Market Update 11/10

MARKET OVERVIEW

Trading activity leads Bitcoin higher - #Bitcoin continued to rally, surpassing a staggering $37,500, price level not seen since the last bull run & subsequent drawdown of April '22. For the trailing twelve months, $BTC has seen a straight up-trend, moving from $15k to 37k - 250% that we have come to expect from cryptocurrencies. Additionally #Ether broke the $2,000 mark!

One notable news is that Bitcoin Ordinals, inscription fees and BRC20 smart contracts have aided in additional revenue to Bitcoin miners - surpassing 10% of the 'Bitcoin transaction fees as percentage of block rewards'. This is a bullish signal for a struggling $BTC mining industry. $HIVE Digital Technologies Ltd. #Bitcoin mining report for October 2023 is published, indicating miners are considering idle equipment and operations due to high energy costs, that you can read here.

The Coinbase earnings report, was also released on November 5th, with the CEO Brian Armstrong during an analyst call worth quoting “On-chain is the new online. The Internet was and is a game-changing technology that redefined our modes of communication, business and social interaction. It broke down barriers, democratized access to information, and made knowledge universally accessible. Blockchain and crypto are doing the same thing today with a re-decentralization of the web and the introduction of a new building block: ownership. Instead of just reading and writing on the traditional Internet, on-chain, you can now read, write and own. On-chain is about digital assets, broader access to financial services, and even changes how we think about identity, governance, artwork and non-financial services."

Coinbase earnings totaled $750 million, broken down by business line that you can read here, Transactions accounted for 43% (retail to institutional breakdown still favoured 95/5 percent for retail), Stablecoin profit 26% (Coinbase entered in an agreement with Circle Inc. regarding USDC of 50% share in fees and rewards), Ether staking 11% (Ethereum balances equal to $ 7.1 billion, Customer staking 6% (cbETH fees most likely albeit no such item is clarified in their MD&A), Coin One Premium Subscribers 5% and Custodial fees 2%. Coinbase stock is trading today at $98 up from $80 - 30 days ago. We view $COIN as proxy for the overall health of the crypto industry, as they are highly regulated, and transparent. Trust the numbers.

Sam Bankman Fried, notorious CEO of the private cryptocurrency and exchange company FTX Ltd. lost his trail versus Federal prosecutors, not able to amount a proper legal defense. He was convicted of fraud, primarily due to a lack of proper risk management systems, enabling the sister trading company Alameda Research to borrow unlimited funds from FTX US and International customers.

Cryptocurrency total market capitalization increased to $ 1.35 trillion. For the week ending on November 10 - two major cryptocurrencies trended upwards as Bitcoin (resistance) $37,750 and (support) $34,250 and Ethereum $2,045 (resistance) and $1,780 (support). Bitcoin daily volume on the day is $ 37.40 billion and Ethereum daily volume $ 19.35 billion, almost twice the amount versus previous week supporting the rally.

BTC and ETH total market capitalizations are equaling $710 billion and $242 billion: indicating 2.9355x ratio, a decrease from 3.1205x ratio on 11/03. Bitcoin dominance is 52.36%.


BITCOIN FUTURES

The Futures Markets on CME had at total volume of 576 contracts, price of $36,655 for month end November (Ticker: BTCX3) as BTC futs recalibrated to higher prices and inverted but still slight contango structure. The aggregate CME contract volumes of Open Interest for the remainder of 2023 have 21,535 contracts. The futures curve with ME December (+ $390), January 2024 (+ $235) and February 2024 (+ $1,390) . Bitcoin futures, volume for the week ending on November 10 2023, is higher for the past 7 days with increased OI for December 2024.

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c1 Bitcoin (trailing) 180 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 November 10th.

#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 3 months - Bitcoin price of $36,190 is in equilibrium now with the ADL line $ 36,217 that might suggest that traders are fairly valuing Bitcoin. The traders are possibly distributing (selling) or accumulating (buying) at these higher valuations, 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 November10th has SR of 2.0125 for the past 30 days, comparing to last week SR of 0.0725. 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) favoured ETH for the past 7 days, a recalibration of of the ratio. For the past 7 days Ethereum token added 11.4% comparing to Bitcoin 4.3%, ending on 0.0556 per coin, relatively flat from 0.0518 from 7 days ago, outperforming BTC some 7.33%. Ethereum mostly rallied in the past 24 hours, demonstrating higher highs than Bitcoin.