Market Update 01/27

MARKET OVERVIEW

The Bitcoin ETFs came along with a lull - the new post TradFi era, has brought us low trading volume, lower prices and low volatility. Per the data from Bloomberg - GBTC (Grayscale) total asset under management amounted to $2 B, IBIT (BlackRock) AUM totaled $ 1.8 B, and FBTC (Fidelity) $ 1.6 B. while Bitwise, ARK and Invesco Galaxy ranked 3 / 4 / 5 $512, $490 and $270 million $AUM. VanEck only accrued a total subscription flows of $117 million. The week 3 of the EFT Bitcoin epoch resulted in -$158 million outflows for the entire group which is the largest single day net outflow so far.

Notably, Coinbase $COIN has continued to under perform resulting in $121 per share, down from $186 at the peak on Dec 28h 2023, some 35% on the trailing 30 day basis. This is relatively alarming as the institutional clients, have not been onboarding cryptocurrencies, and the final epoch of "institutional adoption" came and gone somewhat flat.

The leverage was expunged from the system, as we previously noted, the funding rates data per Coinglass, is reporting single digit rolling percentages for majority of the altcoins, down from +50% before December 31st, 2024 that you can reference here.

John E Deaton a prominent a U.S. lawyer representing the Ripple (XRP) sounded alarm bells over the continued litigation between the SEC versus Ripple Labs. that you can reference here, the trial between the SEC and Ripple began in December 2020 when the U.S. regulator accused the crypto company of illegally selling unregistered securities in the form of XRP, its digital currency. Ripple, of course, denies these accusations. It even asserts that XRP is a cryptocurrency like Bitcoin and Ethereum, not a security subject to SEC regulation. The lawsuit hinges on the fact whether Ripple Labs violated the US Securities Laws by offering its token XRP to institutional investors without registration. This case will determine the future path forward for the crypto industry.

Franklin Templeton launched a fixed income money market (security) fund using Stellar [StellarOrg] Horizon API] XLM. It looks like the Wall Street is programming next generation of capital markets with Lumens XLM that you can reference on our Twitter thread here.

All risky assets are in trouble including Bitcoin, the Macro Economics leading economic indicator [LEI] hits a new low per ZeroHedge report at -6.69. Primarily driven by the ISM drop (The ISM manufacturing index, also known as the purchasing managers' index (PMI), that you can reference here. The last time LEI indicator this valuation was 2020 and before that in 2008, when the risky assets including Bitcoin were trading in bear market.

BTC and ETH total market capitalizations equal $ 805 billion ( $7 billion increase) and $ 270 billion ( 26 billion decrease), as BTC/ETH 2.9873x ratio, with tumbling Ethereum from 2.7411x ratio on 01/19. Ethereum drastically under-performed against Bitcoin for the past 7 days by ~ 9.50% percent. The total market capitalization of the cryptocurrency market is $ 1.55 T ( $.07 T decrease ), and BTC dominance at 49.75%.

BITCOIN DERIVATIVES

The Futures Markets on CME had a closing price of $ 41,400 and trading volume of of 3,272 contracts (Ticker: BTCF4), with traders further reducing their positions in the post Bitcoin ETF era. The aggregate CME Open Interest are currently at 21,599 with a net change from yesterday of 816. The weekly CME Option Markets for the past 7 days had the same amount of Bitcoin Options with (0) Calls and (0) Put options and total volume of total (63) Options.

The futures curve for ME January ($41,750), February 2024 (+ 375) and March 2024 (+ $795) and April 2024 (+ $1065). Bitcoin futures, total volume for the week ending on January 26th, 2024, is higher than comparing to the previous week at 16,743 contracts.

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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 26th, 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 $45,561 is higher than the market price $ 41,214 that suggests that Bitcoin traders are either wrong about the sustainability / strength of the price rally, or 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 26th has SR of 2.17 for the past 30 days, up 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 7 days Ethereum has under performed BTC by 9.60% and on lower trading volumes, ending at 0.0545 per coin, increase from 0.0604 from the 7 days ago. For the past 7 days ETH has under performed BTC, perhaps performance indicating more weakness for the second leading crypto by the market capitalization.