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[24 November-1 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
Digital asset investment products attracted an additional US $346 million worth of inflows bringing the year-to-date inflows to over US $1.5 billion. According to CoinShares’ latest report, this is the ninth consecutive week of positive inflows, with ETPs now accounting for 18% of total spot Bitcoin trading volume. While the market awaits the approval of US-based spot Bitcoin ETFs, new applicants such as Swiss asset manager Pando Asset have joined the race for a spot Bitcoin ETF filing an S-1 form with the US Securities and Exchange Commission on Wednesday. The SEC has also moved existing applications from Franklin Templeton and Hashdex into a public comment period, with many observers taking this as a sign that the agency could be speeding up the review process. According to the Block’s data dashboard, open interest of CME Bitcoin long futures by asset managers has also increased to an all time high of US $1.98 billion indicating strong institutional interest for the asset class.
MicroStrategy continues to accumulate Bitcoin, purchasing an additional 16,130 Bitcoin worth US $593.3 million at an average price of US $36,785. This brings the organisation's total Bitcoin holdings to 174,540 Bitcoin; acquired at an average price of US $30,252 each, worth over US $6.5 billion at Bitcoin’s current market value. According to a recent report from Bitfinex, approximately 83.7% of the current Bitcoin supply is being held at a profit. Many indicators are suggesting that Bitcoin’s price could continue this upward trajectory, with Standard Chartered Bank reiterating its previous forecast that Bitcoin would reach US $100,000 by the end of 2024.
CEO Comment
The Gap between Bitcoin and the S&P 500 rose slightly this week, however we believe that this will continue to close at an elevated rate with the potential for spot ETF approvals right around the corner. We also note from last week that the Second Gap between Bitcoin and the broader digital asset market continues to fall as alts attempt to close their all time high gap relative to Bitcoin’s.
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
领英推荐
Macro/ Regulatory Environment
In the spotlight
Swiss asset manager Pando Asset became the latest firm to seek approval for a spot bitcoin ETF, filing an S-1 form with the Securities and Exchange Commission on Wednesday.
Pending approval, the Pando Asset Spot Bitcoin BTC + Trust would trade on the Cboe BZX Exchange, with Coinbase as a custodian. For bitcoin pricing, the filing mentions use of CME's CF Bitcoin Reference Rate. Pando already offers exchange traded products that track prices of leading cryptocurrencies to European traders on the SIX Swiss Exchange, according to its website.
Although the industry is eagerly anticipating the first spot crypto ETF, the SEC has yet to approve one. The regulator has so far moved to delay the other applications its received from asset management giants including BlackRock, Fidelity, 21Shares & Ark Invest, Bitwise, VanEck, Wisdomtree, Invesco, Valkyrie, Global X, Hashdex and Franklin Templeton.
?itcoin (BTC)
The Securities and Exchange Commission said Tuesday that it wants fresh feedback from the public on whether it should approve or disapprove a spot Bitcoin ETF solicited by asset manager Franklin Templeton, just weeks after first delaying a decision on the proposed fund. The move prompted some analysts to note that the regulator appeared to be moving quickly. The SEC said it wants more analysis and is "instituting proceedings" to do so. The regulator asked commenters on Tuesday about concerns regarding manipulation and fraud, as well as the fund's relationship to Coinbase, which would be the custodian if the ETF garners approval. "The Commission is providing notice of the grounds for disapproval under consideration," it wrote, saying it wanted to analyze whether the application is consistent with the requirement that "the rules of a national securities exchange be 'designed to prevent fraudulent and manipulative acts and practices' and 'to protect investors and the public interest,'" the agency said in the filing.
The amount of circulating Bitcoin that is in profit hit a high of over 83% this week, the highest level since November 2021 when the world's largest cryptocurrency by market capitalization reached its all-time high, according to Monday's Bitfinex Alpha report. The multi-year high was also confirmed by Glassnode data. "With bitcoin trading at yearly highs above $37,000 last week, over 83% of the coin supply was driven back into profitable territory," Glassnode posted on X.com. However, the blockchain analysis firm added that "the magnitude of unrealized profit remains modest, and is not yet sufficient for long-term investors to divest." According the Bitfinex, over 16.3 million bitcoin are currently in profit. "The current percentage of bitcoin held in profit is substantially higher than the all-time average of 74%," Bitfinex analysts said.
Grayscale Investments on Monday met with officials from the Securities and Exchange Commission’s division of trading and markets to discuss potential listing matters concerning the shares of the product, according to a memo published by the SEC. Grayscale is currently trying to convert its flagship Bitcoin trust into a spot Bitcoin ETF. It filed an updated prospectus following the meeting. A separate memo dated Nov. 20 showed that the SEC also had a meeting with BlackRock and Nasdaq employees. Prospective spot Bitcoin ETF issuers Ark Invest and 21 Shares filed an amendment to their prospectus earlier this week.
Ethereum (ETH)
In just a few days, the amount of value sent into the Blast deposit contract on Ethereum has increased by an order of magnitude to $390 million. A smart contract, advertised as a “bridge” for a yet-to-be-developed optimistic rollup, has received about $340 million in ether and $50 million in stablecoins since launching Monday. The contract is controlled by a Safe 5-key multisig where 3 keys are required to execute transactions. However, one of the 5 keys has no transaction history, and the other 4 show initial ether deposits from the same Ethereum account. There is no way for an outside observer to know whether the five keys were generated by five independent entities or people. A thread on X from Blast claims they are using best practices, and that the signers “are deeply technical engineers who have experience with high stakes applications ranging from financial applications to smart contracts.”
Ethereum transaction fees would be five times more expensive if not for layer-2 rollup networks like Optimism and Arbitrum. That’s according to a recent report from blockchain infrastructure unit Chainstack. Aside from fees between 360% and 419% higher, transactions themselves would take nearly twice as long on average, Chainstack found. Wait times would even stretch to 114 seconds compared to a block time of about 12 seconds (the minimum wait time if transactions are sent between blocks).
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.