Opening bell │ #11 │ 29th April

Report highlights:

1. Bitcoin ETF sellers in the market have become less enthusiastic about parting with their cryptocurrency, possibly holding out for the right price.
2. Negative funding rates have shifted markets into wobbly territory, with potential sideways movements for the foreseeable future.
3. Traditional finance continues its integration, with Stripe returning to the table after a six-year hiatus.
4. Fear grips global markets as they face the ramifications of sticky inflation, high rates, and collapsing currencies due to actions by the US Federal Reserve.

Ecosystem growth pulls them back in, Solana earns its stripes.

Stripe, the online payments processor, revealed last month that it had surpassed $1 trillion in payment volume in 2023, a milestone that took PayPal 23 years to achieve. This marks Stripe’s return to the crypto world after abandoning the segment in 2018. The event’s highlight was a transaction using the Solana blockchain for USDC, which confirmed in mere seconds and appeared on the merchant’s panel without fail—a common issue when Solana becomes overloaded (See Video).

# of unique addresses?|? MN

Blobbing good.

This March, Ethereum successfully upgraded its infrastructure to better manage rollup costs, leading to a significant drop in fees. With minimal hiccups, the next upgrade scheduled for the end of this year aims to improve the still cumbersome process of bridging assets, enhancing user experience. Regardless of price fluctuations, progress remains constant.

Total L1 batch submitter costs ?|? ETH

Bitcoin ETF AUM & flows?

Sell pressures show signs of potency loss as Bitcoin’s price stick to flow dynamics.

Last week produced several key headlines for Bitcoin ETFs; BlackRock ended its inflow streak after closing 71 trading days of purchases. Fidelity for the first time saw two days of consecutive outflows. Several ETFs saw outflows. And total net flows closed in the red for three weeks straight.

The narrative for the bull market thus far, should it continue, seems very closely aligned with flows 16 weeks after Bitcoin ETFs began trading.

Volatility recently has increased, and perhaps one should suspect that markets would see a cool-off period after almost doubling in value since its low this year of $38.5k.

More interestingly is attempting to see the effects of flows week in, week out.

Looking at weeks of positive flows would theoretically give an increase in Bitcoin’s price, and of course, vice versa. But due to the volatility and range of the cryptocurrency, finding the effects on the price per dollar inflows or outflows would be a futile exercise.

But one can try and look at the upper and lower bound effects of flows to glean some information as to who is more enthusiastic, the buyers or the sellers.

Bitcoin flows began ramping up from Week 8 of trading, pushing prices from $51k to $64k. By Week 10, when the cryptocurrency hit its new high, ETFs reeled in over $2.5 billion in net flows, but the change in price only moved 7%, signaling that buyers aren’t going to pay massive premiums. Since then, we’ve seen a reversal.

But the past few weeks that have seen negative flows are showing the same inverse effect (see chart 1 & 2). Although outflows have been increasing, the effects on prices have been decreasing considering the open price to the low price of the week.

Perhaps this is a blend of tensions in the Middle East subsiding (Week 13 & 14), and maybe the reducing supply pressures post halving.

While this doesn’t signal a price reversal, it could keep Bitcoin within the sideways bounds it’s been trading at since March.

Net us-based Bitcoin ETF weekly inflows?? |?? $mn?

Open-high change on inflows vs open-low on outflows? |?? %

BTC/USD? |?? $

Short-term holder realised price on-chain?

Short-term on-chain cost basis marking Bitcoin bottom or possible break down.

The BTC STH-realised price, reflecting the average purchase price of Bitcoin by short-term holders (approximately six months), serves as a critical benchmark in identifying a bull market for Bitcoin. This metric acts as a significant support line, indicating strong buying opportunities when Bitcoin remains in a bullish phase. It helps investors gauge market sentiment. Currently, the short-term holder cost basis registers just shy of $60k, marking a significant mental price point for markets. Bitcoin trades above this line during bull markets, which is currently holding, for now at least.

Perpetual futures funding rate?

Negative funding rate dips on perpetuals signalling protracted sideways move?

Funding rates offer a glimpse of how traders are reacting to price changes, and the outlook is visibly different from one exchange to the next. For the most part, funding rates generally stay positive. However, it’s evident that when things go negative, it can take a while for markets to regain confidence. When Binance traders are wobbly, markets have moved sideways within range for lengthy periods. And when rates are sustained in the green, markets rally. We’re back into wobbly territory.

Funding rates on Binance

Funding rates on Deribit

OSINT: open-source intelligence - discussion topics from the web-at-large

Yen.

A week ago, many thought that the US Federal Reserve was stuck between a rock and a very hard place. But the Bank of Japan now reigns supreme as the difficulties of their low-yield environment, matched with the US’s high-rate environment, place pressure on the Yen, bringing down rates to levels not seen since the 1990s.

USD/JPY

Hot PCE.

Personal Consumption Expenditures came in hot last week as the Federal was looking for some inkling of hope that spending would come down, and inflation with it thereafter. But alas, soaring credit use has still made things difficult. Perhaps there is some glimmer of light in the fact that savings are down. Then again, money market funds hold almost twice as much as during the 2008.

Q % Change?

TGA Liquidity.

Tax season raked in another $200 billion for the US Treasury, bringing the total near $1 trillion. The arguments being made are that this will inevitably find its way back into markets either from running the balance down versus issuing more treasuries or shifting borrowing to T-Bills, bringing down the balance sitting in Reverse Repos—another $400 billion.

USD$ Bn

New homes, no sales.

New single-family homes for sales in the US are increasing and now at levels not seen since February 2008 when the Global Financial Crisis hit global markets and a recession ensued. With mortgage rates over 7% and prices remaining sticky due to inflation, the likelihood of this trend continuing is sufficiently high. For comparison, the median price of a home was $234k vs. $417k today.

Homes for sales?

Yields go up, up, up.

At the start of the year, when markets were expecting six rate cuts from the Federal Reserve, 10-Year bonds were yielding 3.7%. But with little hope of even a single cut materializing this year, and possibly a hike, yields have jumped 27% since their low this year, marking a very difficult period for bondholders. Tune in this week to FOMC.

US 10-year?

GDP growth.

US GDP printed what many argue is a disappointing number, showing a slowdown. Then again, even China is seeing a slowdown in their growth rate. The real question is how much of this comes on the back of massive government spending that’s been used to drive even this lower level of growth? It’s a bit of a pickle for the Fed, who doesn’t want to start a recession during an election year.

Q % change

?

Weekly technical indicators?

Fear across the market spectrum as gold bugs get greedy.

Bitcoin fear at levels not seen since 2021

S&P 500 fear at levels not seen since 2022

US 10-year fear levels show little positive recourse

Gold greed at higher levels than 2020 when money printer went ’brrr’

Economic calendar

Key events this week: Fed interest rate decision, unemployment, EU CPI.

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