![[1-8 December 2023] DigitalX Weekly Crypto Update: Market Trends and Analysis](https://media.licdn.com/dms/image/v2/D5612AQHR_r21L7EWow/article-cover_image-shrink_720_1280/article-cover_image-shrink_720_1280/0/1702605323834?e=2147483647&v=beta&t=5jolXvwfduLnPNj85uh6KrX9FIzeaEeFM7MZKM7ysvI)
[1-8 December 2023] DigitalX Weekly Crypto Update: Market Trends and Analysis
DigitalX Limited (ASX:DCC)
Transparent investment management at the intersection of technology and finance #Web3 #DigitalAssets
Weekly Price Action
*All figures below are in USD unless otherwise specified.
Market commentary
Bitcoin has continued its surge this week and is now trading at just under US $44,000, a ~16% rise over the week. As at writing, Bitcoin's market capitalisation has exceeded that of Berkshire Hathaway, Meta, and Tesla, making it the seventh most valuable traded asset globally.
While the Securities and Exchange Commission (SEC) has yet to approve a spot bitcoin ETF and has so far delayed all the received applications, there is evidence that they are actively in discussion with several applicants and could be finally ready to approve a spot fund. Asset management giant BlackRock amended its S-1 filing with the SEC for its proposed spot bitcoin ETF on Monday. A similar move was also made by Bitwise, possibly reflecting the on-going conversations with the SEC. Grayscale Investments CEO Michael Sonnenshein expressed optimism about conversations his firm has had with the SEC regarding the potential for a spot bitcoin ETF. He highlighted that the questions that Grayscale received from the SEC signal that they wanted to engage on the issue and they were eager to make progress.
The surge in Bitcoin price and the anticipation surrounding a spot Bitcoin ETF have spurred inflows into digital asset investment products with a record US $176 million (US $133 million inflows for Bitcoin funds and US $31 million inflows for Ether products) last week. This represents a 10-week total of US $1.76 billion of inflows — the highest since the bull market peak of October 2021, when futures-based bitcoin ETF products launched in the U.S.
CEO Comment
The Gap between Bitcoin and the S&P 500 decreased substantially this week, to an all time low since we have been recording it to 28% - as expected it is coming in very fast - we have had people saying they feel they have missed the boat however we? point out there is a second gap which is the potential for our diversified digital asset fund to make up its underperformance relative to Bitcoin only, which is circa 21%.
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 three for this week includes:
In our DigitalX Digital Asset Fund we continue to apply a sound institutional investment process to investing in the top digital asset opportunities within the sector. Some of our key thematics include identifying the most reputable and innovative networks working on identity and data validation (Zero Knowledge proofs and rollups), data storage, infrastructure plays, and many others as well as other tangential opportunities the scaling of Real world assets brings. We are encouraged by the sheer volume of real world asset tokenisation activity that also underpins these thematics and believe 2024, will be the year this market scales up.
Lisa Wade (she/her), CEO DigitalX
Week in review
The Shift List
Market Updates
Macro/ Regulatory Environment
领英推荐
In the spotlight
Grayscale Investments CEO Michael Sonnenshein said he is feeling optimistic about conversations his firm has had with the Securities and Exchange Commission about the potential for a spot bitcoin exchange-traded fund. "We're feeling optimistic," Sonnenshein said on Wednesday on Yahoo Finance. "We have been actively engaging with the SEC. The questions that we're getting from them signal to us that they want to engage on this issue, that they're eager to make progress on this issue." Timelines have not been shared, Sonnenshein added.
Sonnenshein was also asked by Yahoo Finance about his reaction to JPMorgan CEO Jamie Dimon telling lawmakers on Wednesday that he would shut down crypto if he were the government. Dimon also reiterated his opposition to bitcoin and crypto during the Senate Banking Committee hearing earlier in the day.
Every executive is going to have their own opinions on new technologies, Sonnenshein said. "But if you take a big step back, there is no question that this asset class is here to stay, that investor interest in this asset class is only growing..." he said.
?itcoin (BTC)
The recovery of the bitcoin price to all-time highs will be “significantly quicker” this cycle, according to the latest K33 Research report.
The drawdown has lasted for 755 days so far, currently around 36% off bitcoin’s all-time high of around $69,000 set in November 2021. That compares to the 1,178 days spent before recovery post-2013 and the 1,092 days post-2017, K33 Senior Analyst Vetle Lunde and Vice President Anders Helseth noted.
“Neither of the past cycles saw institutional demand comparable to the current, with major financial institutions both participating in the space and vocally vouching for BTC in public,” the analysts said. “In 36 days, U.S. ETFs will receive their final verdict, and the market shows considerable demand to accumulate exposure ahead of anticipated launches,” they added — arguing that the current run-up is caused by a real and compelling narrative.
A CryptoQuant report predicted Bitcoin could potentially exceed $50,000 early in 2024, from its current price of $43,000. The prediction is based on analyzing Bitcoin’s user activity, using the Metcalfe price valuation band metric, considering factors like market capitalization, transaction volume, and user activity. The report suggested Bitcoin’s target price range could be $50,000 to $53,000 early next year.
"Bitcoin may be targeting $50,000 to $53,000 based on the network activity valuation perspective," CryptoQuant analysts said. The report referenced the “bitcoin bull-bear market cycle indicator,” indicating a current bull market but nearing an “overheated bull phase” which historically aligns with price rally pauses or corrections.
According to Bitfinex analysts, there are four major factors driving the latest bitcoin rally. The analysts cited the upcoming bitcoin halving, the possible approval of spot bitcoin ETFs, El Salvador's bitcoin bet creeping into profit, and a potential Federal Reserve rate cut in 2024. "The bitcoin halving, expected in April 2024, has traditionally led to price increases due to the reduced supply of new coins. This event is associated with supply scarcity, driving up the price. Combined with the fact that we currently have the highest supply inactive statistics, especially for long-term holders, this effect is already in play," the Bitfinex analysts said in a note sent to The Block.
Ethereum (ETH)
The Security and Exchange Commission today said that it will need more than 45 days to evaluate a rule change that would allow Grayscale to convert its Ethereum trust into an Ethereum spot ETF. The new deadline is January 25, 2024.
The news comes as the regulatory body received notice from investing giant BlackRock that its pending Bitcoin spot ETF has already drawn $100,000 in seed funding from an undisclosed investor. For Grayscale, the decision comes two weeks after the SEC delayed a separate request from the crypto asset manager to evaluate its proposal for an Ethereum futures ETF. That application was submitted in September.
The SEC has never approved a spot BTC or ETH exchange-traded fund for listing on a U.S. exchange, though it has given the green light to investment vehicles tied to crypto futures. Bloomberg ETF analyst James Seyffart speculated that should the commission decide to approve a spot BTC ETF, it could move forward with simultaneous approvals of funds from multiple firms.
Grayscale first filed with the SEC to convert shares of its Grayscale Ethereum Trust into a spot Ether ETF in October, adding its name to the list of companies awaiting a decision from the regulator.
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
.