Market Update 02/09

MARKET OVERVIEW

Bitcoin is tracking performance of SPY - What might be perceived as a 'digital gold', 'inflation hedge' and 'flight to safety' asset, Bitcoin is in fact tracking risky assets, and more closely performance of Standard & Poor's 500 index. For the past 30 days BTC [SPY] performance totaled 2% [6%] and for the past 90 days BTC [SPY] 21 % [14%]. What is more intriguing is the high correlation between the US equities and Bitcoin, that you can see per the chart attached in the next section below 👇

Bittensor blockchain, is all the rave this week, a scalable protocol intending to incorporate AI applications and meta-data shared-economy, in a single framework. Essentially, Bittensor has added a familiar scaling technology of 'sharding', similar to Zilliqa and other layer 1 frameworks that compete with Ethereum smart contracts. This might appear to be a marketing edge, as we currently do not see any real world applications for machine learning and the use neural networks deployment with this particular chain. It appears that Bittensor is a database, enabling users to share data streams with one another.

Solana blockchain experienced an "outage", stopping $SOL database block validation for about 5 hours on Tuesday February 6th. Our team was able to aggregate some analysis from reputable #CryptoTwitter accounts, it appears that Solana Foundation and FTX Holdings Inc. provide $100 million monthly token subsidy to validators, because the on-chain fees are not providing sufficient revenue streams for Operating Expenses of the blockchain miners. The remaining Solana validators are encouraged to secure additional deposits from the retail hodlers, and their profitability is precarious at best, more on this tread you can reference here.

South Korea will implement the "Virtual Asset User Protection Act" on July 19 2024, which prohibits market manipulation, illegal transactions, the use of undisclosed important information and insider trading. Violators will face imprisonment of not less than one year. If the illegal benefit exceeds 5 billion $WON or 4 million $USD, the person may be sentenced to life imprisonment.

U.S. publicly traded mining companies are retaining their Bitcoin holdings without showing significant selling pressure, as seen by their wallet activities, according to the data published by Crypto Quant that you can reference here.

Bitcoin ETFs analytics aggregated by AmberData, suggests that ETF Bitcoin flows have returned to a marginally positive territory, with a significant decrease in outflows from GBTC and increased inflows into other ETF symbols surpassing GBTC. Net New Flows for Bitcoin ETFs appear to be negligent (total inflows - total outflows), which is a metric widely used in conventional finance is effectively zero, a chart that you can reference here.

Kaiko Data published a report, only 16% of #BTC trade volume occurs on US-available exchanges, yet they dominate over 70% of BTC 1% #depth. Interestingly, their BTC depth share hasn't yet returned to pre-FTX levels that you can reference here.

Ethereum and Ethereum Classic, "comp" analysis performed by our team, appears to suggest that ETH and ETH have a very high period performance correlation, that our team at Cryptoken Board was able to publish, indicating that crypto markets do not yet trade based on fundamentals, but rather are dictated by market making and liquidity mechanism that you can reference here.

Farcaster, Social Media platform (by Archetype Venture Capital) was officially launched on the App Store, Ethereum community users are trying to move to their own crypto-centric micro blogging platform, which directly competes with Lens blockchain.

Synthetic Exchange, that our team at CB is accelerating has published a series of crypto portfolio management "education cards" including Sharpe Ratio, Treynor Measure and Return Over Maximum Drawdown that you can access on their CT page here.

BTC and ETH total market capitalizations equal $ 877 billion ( $53 billion increase) and $ 291 billion ( 21 billion increase), as BTC/ETH 3.0155x ratio, changed from 3.0302x ratio on 02/02. Ethereum out-performed against Bitcoin for the past 7 days by 0.50% percent. The total market capitalization of the cryptocurrency market is $ 1.66 T ( $.03 T increase ), and BTC dominance at 51.21% from the previous week, continuing to outperform Altcoins.

Bitcoin daily volume equals 2.91% of the total market capitalization, while Ethereum daily volume is 3.47% of TMC.

BITCOIN FUTURES

The Futures Markets on CME had a closing price of $ 45,075 and trading volume of of 3,270 contracts for February contract (Ticker: BTCG4), with traders slightly increased their positions in the post Bitcoin ETF era from the previous week. The aggregate CME Open Interest are currently at 21,896 with a net change from yesterday of 99.

The futures curve for ME February ($44,410), March 2024 (+ 430), April 2024 (+ $740) and May 2024 (+ $1,30). Bitcoin futures, total volume for the week ending on February 9th, 2024, is higher than comparing to the previous week at 8,764 contracts, trading in slight [early dates] - backwardation.

BITCOIN OPTIONS

Deribit Bitcoin Options call / put ratio is 0.55, with Call Options OI of 157,833 and Put Options OI of 71,818. The two large call option strike price are $45,000 and $50,000, while the put option strike price is more evenly distributed between $37,000 - $41,000. The largest options contract by expiration are February 23rd, and March 29th and June 28th 2024.

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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 February 9, 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 $47,996 is higher than the market price $ 45,312 that suggests that Bitcoin traders are 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 February 2 has SR of 1.38 for the past 30 days, up from 1.08 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 0.40% and on higher trading volumes, ending at 0.0540 per coin, increase from 0.0538 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.