Q9 Weekly | Everything Bitcoin
29 June 2023
- Bitcoin briefly rises above $31k
- Dominance rises, indicators turn bullish, product flows turn positive
- Fidelity applies for spot BTC ETF
Bitcoin is back. The #1 digital assert briefly reached $31k on a raft of positive news including Fidelity applying for a spot ETF and HSBC reportedly allowing the trading of crypto ETFs.
With only a few days until the halfway point of 2023, the mood has shifted dramatically from the bitterly cold days of January, and the regulatory crackdown of Spring. A rush of institutions announcing new crypto products and platforms has seemingly overshadowed the negative developments of H1. BTC is up 10.4% this month and 81.9% this year.
Bitcoin Up 81.9% This Year
Source: TradingView
The disparity in performance this year between BTC, ETH, and other Layer-1 protocols has been striking. While BTC and ETH have thus far avoided being labelled “securities” by the SEC, the same is not true for a number of altcoins.
In many ways, regulatory clarity from the SEC may ultimately be more pertinent to altcoins than to BTC and ETH — and this is having an impact on their prices. This may lead to continued decoupling, as investors looking for crypto exposure stick with BTC and ETH. Bitcoin’s outperformance vs everything else has pushed its dominance above 50% — a 26-month high.
BTC Dominance Now >50%
Source: Bitcoin Magazine
Bitcoin sentiment has turned bullish over the past week with the CoinDesk Bitcoin Trend Indicator climbing into “significant upturn” territory.
Bitcoin Trend Indicator Turns Bullish
Source: CoinDesk Indices
Digital asset investment products witnessed the largest single weekly inflows in a year after nine consecutive weeks of outflows. This was largely driven by flows into Bitcoin based investment products. Bitcoin-related products were the primary asset for inflows, with $188mn, or 94% of the total.
First Weekly Inflow for Crypto Products in 9 Weeks, Driven by BTC
Source: CoinShares
Bitcoin’s exchange whale ratio has declined to its lowest since 2018 in a bullish sign. It indicates that whales are less active on central exchanges — ie, they aren’t moving assets there to sell.
BTC Whale Exchange Ratio Drops — Bullish Sign
Michael Saylor’s MicroStrategy spent $347mn buying 12,333 BTC between April 29 and June 27, the company said Wednesday. With the most recent buys, MicroStrategy now holds 152,333 BTC, worth over $4.6bn.
Meanwhile, crypto miners have sent over a billion dollars’ worth of Bitcoin to crypto exchanges over the past two weeks, according to on-chain data from CryptoQuant. The analytics firm said those flows were largely going to derivatives exchanges, suggesting miners are taking out financial hedges.
% of BTC Miner Revenue Transferred to CEX’s
BTC’s correlation to traditional markets has also vanished in recent weeks and it is showing negative correlation with gold.
And whilst past performance is no guarantee of future returns…July has historically been a very good month for the #1 digital asset. BTC tends to rally 11% in July and for 7 out of the last 10 July’s it was up.
BTC Tends to Rally in July
Bitcoin’s hash rate — the computational power of the Bitcoin network — has continued soaring, showing that miners are back online and rushing to collect their rewards before the halving next year.
Total Hash Rate (TH/s) Continues to Soar
Source: Blockchain.com
Market Depth
However, the move higher has been on thin volumes. Crypto market depth has been sitting at very low levels this year. When market depth is low and big players put in orders to buy or sell digital coins, prices can move in a big way up or down, even if the orders are not that huge.
According to data firm Kaiko, Bitcoin’s market depth has fallen 20% this year. Daily trading volume currently sits at around $24bn — that’s down markedly from the +$100bn of overall trading volume in Bitcoin during the 2021 rally.
BTC Market Depth Has Dropped 20% in 2023
Source: Kaiko
High Fidelity
Asset management giant Fidelity is close to submitting its own filing for a spot Bitcoin ETF, joining a long list of issuers keen to be first to market.
There is no guarantee these Bitcoin products will win approval. — the SEC has rejected multiple applications from high-profile firms previously — although investors are more optimistic this time round. Circle’s CEO claims that ”progress is being made”.
Leveraging Up
Volatility Shares 2x Bitcoin Strategy ETF (BITX), the first leveraged Bitcoin ETF in the US, started trading on Tuesday, witnessing $5.5mn of volume on its first day.
Action got off to a quick start, with volume of about $500k in the first 15-minutes after the open. However, by comparison the ProShares’ BITO — the first ever Bitcoin ETF (futures-based) in the US — saw roughly $1bn in volume on its first day of trading in 2021.
Institutions from the traditional world of finance dipped their toes in crypto long before FTX hit rock bottom last November. But now, as the SEC circles the largest two centralized exchanges left standing, traditional finance appears poised to gain ground and market share. All financial roads in the US, no matter how nascent, eventually lead to Wall Street… and these giants are all starting with one digital asset in particular — Bitcoin.
Bitcoin’s Price Rises with Wall Street Interest
Source: Decrypt
As relates to positive news flow, June has been the biggest month since November for digital assets. The SEC lawsuits against Binance and Coinbase have not been forgotten, but they’ve certainly been overtaken by far more promising news in the last two-weeks. To a large extent, BlackRock. Fidelity et al are legitimizing the entire space as an investable asset class.
Bitcoin has good momentum once more and the community may well be wondering if this could be the kind of development that sees enthusiasm for crypto’s surge again.
In the News…
- HSBC rolls out cryptocurrency services in Hong Kong
- Coinbase celebrates win at US Supreme Court over arbitration
- Binance EUR banking partner to halt support of the crypto exchange in September
- ECB welcomes European Commission legislative proposals on digital euro and cash
- Startup Kaito gets $87.5mn valuation in new funding to build AI search engine for crypto
- Web3 gaming firm Mythical Games raises $37mn in Series C1 funding
- BitPanda Pro has spun out under a new name, One Trading, and raised €30mn
- Judge denies motion to dismiss most charges against Sam Bankman-Fried
- Alameda seeks to claw back $700mn SBF paid ‘super networkers’
- Warner Music, Polygon Labs launch blockchain music accelerator
