Market Update 12/15

MARKET OVERVIEW

Cryptocurrency market pulls back from YTD highs - Bitcoin and Ethereum have pared back some of the gains, falling 100 basis points and 225 basis points respectively. We were closely watching developments in Argentina, as a way to combat inflation, President Milei resorted to hyper-inflation devaluating $ARG peso from 365 to 800 per $USD by ~ by about 50%. The announcement goes “For a few months we’ll be worse off, particularly with inflation” in consultation with the IMF, Javier Milei declared devaluating the local currency, and has not made any mention of Bitcoin eh

In collaboration with Quantum Economics, we published a research piece "Blockchain settlement layer: how Argentina can digitize their economy" that you can read here.

The new FASB accounting rules are set to come into effect on January 1st 2024, will lead to Treasury holdings of #Bitcoin for companies reporting any "unrealized" gains and losses right on their books like the Income Statement and Shareholder's Equity at fair value, that will induce higher volatility of earnings per share.

We have posted a recent tweet on MicroStrategy $MSTR revenue as an example, of how FASB rules will placate their operating income, with their Q3 revenue of $ 125 mn - entire profit ledger be wiped off clean with any $BTC down-swing. In a tweet that you can reference here, $MSTR gross profit Q3 '23 equals $ 103 million, $MSTR total debt Q3 '23 is $ 2.5 billion, and $MSTR total #Bitcoin FV (12/14/23) $ 6.8 billion $MSTR shareholders value (12/14/23) $ 9.16 billion. Net of $BTC holdings we concluded that #Microstrategy is worthless. 📍 f(x) Equity - Debt - Bitcoin = - $0.14 billion.

In El Salvador, a groundbreaking regulatory approval has been granted for the world's inaugural Bitcoin bonds, slated for a launch in the Q1 of 2024. Several posts amplified on social platform X by President Nayib Bukele suggest. These "Volcano bonds" are part of the President's ambitious plan to secure $1 billion in funding. The bonds are set to be offered on Bitfinex Securities, a regulated division of crypto exchange Bitfinex.

Tron's native token $TRX traded at a discount of up to 17% over the weekend on the recently hacked exchange Poloniex. Crypto mogul Justin Sun has said that assets held on HTX and Poloniex are “100% safe” after last month’s hack that saw more than $200 million siphoned out of both exchanges. Both exchanges have opened withdrawals for certain assets, although several altcoins remain locked. Bitcoin BTC and Tron TRX are the two digital assets that could be withdrawn: this led to both tokens trading at a discount on Poloniex over the past few weeks, which meant users would have to take a haircut of up to 10% to liquidate their asset and withdraw another.

Coinbase Q4 product highlights for the week is the new Project Diamond meant for global settlement of native assets using Prime Custody, the recent roll-out of Seamless Protocol SEAM enabling LandFi, and Coinbase wallet being integrated with SoFi messaging platforms peer to peer like WhatsApp and iMessage.

Cryptocurrency total market capitalization remained relatively flat at $ 1.55 trillion. For the week ending on December 14th- Bitcoin (resistance) $44,654 and (support) $40,360 and Ethereum $2,382 (resistance) and $2,161 (support), edging higher from the previous week. Bitcoin daily volume on the day is $ 29.95 billion (4.98% of MC) and Ethereum daily volume $ 14.1 billion (5.08% of MC), a slight increase from the previous week.

BTC and ETH total market capitalizations are equaling $ 842 billion (- $1 billion decrease) and $ 275.6 billion (- $7 billion decrease), as BTC/ETH 3.0555x ratio, increase from 3.0103x ratio on 12/07. Bitcoin dominance continued with 52.54% of the total market, year to date high.

BITCOIN DERIVATIVES

The Futures Markets on CME had a closing price of $ 43,355 and trading volume of of 7,171 contracts (Ticker: BTCX3). The aggregate CME Open Interest volumes are currently at 22,259, a net change from yesterday of 1,048. The weekly CME Option Markets for the past 7 days have didn't have any Bitcoin Options with (2) Calls and (0) Puts and total volume of only (2) Options.

The futures curve for ME December ($43,335), January 2024 (+ 480) and February 2024 (+ $975) and March 2024 (+ $920) trading in slight contango, and the back end basis lower. Bitcoin futures, volume for the week ending on December 14th, 2023, is relatively subdued comparing to pre-rally highs of mid November Nov 20th - Nov 22nd.

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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 14th.

#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 $42,883 is in below the ADL line $ 43,556 that suggests that traders are still accumulating Bitcoin ahead of the holidays season, and possible BTC Spot ETF approval coming in the new year over the past week.

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 0.75 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) has fallen over the past 7 days with Ether underperforming versus BTC. Comparing to a Bitcoin loss of -1.05%, Ethereum gained lost even more -2.30% ending at 0.0533 per coin, a decrease from 0.0540 from the 7 days ago, underperforming BTC some 120 basis points over the past 7 days.