Category: Cryptocurrency

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The cryptocurrency market encountered challenges this week, particularly impacting crypto Exchange-Traded Funds (ETFs). The theme of cryptocurrency investment witnessed an overall decline of 5.99%, reflecting setbacks in major cryptocurrencies. Bitcoin retreated by 2.25%, slipping below the $70,000 mark, while Ethereum faced an even steeper decline, plummeting by 6.5%.

Challenges with SEC and Spot ETFs

The recent setback stemmed from actions by the U.S. Securities and Exchange Commission (SEC). The regulatory body initiated a three-week comment period regarding proposals for spot Ether ETFs, effectively postponing any possibility of approval until at least May. This delay subdued investor optimism, especially among those expecting prompt approvals for spot ETFs representing direct investments in cryptocurrencies, as opposed to derivatives.

Impact on Crypto ETF Performance

Particular crypto ETFs bore the brunt of these developments. The Ether Tracker Euro ETC (ETHEREUM XBTE) and the 21Shares Ethereum Staking ETP (AETH) experienced declines of 7.96% and 7.63%, respectively. These setbacks highlight the heightened sensitivity of crypto ETFs to regulatory decisions and market sentiment as investors navigate the uncertain landscape of cryptocurrency regulations and their implications for spot ETFs.

The SEC’s decision to postpone approvals for spot ETFs has cast a shadow over the future of Ether ETFs, temporarily halting the momentum that had been building in anticipation of broader institutional acceptance. While these ETFs offer a regulated avenue for investors to gain exposure to cryptocurrencies, the path forward appears to be mired in regulatory uncertainty, impacting both investor sentiment and ETF performance.

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According to a survey by Deutsche Bank released on Monday, consumers are showing slightly diminished skepticism towards bitcoin, though nearly one-third of respondents still foresee a significant drop in its price by the conclusion of 2024.

Despite substantial investments poured into bitcoin with hopes of capitalizing on price surges, leading regulators have asserted its lack of intrinsic value and associated risks.

Deutsche Bank’s survey encompassed over 3,600 participants, with 52% expressing the belief that cryptocurrencies will emerge as an “important asset class and payment method” in the future. This marks a shift from less than 40% in September 2023.

One-third of respondents in the United States anticipate bitcoin’s value to dip below $20,000 by the end of 2024. Notably, this demographic is marginally diminishing, having comprised 35% in February and 36% in January.

The segment of individuals regarding cryptocurrencies as a “temporary trend destined to fade away” dwindled to less than 1%.

However, merely 10% of those surveyed expect bitcoin to surpass $75,000 by year-end.

Context

Bitcoin ascended to a three-week peak on Monday, having achieved an all-time high of $73,803.25 in March after rebounding from a significant downturn in 2022.

Analysts attribute the recent resurgence to anticipation surrounding spot bitcoin ETFs and expectations of impending interest rate reductions.

What’s Ahead

Some analysts interpret bitcoin’s recent rebound beyond $70,000 as a sign of investors disregarding cautionary advice.

Deutsche Bank analysts anticipate support for bitcoin’s price from forthcoming events such as the “bitcoin halving,” regulatory measures, central bank rate cuts, and the potential approval of spot ethereum ETFs by the SEC.

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A recent analysis of Ether options’ open interest for the end of April expiry suggests a prevailing bullish sentiment in the market, with an underlying bias toward upward movement, according to industry experts.

The largest cohort of ether options open interest, set to expire at the end of April, demonstrates a significant tilt toward bullish positions, with approximately $3.3 billion of notional ether options slated to expire, as per Deribit data. Around two-thirds of this total have been placed on calls, representing bullish bets on price movement.

Wintermute OTC Trader, Jake Ostrovskis, highlighted that call strikes are concentrated between $3,700 to $4,000, indicating an inclination toward upside movement and an overall bullish sentiment in the market.

Moreover, Ostrovskis pointed out that the current open interest skew favors call trading at a premium to puts, coupled with a notable increase in implied volatility over the weekend. This suggests a stronger directional bias and reduced dependence on writing options to finance premiums.

Bullish Put-Call Ratio

Deribit data reveals that the ether put-call ratio for the end of April expiry stands at 0.45, slightly more bullish compared to bitcoin options, which have a put-call ratio of 0.48. Ostrovskis attributes this trend to traders identifying relative value in ether, especially considering its underperformance compared to Bitcoin in 2024.

A put-call options ratio below one signifies that call volume exceeds put volume, indicating bullish sentiment in the market. This trend is further underscored by Monday’s ether put-call ratio on Deribit for all expiries, which has fallen to 0.4, reaching a low not seen since late February, according to The Block’s Data Dashboard.

Despite the bullish outlook, Ostrovskis cautions against perceived negative impacts from regulatory changes, such as the ongoing scrutiny from the SEC regarding Ether’s classification as a security. Additionally, skepticism persists regarding the likelihood of an ETF approval by June 30th, 2024, with market sentiment indicating only a 17% probability. Even positive developments, such as the SEC soliciting comments on spot ether ETFs, have not been fully embraced by the market.

Ether Price Movement

Ether has observed a notable 6.8% increase in the past 24 hours, trading at $3,645 at 11:14 a.m. ET, according to The Block’s Price Page. This surge in price further reinforces the bullish sentiment prevalent in the options market for the end of April expiry.

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In recent days, the Solana network has encountered congestion issues attributed to a surge in spam transactions, prompting developers to spring into action with various solutions.

Solana developers are actively addressing the congestion dilemma as users grapple with delays and dropped transactions, particularly noticeable on the Phantom wallet app and other platforms. The root cause of this congestion lies in the influx of spam transactions, aggravated by a spike in memecoin-related activities, which strain the network’s block space and impede regular user access.

In the first quarter of 2024, we witnessed a notable uptick in memecoin activity on the Solana blockchain, reflecting the growing interest among new and retail users lured by the network’s cost-effective transaction fees. However, the surge in spam transactions has become a bottleneck for Solana’s operation.

Matt Sorg of the Solana Foundation likened Solana’s architecture to that of the internet, highlighting its decentralized transaction processing system. Unlike traditional setups with mempools, Solana dispatches transactions directly to block leaders, potentially leading to transaction drops under a heavy spam load.

In response, the Solana development team is actively devising solutions, including software patches. Anatoly Yakovenko, co-founder of Solana, anticipates improvements in the coming week as bug fixes roll out.

Anza, the developer of Solana’s Agave validator client, also addresses specific issues within its QUIC implementation to enhance performance under high request volumes.

The upcoming 1.18 update, slated for April, aims to make transaction scheduling more deterministic to streamline processing and alleviate bottlenecks. Additionally, implementing priority fees across Solana applications will mitigate delays and enhance user experience, as highlighted in a March blog post from Solana Labs.

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Ether’s price surge today indicates a renewed focus on the Ethereum ecosystem, with multiple factors contributing to its upward trajectory.

Several key elements propel the recent surge in Ether’s price. Notably, heightened whale activity and a growing interest from institutional investors in Bitcoin have injected bullish sentiment into the wider crypto market, pushing Ether’s price up by over 5% on April 8. With Ether trading above $3,600, attention seems to be shifting towards the altcoin, which has seen a remarkable 96.2% increase in its price over the past year.

Investor Shift Towards Ether Market

Ether’s current upward momentum against the U.S. dollar mirrors its robust gains against Bitcoin. The ETH/BTC pair recorded a notable 1.5% increase on April 8, surpassing the crucial 0.05 BTC level. This suggests a potential capital rotation in the short term, with investors diverting their attention towards Ether.

Furthermore, Ether’s performance against other cryptocurrencies has notably improved in the last 24 hours, as evidenced by a nearly 2% rise in the Ethereum Dominance Index (ETH.D) from its recent low on April 7. This indicates a growing influx of capital into the Ether market, strengthening its value.

Resurgence of Ethereum Whales

The recent surge in Ether’s price coincides with a period of accumulation among its wealthiest investors, commonly referred to as whales. Data from Glassnode reveals a consistent daily increase in Ether reserves among entities holding between 1,000 and 10,000 ETH since March 17. Historically, such accumulation patterns have often preceded significant price rallies, similar to the one Ether is experiencing presently.

Growing Institutional Interest and Anticipation for Spot ETH ETF

Interest from institutional traders in Ether has been on the rise since November 5, 2023, when the U.S. Securities and Exchange Commission (SEC) acknowledged Grayscale Investment’s application to convert its Ethereum trust into an ETF. Subsequently, on November 9, BlackRock, the world’s largest asset manager, filed for a spot Ether ETF, propelling Ether’s price to a six-month high at the time.

As of April 8, a total of seven spot Ether ETFs have been filed and are awaiting approval from the SEC. Moreover, the SEC’s recent call for comments on Fidelity, Grayscale, and Bitwise spot Ether ETFs on April 3 underscores the growing anticipation in the market.

Institutional investors have poured $13.8 billion into crypto investment products year-to-date in 2024, surpassing the record $10.6 billion inflow for the entire year of 2021. Despite recent outflows from institutional investors, Ether investment products have seen $52 million in inflows in 2024, bringing the total assets under management to $14.1 billion.

While the current market conditions appear favorable, macroeconomic factors such as potential rate hikes and regulatory scrutiny in the U.S. could exert slight pressure on Ether’s price. However, the approval of a spot Ether ETF, positive regulatory developments, and a strong U.S. economy could serve as catalysts for further price growth.

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Bitcoin ETFs continue to attract investor interest, with Farside data showing a $203.0 million net inflow on April 5th, marking the fourth consecutive day of positive flows. This trend signals increasing confidence and interest in the digital asset space.

Among the ETF providers, BlackRock’s IBIT stands out, recording a significant net inflow of $308.8 million, bringing its cumulative total net inflow close to $15 billion at $14,769.1 billion. This marks the largest net inflow day for IBIT since March 27th, highlighting the growing prominence of the fund in the market.

Fidelity’s FBTC also saw healthy inflows, with a $83.0 million net influx, contributing to its total net inflow reaching $7,957.6 billion. In contrast, Grayscale’s GBTC experienced significant outflows of $198.9 million, the largest since April 1st, bringing its total outflow to $15,505.3 billion, according to Farside.

Data from Heyappolo indicates that GBTC currently holds 323,000 Bitcoin, while IBIT and FBTC have accumulated 264,000 Bitcoin and 151,000 Bitcoin, respectively. Interestingly, the nine new BTC ETFs, excluding GBTC, have collectively amassed 519,000 Bitcoin.

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Digital asset investment products saw $646 million in inflows last week, reflecting continued positive sentiment in the crypto market despite Bitcoin’s sideways movement over the past month.

Although inflows into crypto funds have slowed compared to the surge seen after the introduction of spot Bitcoin ETFs in the U.S., the overall trend remains upbeat. Most days witness inflows into popular ETFs, while outflows from Grayscale’s GBTC have notably decreased.

James Butterfill, head of research at Coinshares, noted that year-to-date inflows have reached a record $13.8 billion, surpassing last year’s $10.6 billion. However, there are signs of moderation in ETF investor appetite, with weekly flows not reaching early March levels. Weekly volumes also declined from $43 billion to $17.4 billion last week.

The U.S. continued to lead in terms of regional inflows with $648 million, followed by Brazil, Germany, and Hong Kong. Switzerland and Canada experienced outflows of $27 million and $7.3 million, respectively.

Bitcoin saw inflows of $663 million, while short-bitcoin investment products faced outflows for the third consecutive week, suggesting bearish investor capitulation. Ethereum recorded its fourth week of outflows, totaling $22.5 million, amidst lowered expectations for the approval of an ETH ETF in May.

Despite Ethereum’s outflows, other altcoins like Litecoin, Solana, and Filecoin continued to attract inflows.

With the Bitcoin halving looming just 11 days away, sentiment in the crypto market remains in ‘Extreme Greed’ territory. While analysts anticipate post-halving volatility, the consensus is optimistic, expecting a trend toward higher prices. Historical data suggests that the crypto market typically experiences a bullish phase lasting six to eighteen months after the halving event.

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The latest frenzy gripping the crypto world revolves around the exchange of trading cards featuring prominent figures in the cryptocurrency space, courtesy of Fantasy.top.

Although the platform is currently on testnet, it is set to launch on the mainnet imminently. From Bitclout to FriendTech, it’s evident that Crypto Twitter thrives on speculating about each other.

The latest sensation takes the form of trading cards introduced by Fantasy.top, featuring nearly 250 crypto individuals available for trading on the platform. Users can collect these cards, assemble them into a team, and participate in competitions. The project’s X account reports that the latest competition attracted 23,800 participants.

Trading of these cards commenced on Fantasy.top in mid-February, gaining momentum recently following endorsements from influential crypto personalities such as crypto trader Ansem. Currently limited to testnet, users are not transacting with actual funds. However, the project is gearing up for its mainnet launch to gauge whether it can sustain the same level of interest.

Fantasy.top’s founder, known by the pseudonym Travis Bickle, noted that their growth has been explosive since the Ansem tweet. While they have observed Fantasy’s virality from the beginning, the current scale is unprecedented. Travis expressed anticipation for hitting full speed with the mainnet launch but is thrilled to witness such widespread interest already.

Although these figures reflect testnet activity, certain individuals have witnessed significant trading volumes for their cards. Ansem, for instance, recorded 439 testnet ether in trading volume, earning him rewards in testnet ether. FriendTech also experienced success by implementing a comparable model with high fees, incentivizing influencers to utilize and endorse the app.

Upon joining the platform, which currently operates on invite code-only access, users receive three testnet ether on the Blast Sepolia testnet, which they can utilize for purchasing cards. Additionally, new users are granted five starting cards, available in four categories: common, rare, epic, and legendary. To date, more than 1 million cards have been minted.

Fantasy.top provides social analytics data for individuals featured on each trading card, along with insights into their interactions on X. This feature aims to assist in valuing individuals based on their social media presence.

Built on Blast, a Layer 2 network on Ethereum launched on mainnet in February, Fantasy.top aims to offer a native-yield model for ether and stablecoins, providing 4% interest for the former and 5% for the latter. Blast was developed by Tieshun Roquerre, the founder of NFT marketplace Blur.

Building on Previous Social Finance Platforms

BitClout was among the pioneers in this domain, offering a similar experience to X, allowing users to speculate on the value of profiles. However, its launch was marred by controversy and missing features. BitClout seems to have been replaced or rebranded as Diamond.

FriendTech followed suit, allowing users to bet on individuals’ profiles, with the added feature of purchasing someone’s “key” for access to their private group chat. Despite a decline in activity, the project hints at a forthcoming next phase.

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Coinbase and MicroStrategy have seen significant gains of 8% and 12%, respectively, in early-day trading.

The surge in stock prices coincides with Bitcoin’s climb above the $72,000 mark.

Crypto-related companies started the week on a positive note as Bitcoin reached above $72,000 for the first time since mid-March.

Shares of Nasdaq-listed Coinbase and MicroStrategy rose by 8% and 12%, respectively, during early morning trading in New York. Coinbase shares surpassed $260, while MicroStrategy’s stock surged beyond the $1,600 mark within the past 24 hours, as per TradingView data at 10:00 a.m. ET.

Coinbase Price Target Raised

Oppenheimer, a New York-based financial firm, recently raised Coinbase’s share price target to $276 from a previous target of $200 while maintaining its buy rating. This increased target represents a roughly 6% rise from Monday’s opening share price for Coinbase.

Oppenheimer analyst Owen Lau stated that they estimate Coinbase’s trading volume for the first quarter of 2024 to increase by 95% compared to the previous quarter and by 107% compared to the same period last year, reaching $300 billion.

Bullish Outlook for MicroStrategy

According to a report on MarketWatch, Benchmark analyst Mark Palmer increased his price target for MicroStrategy stock to $1,875 from $990, reiterating his buy rating in an investor note on Monday. This new target implies approximately a 17% upside from the current opening price.

As per The Block’s Data Dashboard, MicroStrategy’s bitcoin holdings now stand at 214,250 as of the company’s March filing. In March, MicroStrategy acquired an additional 9,245 bitcoins for $623 million in cash, bringing its total holdings to over 1% of the total bitcoin supply.

Decrease in Bitcoin Long-Term Holder Supply

However, according to this week’s Bitfinex Alpha report, bitcoin sell pressure could arise due to a reduction in the digital asset’s supply held by long-term holders.

Bitfinex analysts noted that since reaching its peak of 14.91 million Bitcoins held by long-term holders in December 2023, the supply within this cohort has decreased by approximately 900,000 Bitcoins. It’s noteworthy that around one-third of this reduction, totaling about 286,000 Bitcoins can be attributed to outflows from the Grayscale Bitcoin Trust ETF (GBTC).

The report also noted an increase in the supply held by short-term holders, totaling 1.121 million Bitcoins. The analysts added that this increase not only counteracts the distribution pressure from long-term holders but also suggests an additional acquisition of approximately 121,000 bitcoins from the secondary market, including exchanges.

Since spot bitcoin ETFs started trading on January 11, the quantity of bitcoin held by these ETFs has risen from 621,390 to 836,120, as reported on The Block’s data page.

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Global crypto investment products have witnessed an unprecedented surge in annual inflows, reaching $13.8 billion year-to-date, with an additional $646 million added last week. However, there are indications that the hype surrounding exchange-traded funds (ETFs) is beginning to moderate, according to James Butterfill, Head of Research at CoinShares.

Leading asset managers such as BlackRock, Bitwise, Fidelity, Grayscale, ProShares, and 21Shares collectively attracted $646 million in inflows globally last week, as reported by CoinShares. This follows the previous week’s net inflows of $862 million, pushing the year-to-date inflows to a historic high of $13.8 billion, surpassing the prior annual record of $10.6 billion set in 2021, within just a few months into 2024.

This surge indicates a sustained recovery for global crypto funds, following nearly $1 billion worth of outflows observed for the week ending March 22. However, Butterfill noted a moderation in appetite from ETF investors, with weekly flow levels not reaching the heights seen in early March. Additionally, trading volumes declined to $17.4 billion last week compared to $43 billion in the first week of March.

Bitcoin Continues to Dominate

Bitcoin remains the primary focus for global crypto investment products, with a net addition of $663 million last week. Conversely, short-bitcoin funds experienced their third consecutive week of outflows, totaling $9.5 million, indicating minor capitulation among bearish investors.

ETFs remain dominant, accounting for $484.5 million of last week’s net inflows.

Bitcoin is currently trading up 4% over the past week at $72,129, while the GMCI 30 index, representing the top 30 cryptocurrencies by market capitalization, has seen an 8% increase during the same period, reaching 154.27.

Inflows into Other Cryptocurrencies

Investment products tied to Litecoin, Solana, and Filecoin also attracted inflows of $4.4 million, $4 million, and $1.4 million, respectively, last week. However, funds based on Ether experienced outflows for the fourth consecutive week, losing $22.5 million.

Regional Sentiment

Regionally, sentiment remains polarized, with U.S.-based funds adding $648 million last week, alongside inflows for products in Brazil, Hong Kong, and Germany. However, Switzerland and Canada recorded outflows of $27 million and $7.3 million, respectively.

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