorney generals have filed a joint amicus brief in the SEC’s case against Kraken, arguing the SEC’s “enforcement actions exceed its delegated powers” and massively expand the definition of investment contracts. The AGs are worried the SEC is encroaching on their territory.
Ethereum ETF
Chief legal officer for Variant Fund Jake Chervinksy says he is “a lot less confident about ETH ETF approval this year than many of you are.” He says the SEC copped a lot of political blowback for approving BTC ETFs and will not want to add fuel to the speculative crypto fire. The SEC just delayed BlackRock’s Ether ETF application again overnight. Bloomberg ETF analyst Eric Balchunas caused controversy by balling the ETH ETF “small potatoes vs spot Bitcoin ETFs” and suggested it was like the ‘90s band “Sister Hazel trying to follow Nirvana.” However, President of the ETF Store Nate Geraci said afterwards that he was prepared to go out on a limb and “predict spot ether ETFs will be a bigger deal than everyone thinks.” Ethereum’s Dencun upgrade, which introduces proto-danksharding and “blobs”, will go live in a little over a week. Co-founder Vitalik Buterin noted this week that Polymarket users are betting it will make gas fees on L2s around 60X lower.
Until next week, happy trading!
