Market Update 12/22

MARKET OVERVIEW

Crypto Christmas - we finally have a Christmas rally, albeit the cryptocurrency markets usually sell-off during the holidays as most retail holders have holiday related expanses. The new years sell off has been observed for the few couple of years, but '23 Santa brought higher prices for all of the leading digital pairs including Solana that officially bypassed Binance as the 4th largest cryptocurrency by market capitalization.

Internet Computer blockchain lead the altcoins with +60% (7 day) performance, followed by Near Protocol +57% (7 day), Sei Network +45% (7 day), Stacks +35% {7 day) and Axelar +30% (7 day). Followed by Solana cryptocurrency surging to $100 per coin, extending 30% gains on the week, Injective 30%, Avalanche 22%, FIlecoin 20%, and Algorand 20%.

Cryptoken Board team has published a series of tweets, reporting on Bitcoin ordinals - since the inception March of 2023 - inscriptions have lead to an average BTC block size to increase to 2.5 mb and the memory of the Bitcoin mempools have increasing to 1.4 gb, surpassing a limit of 300 mb optimal performance projection. As a result of increased volume of Bitcoin inscription, average transaction fee has increased to 0.00068 BTC ($30.15) 368.1 sats/vB per bitinfocharts.

OKX Exchange has become the number one NFT marketplace after enabling trading of BTC Ordinals NFTs. Blur and OpenSea have not yet allowed trading of these Bitcoin-based NFTs, so they've started to fall behind in terms of volume due to the huge demand of Ordinals.

Digital Asset Anti-Money Laundering Bill sponsored by Sen. Elizabeth Warren D-Mass (Digital Asset Anti-Money Laundering Act Closes Loopholes and Combats Money Laundering, Ransomware Attacks, Sanctions Evasion, Drug Trafficking, Elder Fraud, and Other Illicit Financial Activities Using Crypto) - had 5 other democratic members of Congress, 2 of which are part of Senate Banking, Housing and Urban Affairs committee as co-sponsors. The bill covers a myriad of topics, and one of the most striking aspects pertains to miners, and or node operator, which will have to file full KYC / AML client registrations - that we believe impact #Ethereum community to a greatest extent.

Argentina added Bitcoin to their capital markets with Diana Mondino, Minister of Foreign Affairs of Argentina, confirming that, from now on, financial contracts can be denominated in Bitcoin so much as they voided laws that prevented digital finance.

Lastly, part of the reason why we're seeing rally in the crypto markets, is that the Federal Reserve pivoted to a 'dovish' token regarding possible '24 rate cuts, fueling a rally in risky assets and particular Bitcoin and Gold, with PAXG currently trading near one year high of $2,030 per ounce.

Cryptocurrency total market capitalization remained relatively flat at $ 1.63 trillion. For the week ending on December 22nd - Bitcoin price is at 7 day resistance level of $44,165 and (support) $40,633. Ethereum token is also trading near 7 day resistance level $2,280 (resistance) and $2,132 (support), accumulating additional momentum. Bitcoin daily volume on the day is $ 22.5 billion (2.63% of MC) and Ethereum daily volume $ 12.9 billion (4.75% of MC), a significant increase in trading volume from the previous week.

BTC and ETH total market capitalizations equal $ 864.8 billion (+ $23.2 billion decrease) and $ 272.2 billion (- $2.8 billion decrease), as BTC/ETH 3.1771x ratio, increase from 3.0555xratio on 12/14. Bitcoin dominance continued with 51.68% of the total market, year to date high. Solana surged to 1.96%.

BITCOIN DERIVATIVES

The Futures Markets on CME had a closing price of $ 44,280 and trading volume of of 882 contracts (Ticker: BTCX3), with traders being absent this week due to a holiday season. The aggregate CME Open Interest volumes are currently at 23,909 with a net change from yesterday of -466. 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 still remaining.

The futures curve for ME December ($44,135), January 2024 (+ 615) and February 2024 (+ $680) and March 2024 (+ $1,360) trading in slight contango.. Bitcoin futures, volume for the week ending on December 22nd, 2023, are higher comparing to previous week.

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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 22nd.

#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 $44,186 is slightly ahead of the ADL line $ 43,996 that suggests that Bitcoin priced fairly.

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 22nd has SR of 1.30 for the past 30 days, up from 0.70 on 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) has fallen over the past 7 days with Ether underperforming versus BTC. Comparing to a Bitcoin gain of 3.66%, Ethereum lost -0.15% ending at 0.0511 per coin, a decrease from 0.0531 from the 7 days ago, underperforming BTC some 377 basis points.