Market update
Bitcoin broke through the US$50K (A$76.4K) mark today for the first time since December 2021. Back then, we were in the grip of a retail frenzy, with Terra-Luna and FTX pumping prices, and a bunch of hype from Super Bowl crypto ads. This time around, retail interest on Google is low, and there were no Super Bowl ads – apart from President Biden’s unrelated “laser eyes” meme. “Interest rates falling, spot ETFs driving billions in new flows, halving two months away. Face-ripping rally incoming IMO,” Skybridge capital founder Anthony Scaramucci said. Bitcoin is now the 10th largest asset in the world, just ahead of Berkshire Hathaway and just behind Meta. BTC finished the week up 18% to trade around A$76,423 (US$50K) at the time of writing, while Ethereum gained 16.2% to trade around US$4,063 (US$2,662). Everything else was up, including Solana (17.1%), XRP (5%), Cardano (14.4%), Chainlink (9.3%) and Dogecoin (5.8%). The Crypto Fear and Greed Index is at 70 or Greed.
Bitcoin didn’t make any major moves this week and finishes down 1.8% on seven days ago at A$65,230 (US$42,390). Ethereum eased down by 1.3% to trade at A$3,519 (US$2,287). Solana lost 7%, Ripple fell 6.4%, and the rest – Cardano (-7.1%), Avalanche (-5.5%) and Dogecoin (-5.3%). Traditional markets are doing well, with the ASX hitting a record high, and interest rates expected to stay on hold at the RBA’s meeting today even though inflation has eased to 4.1%. There are undercurrents of danger however, with US Fed Chair Jerome Powell warning about “unsustainable” debt — the US now pays more on interest than defence — and the Chinese stock markets are in trouble. China’s CSI 1000 index fell 8% yesterday and a third of stocks halted trading. The Crypto Fear and Greed Index is at 60, with markets growing more comfortable with the performance of the Bitcoin ETFs.
It’s fair to say things aren’t going exactly to plan with the Bitcoin ETFs, with massive outflows from Grayscale sucking much of the fun out of the launch. Bitcoin finishes the week down 6.7% to trade around A$60,430 (US$39.74K), while Ethereum lost 8% and is trading around A$3,529 (US$2,317). Almost everything else was down: Solana (-11%), XRP (-8%) and Cardano (-9%), however, Dogecoin only lost 1% on hopium that the new ‘Xpayments’ account on X might see DOGE added as a payment method. A retracement in the lead-up to the halving is normal according to Rektcapital, who points out that at the same stage in the cycle in 2016 Bitcoin had lost 16%, and in 2020 it was 63%. In traditional markets, the S&P 500 has hit a new all-time high, although there are concerns that interest rate cuts won’t come as quickly as hoped. The Crypto Fear and Greed Index is at 55, or Greed.
It’s been a historic week, with the launch of multiple Bitcoin ETFs in the US marking a “potential paradigm shift in the global perception and use of digital assets,” according to Morgan Stanley. However, the expected billions have failed to flow in yet, with the SEC’s bungled approval process, investors fleeing Grayscale’s GBTC and delayed and incomplete TradFi reporting all playing a role. The Bitcoin price climbed to around A$73,000 (US$48.7K) on the 11th and then fell to under A$63K (US$41.9K) on the weekend, with Google searches for “why is Bitcoin dropping” increasing 1,100%. Bitcoin finished the week down 9.1% to trade at A$63,921 (US$42.7K), while Ethereum gained 8% to trade at A$3,771 (US$2,515). Solana fell 2%, XRP and Dogecoin were both flat, and Cardano lost 2%. The Crypto Fear and Greed Index has retreated to 52 or Neutral for the first time since October.
Bitcoin volatility increased this week ahead of the January 10 deadline in the US for a decision on the Bitcoin ETFs. The price fell below A$63K ($42K) on a report that the ETF would be denied and then surged again today on renewed confidence to top A$70K (US$47K). Alex Thorn, head of research for Galaxy, says that after ETF approvals, such sharp price action could become a thing of the past: “Volatility will likely dampen, along with inter-crypto cyclicality given AUM stickiness.” The price surge saw Bitcoin’s market cap once again overtake Facebook‘s. At the time of writing, Bitcoin was up 5% on the same time last week to trade at A$69,763 (US$47,100). Ethereum was flat this week and is trading around A$3,480 (US$2,328). Solana fell 11%, XRP lost 9%, Cardano was down 14%, and Dogecoin retreated 12%. The Crypto Fear and Greed Index is at 76 (+5) or Greed.