Market Update 12/08

MARKET OVERVIEW

Holiday season rebound, Santa Claus Rally: What It Is and Means for Investors - well Bitcoin and Ethereum have broken out of a 18 month slump, rallying significantly over the past week, the price levels we haven't seen since the last bull market of 2021 - Merry Christmas. Over the past 7 days, many cryptocurrencies rallied in the top 50 by market capitalization, including BTC, ETH, SOL, DOGE, ADA, DOT, AVAX, SHIBA INU, ETC and NEAR. Ethereum layer 2 (Mantle) $MANTLE #36 also gained over the past week surpassing (Optimism) $OP at #37.

We also view BNB coin as the proxy for the overall crypto-market sentiment, with Binance coin not joining the party. This continues to tame our enthusiasm as we move into the new year.

The Bitcoin community experienced heavy amount of gas-lighting. One of the leading Bitcoin Core developers Luke Dashjr (team is controlled by Blockstream provides a Bitcoin and blockchain technology solution for financial markets. Victoria, British Columbia, Canada) tweeted that “Inscriptions” are exploiting a vulnerability in Bitcoin Core to spam the blockchain. Now famous BRC20 smart contracts, and Bitcoin Ordinals became popular in 2023, as Non Fungible Token equivalent inscriptions. However, additional meta-data stored into BTC blocks have caused the network to congest.

According to mempool data, due to the popularity of BRC20 tokens, the Bitcoin network is currently in a congested state. There are more than 280,000 transactions to be confirmed, the memory pool usage exceeds 300 MB and reached 1.57GB, and the minimum transaction fee exceeds 220 sat/vB.

About Bitcoin Ordinals per decrypt "Ordinals are taking Bitcoin by storm. Ordinal Inscriptions, similar to NFTs, are digital assets inscribed on a satoshi, the lowest denomination of a Bitcoin (BTC). Inscribing on satoshis, named after the pseudonymous creator of Bitcoin, Satoshi Nakamoto, is possible thanks to the Taproot upgrade launched on the Bitcoin network on November 14, 2021. With Taproot, all parties in a transaction can cooperate to make these complex transactions look like standard, person-to-person transactions. They do so by combining their public keys to create a new public key and combining their signatures to create a new signature. It does this through a device called Schnorr signatures."

Cryptoken Board twitter published a report, indicating that $2 billion in (Tether) $USDT were minted on 11/22 and 11/27 into Tether Treasury, analysis that your can reference here. Additionally ChainArgos, a forensic blockchain team published a report that all interest income received by Tether, came from their sister company Bitfinex Exchange. We have previously noted, that per Q3 financial attestation, Tether has about $6 billion in secured loans outstanding from the 86 billion in assets under management. It's concerning that the interest payments are coming from a related party, a full thread you can reference here.

Cryptocurrency total market capitalization ballooned by 11.37% to $ 1.57 trillion. For the week ending on December 8th - Bitcoin (resistance) $44,320 and (floor) $37,80 and Ethereum $2,350 (top) and $2,043 (floor). Bitcoin daily volume on the day is $ 19.50 billion (3.18% of MC) and Ethereum daily volume $ 13.7 billion (4.84% of MC), that is interesting as this rally did not come with higher trading.

BTC and ETH total market capitalizations are equaling $ 849 billion (+ $115 billion increase) and 282 billion (+ $38 billion increase), as BTC/ETH 3.0103x ratio a slight increase from 3.0095x ratio on 12/01. Bitcoin dominance continued with 51.99% of the total market.

'Crypto market usually trades well in the bull-market, carrying its momentum' - were the wise words from last week.

BITCOIN DERIVATIVES

The Futures Markets on CME has a closing price of $ 43,915 and trading volume of of 6,239 contracts (Ticker: BTCX3). The aggregate CME Open Interest volumes are currently at 22,682, a net change from yesterday of -359. The weekly CME Option Markets for the past 7 days have seen a spike in Bitcoin Options with (220) Calls and (69) Puts and total volume of (281) Options.

The futures curve for ME December ($44,215), January 2024 (+ $535) and February 2024 (+ $785) and March 2024 (+ $1,065) trading in slight contango. Bitcoin futures, volume for the week ending on December 8th, 2023, is quite smaller than on Nov 20th - Nov 22nd, before a spike in BTC ensured, suggesting that derivative markets played a role in this rally.

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c1 Bitcoin (trailing) 5 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 December 8th.

#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 $43,307 is in well below the ADL line $ 34,892 that suggests that traders are further accumulating Bitcoin ahead of the holidays season, and possible BTC Spot ETF approval coming in the new year.

The AD line ADL (Accumulation Distribution Line) 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 December 8th has SR of -1.15 for the past 30 days. 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) is seeing a positive momentum for Ether cryptocurrency. Comparing to a Bitcoin gain of 14.70%, Ethereum gained even more 14.85% ending at 0.054098 per coin, a slight increase from 0.054017 on the trailing 7 days ago, outperforming BTC some 15 basis points over the past 7 days.