Market Update 01/12

MARKET OVERVIEW

Registered Bitcoin Security Products - After a long while, the leading Bitcoin cryptocurrency by market capitalization received an approval by the Securities and Exchange Commission, with (11) exchange traded funds to begin trading! The following products were approved to commence trading (6) issuers on CBEO by Thursday January 11th - including Bitwise (BITB), ARK 21 Shares (ARKB), Fidelity (FBTC), Wisdomtree (BTCW), Invesco Galaxy (BTCO), Valkyrie (BRRR), BlackRock iShares (IBIT), VanEck (HODL), Franklin ETF (EZBC), Hashdex (DEFI) and Grayscale Bitcoin Trust (conversion) (GBTC). The management fees for the exchange traded products range from 20 basis points, to 150 basis points at Grayscale.

The cryptocurrency market took notice, with both Bitcoin and Ethereum rallying to a twelve month highs as BTC charged to $46,000 and ETH to $2,600. The total market capitalization reached $1.71 trillion, with Bitcoin leading the way to $906 billion and Ethereum $314 billion. Per the last week report, 'Cryptoken Board has published a research piece on the global summary of ETPs, in order to provide some context on possible crypto fund flows - presently Bitcoin exchange traded products have accumulated $ 4.5 billion in assets under management, rallying to $8 billion total AUM with a recent BTC price increase. You can reference our full research via Medium channel here, including ETP breakdown by issuer, AUM and Corporate Treasury holdings here.' We are not expecting significant fund flows pouring into the newly minted Bitcoin ETFs, and it might take a some time before conventional asset a managers and pension funds begin to allocate their asset positions to Bitcoin.

Notable news for the week surrounding Tron blockchain, some $11 billion of USD stablecoin Tether has been minted over ETH and TRX blockchains, leading some to speculate that this crypto rally is driven by inelastic supply, purchases driven by Tether (present or future subscriptions). Tether is operated by iFinex Inc. a Hong Kong entity that has not been audited, and we have no way of verifying the client flows, albeit an asset attestation report is 'stamped' by BDO. You can reference a thread by Lookonchain Twitter post here.

Cryptoken Board team has produced a brand new research piece, "Bitcoin Project — BRC20 Token Analysis and Performance" that you can reference here, aggregating valuable market data meta-inscriptions on 1] Bitcoin Financial Model 2] BRC20 Token Sector Overview 3] BTC blockchain Throughput and Performance including 15 graphs, recommendations and takeaways!

Jamie Dimon, CEO at JP Morgan appeared on Fox News (Finance) on January 10th - and sounded off on the state of economy, sticky inflation, weak consumer sentiment, and a possible hard landing as the world's largest economy continues to battle geopolitical shocks, supply chain disruption, high interest rates and fiscal imbalances. The JP Morgan CEO doubled down against Bitcoin suggesting that 'buying / selling cryptocurrency has no value, and is used mostly for illicit activities', a full interview that you can watch here.

Alarmingly, a new statement by the Commissioner Christy Goldsmith Romero that we studied by the CFTC’s Digital Assets and Blockchain Technology Subcommittee of Decentralized Finance Report (Christy Goldsmith Romero was sworn in as a CFTC Commissioner on March 30, 2022, after being nominated by President Joseph Biden in September 2021, and unanimously confirmed by the U.S. Senate) - sounded off alarms surrounding cryptocurrency decentralized finance protocols, calling them carrying 'significant risk to the U.S. financial system, consumers, and national security.' CFTC has declared both BTC and ETH cryptocurrencies digital utilities, however 'regulation by enforcement' appears to be an official stance of this administration when it comes to regulating blockchain service providers, especially in DeFi.

For the week ending on January 12th - Bitcoin price rallied to $46,277 and (support) $43,306. Ethereum token also tested the 7 day resistance level high of $2,610 and $2,180 (support), experiencing high price surge on Monday January 8th. Bitcoin daily volume on the day is $ 51.2 billion (4.31% of MC) and Ethereum daily volume $ 30.10 billion (9.70% of MC), a significant increase in trading volume as the market repositioned for the Bitcoin ETF approval.

BTC and ETH total market capitalizations equal $ 907.5 billion ( $57.4 billion increase) and $ 314.2 billion ( $44.90 billion increase), as BTC/ETH 2.8883x ratio, decrease from 3.1579x ratio on 01/05. Ethereum surged against Bitcoin for the past 7 days by a whooping 10 percent, likely indicating a trend that might continue in 2024.

BITCOIN DERIVATIVES

The Futures Markets on CME had a closing price of $ 46,155 and trading volume of of 3,555 contracts (Ticker: BTCF4), with traders increasing their positions in the wake of Bitcoin ETF approval. The aggregate CME Open Interest volumes are currently at 27,525 with a net change from yesterday of 406. The weekly CME Option Markets for the past 7 days had the same amount of Bitcoin Options with (58) $47,000 Calls and (125) total Puts (50) $38,000 (50) $40,000, (10) $41,000 and total volume of total (125) Options.

The futures curve for ME January ($43,080), February 2024 (+ 330) and March 2024 (+ $625) and April 2024 (+ $1,290). Bitcoin futures, volume for the week ending on January 12th, 2024, is higher than comparing to the previous week.

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c1 Bitcoin (trailing) 30 days

c2 BTC/ETH (trailing) 7 days

TECHNICAL ANALYSIS

The volume adjusted indicators for BTC cryptocurrency, including Accumulation Distribution Line and the Sharpe Ratio, including BTC/ETH ratio are reported on chart 1 and chart 2 for week the ending on January 12th, 2024.

#Bitcoin
○ A/D Ratio - Accumulation Distribution Indicator or ADL (Accumulation Distribution Line) is a volume based indicator that aims to measure the underlying buying / selling pressure by combining money index multiplier with traded volume. For the period of trailing 30 days - Bitcoin ADL of $47,642 is higher than the market price $ 46,238 that suggests that Bitcoin traders are still accumulating.

The ADL is a volume based indicator which was essentially designed to measure underlying supply and demand. It accomplishes this by trying to determine whether traders are actually accumulating (buying) or distributing (selling), so ADL can reveal divergence between volume flow and the actual price.

○ Money Index Flow (31 day)- or The Money Flow Multiplier is determined by the relationship between a period’s closing price and the period’s high/low range, adjusted for 31 days, trailing. For this week, we're not reporting MIF.

○ Sharpe Ratio (31 Day) - The Bitcoin SR is the performance adjusted return for the risk free rate (5%) / divided by the standard deviation of return for the period. The week ending in January 5th has SR of -0.42 for the past 30 days, down from 0.49 in the previous week. Please note that Sharpe Ratio take into account volatility in the denominator, even as we see spike in BTC price, so does a level of risk.

#Ethereum
○ $BTC / $ETH (inverse quotation) for the past 14 days Ethereum has outperformed BTC by 9.08% and on higher trading volumes, ending at 0.0564 per coin, a decrease from 0.0517 from the 7 days ago. For the past 7 days ETH has surprisingly outperformed BTC.