Crypto News

BlackRock and Fidelity Dominate ETF Rankings Globally

Blackrock’s iShares Bitcoin Trust (IBIT) has swiftly ascended to the top 5 Global Exchange-Traded Funds (ETFs) by inflows since the start of 2024, achieving this milestone just 17 days after the introduction of Bitcoin Spot ETFs. Accompanying IBIT in this prestigious ranking is Fidelity’s Wise Origin Bitcoin Fund (FBTC), securing the number 8 spot. With IBIT amassing a substantial $3.2 billion in inflows, any lingering doubts regarding the viability of these ETFs have been unequivocally dispelled.

Other top-ranking ETFs include longstanding, renowned funds primarily dealing with major traditional finance indices. Vanguard’s S&P 500 Index Fund ETF (VOO) leads with $11.1 billion in inflows, followed by the iShares Core S&P 500 ETF (IVV) at number 1, amassing a staggering $13 billion since the beginning of 2024.

Notably, despite a general slowdown in Bitcoin Spot ETFs post-launch, both BlackRock and Fidelity’s offerings demonstrate consistent growth, reflecting increasing mainstream interest and bolstering the cryptocurrency sector. Currently, Bitcoin stands at $42,954, at the current time of writing, marking a remarkable 177% increase from its November 2022 low. Much of this surge is attributed to the long-awaited approval of a Bitcoin Spot ETF on January 10, 2024.

Monero : Binance Announces Delisting Of Privacy Token, XMR

Binance, the world’s largest cryptocurrency exchange, made headlines last Tuesday by announcing its decision to delist Monero (XMR) along with several other privacy tokens. This action includes Aragon (ANT), Multichain (MULTI), and Vai (VAI), the latter being distinct from the Artificial Intelligence cryptocurrency, Vaiot. The delisting is set to occur on February 20, 2024, as Binance states that these coins fail to meet the regulatory standards expected by the exchange.

Following the announcement, Monero’s native token, XMR, experienced a sharp decline of about 30%, reaching a new 20-month low. However, it managed to recover half of its losses the following day. Privacy coins like Monero utilise encryption techniques to render transactions visible solely to the sender and recipient, with third parties only able to validate the transaction without accessing its specifics. Despite this, third parties can observe the overall volume of the transaction, network activity, timestamp on the Monero blockchain, and address type, while remaining unable to discern the specific sender, recipient, or amount involved.

The Securities Exchange Commission (SEC) has intensified its scrutiny of major centralised exchanges in recent months, with privacy coins becoming a focal point. Transparency emerges as a critical factor in the SEC’s campaign against cryptocurrencies, as privacy coins can obscure the anonymity of trades. Binance’s decision to delist these tokens was not entirely unexpected, given OKX’s previous delistings of other privacy-based tokens, such as Dash and Zcash, combined with the regulatory pressure facing the industry.

The potential ripple effects of Binance’s delistings remain uncertain. Whether other major exchanges will follow suit is yet to be seen, but it warrants careful observation. The impact on privacy tokens like Monero in the future will be intriguing to monitor as the cryptocurrency landscape continues to evolve.

Ethereum Milestone: 25% of Total Supply Staked in Historic Landmark

Ethereum, the second-largest cryptocurrency by market capitalisation, has achieved a notable milestone by having a quarter of its total supply staked, as reported by Dune Analytics. Staking involves investors locking up their tokens in exchange for earning additional token rewards. This process reduces the circulating supply of Ethereum, consequently creating less availability and potentially driving upward pressure, by the basic principles of supply and demand.

As of the time of this writing, Ethereum is trading at $2,516, marking a nearly 10% increase from the previous week. Approximately 30 million Ethereum tokens are presently staked, with a combined value of around $73 billion. Notably, Lido, an Ethereum staking platform, has captured an impressive 31.5% share of the total staked amount.

Another analytics firm, Nansen, corroborates this data, revealing that the Ethereum awaiting unstaking stands at just over 176 thousand ETH, constituting a mere 0.6% of the total staked amount. This figure pales in comparison to the substantial amount currently staked.

Since the Ethereum network transitioned to a proof-of-stake (PoS) consensus mechanism on September 15, 2022, Ethereum's supply has undergone a significant reduction, resulting in an annual inflation rate of 0.57%, effectively rendering it a true deflationary asset. Considering all these factors, Ethereum stands poised for potential rapid growth in the future, alongside the broader cryptocurrency landscape's ongoing advancement.

Crypto Analysis

Bitcoin (BTC)

Bitcoin experienced significant developments over the past week, breaking out of a consolidation phase with notable candles and robust trading volume. This breakout aligns with our expectations outlined in the previous week, setting the stage for a potential retest of this year's January 11th highs, marked at $48,969.

Reflecting on recent events, it's clear that the dip to lows of $38,555 on January 23rd was a deceptive move to the downside, and fakeout driven possibly by Whales (large players), followed by a decisive move back above the key resistance level around $41,253. The forceful breach of the subsequent resistance line, accompanied by substantial volume and bullish candle formations, positions Bitcoin as an exceptionally bullish asset presently and in the foreseeable future.

While it's worth noting that the RSI momentum indicator is approaching overbought territory, it's essential to recognize that this condition can signal strong bullish momentum and may persist for extended periods. Additionally, the price comfortably rests above the 10-day exponential moving average (EMA), a factor often associated with continued upward movement.

Examining the monthly chart, we have successfully retested the 0.618 Fibonacci level, calculated from the all-time high of $69,000 to the significant swing low of $15,476 in November 2022. This level, at $48,553, coincides with a confluence of resistance levels, as indicated by the adjacent chart.

Another noteworthy observation in the chart below is the occurrence of three instances since the beginning of 2023 where we've witnessed seven consecutive up days. Remarkably, each of these occurrences has been succeeded by a continuation to new highs. Credit goes to Jamie Goodland for highlighting this crucial analysis.

Considering all factors, if one were to speculate, the positive price action and the robust momentum leading up to the 0.618 level suggest favourable odds for not only a breakthrough but also an eventual retest of the all-time highs.

It's important to emphasise that while these observations are made with cautious optimism, they do not constitute financial advice. Looking ahead, despite the potential for retracements or consolidation, the overall trajectory indicates a high likelihood of Bitcoin reaching unprecedented levels and record highs soon.

We eagerly anticipate revisiting Bitcoin's performance in the coming week.

BTC Dominance (BTC.D) excluding Major Stablecoins

This week, I've chosen to focus on the Bitcoin Dominance chart, excluding major stablecoins, to gauge the overall sentiment in the cryptocurrency space and track the flow of capital. A significant portion of funds is flowing into Bitcoin, as indicated by its dominance.

Bitcoin's price has remained comfortably above the 10-day Exponential Moving Average (EMA), signalling strong bullish sentiment with consistent green candle formations. While there was a brief consolidation around the 57.15% mark in early February, resembling a bull flag pattern, the subsequent price action suggests a continuation of the uptrend, aligning closely with the Bitcoin chart.

Despite observing three consecutive lower lows, it's essential to recognise that Bitcoin's dominance may not wane anytime soon. However, it's prudent to consider this trend alongside an overbought Relative Strength Index (RSI) reading.

On the daily chart, the next significant resistance level is denoted by a blue horizontal line just under 59%. This coincides with major resistance levels on the monthly chart, illustrated by the 0 line of a significant Fibonacci swing pattern dating back to September 2020, highlighted by blue arrows.

In our previous analysis of Bitcoin dominance, we observed a downside break of an ascending wedge pattern. However, this downward move may prove short-lived, given the bounce off the 0.236 Fibonacci level from the major monthly swing low in May 2021 to the recent swing high four months ago, positioned at 59.96%. While altcoins are gradually gaining traction, there are no indications on the dominance chart, along with its series of higher highs, suggesting that altcoins will outperform Bitcoin in the near term.

As we approach the critical 0 line once again, accompanied by a convergence of resistance levels, it's crucial to remain vigilant. It's worth emphasising that nothing in financial markets, particularly in the volatile cryptocurrency space, is guaranteed. Hence, it's essential to closely monitor these charts for any developments.

Stablecoin Dominance Chart (USDT, USDC & DAI)

For our final chart analysis, I deemed it necessary to examine stablecoin dominance to ensure a comprehensive understanding of the cryptocurrency market's inflows. As discussed in the preceding analysis, particularly focusing on Bitcoin, the insights gleaned from stablecoin dominance provide a holistic perspective. And indeed, the picture couldn't be clearer.

The Stablecoin Dominance chart, encompassing major stablecoins like USDT, USDC, and Dai, presents a compelling narrative. It's evident that capital is flowing out of cash and stablecoins and into Bitcoin and altcoins, with Bitcoin being the primary beneficiary. This trend is observable across both timeframes.

Beginning with the daily chart, we observe a breakdown below the daily 0.618 Fibonacci level from the January 11th swing low to the January 23rd swing high, positioned at 7.58%. Currently, the dominance level is testing the 0.786 Fibonacci level at 7.30%. While not definitive, the downward momentum suggests a probable continuation to the downside. The RSI indicator has yet to reach oversold territory, indicating further potential for decline. Additionally, the major moving averages are descending, with the price persistently below the 10-day exponential moving average.

A detailed examination of the monthly chart reveals an impending breach below the 0.618 Fibonacci level from the June 2019 swing low to the June 2022 all-time high, standing at 7.37%. This area demands serious attention as a pivotal point of interest. However, given that we are only two weeks into the month, it remains to be seen whether the price can sustain above this level amidst the ongoing shift of capital from stablecoins to Bitcoin and altcoins.

In Summary

The robust performance of the entire cryptocurrency market throughout the past week stands as a significant positive indicator. Until clear signals of a topping formation or a sudden downturn from current highs emerge, it's reasonable to anticipate that Bitcoin, barring a temporary pause or minor retracement, will continue its trajectory toward new all-time highs in the near to medium term. However, it's crucial to reiterate that certainty is elusive in financial markets, necessitating vigilant monitoring of evolving situations on a weekly basis.

Macro News

CCP Appoints New Securities Regulator

Wu Qing, a former chair of the Shanghai Stock exchange with political experience, has unexpectedly replaced Yi Huiman as head of China Securities Regulatory Commission (CSRC) in president Xi Jinping’s latest attempt to stabilise equity markets and China’s economy. The Hang Seng Index (HSI) has lost around $6.3 trillion in market value since its high in 2021

In a previous role at CSRC in the mid-2000s, Wu earned the nickname the “broker butcher”, in a crackdown on brokerage insider trading. Wu cut risk at around 30 failing securities firms – or a quarter of such companies at the time – leading to over 20 bankruptcies.

Reaction has been largely been positive, with many seeing this as what’s needed to turn China’s equity market around. However, this doesn’t change the underlying issue of chronic lack of confidence in China’s economy and real estate market, both on- and off-shore.

Deutsche Bank Scraps Recession Call

Deutsche Bank was one of the earliest on Wall Street to call for a recession in late 2023, after the Federal Reserve started its rate hiking cycle in 2022, and one of the few to predict rates would go as high as 5-6%. Whilst they were correct in their rate forecast, the recession appears not to have materialised. For nearly 2 years, many have rigidly stuck to their US (and in some cases, global) recession thesis despite the US economy being remarkably strong with above trend real GDP growth and record low unemployment.

The bank has now taken back its call for a recession, stating they “now think the economy will land on this narrow path and that a recession will be averted with limited cost in the labor market”. And they’re not the only ones.

Former Federal Reserve senior open markets desk trader Joseph Wang has long been saying the data doesn’t show what recessionistas have been calling for and recently said on his weekly YouTube updates that the economy has avoided a recession.

Market veteran Andy Constan has been arguing that whilst fiscal deficit spending continues at its current pace, as the US Congressional Budget Office (CBO) suggests it will, he sees a recession as highly unlikely.

S&P Closes Above 5,000 for the First Time

The benchmark S&P 500 (SPX) index broke above 5,000 for the first time last week to close Friday at 5,026.62. The index is up over 22% since its October 2023 low, with only a single lower weekly close in that 15 week period. That’s pretty rare, although momentum is strong.

The RSI is in overbought territory but by no means at extreme levels and MACD is showing significant, and growing, momentum along with strong weekly candles. And breadth has widened significantly since the October low which is a key sign of stock market strength.

The AI narrative driven S&P index is a freight train you don’t want to stand in front of until it starts showing signs of weakness. Whilst a correction is due, markets can continue up for longer than most expect, as discussed at the start of the year. It didn’t play out then. Will it now? Currently, weakness is something the US stock market definitely is not showing.