Crypto News

Financial Titan BlackRock Makes History with Unprecedented Surge in Inflows

BlackRock, the world's leading investment house, achieved another milestone in cryptocurrency as its iShares Bitcoin Trust (IBIT) saw a record-breaking inflow of $493 million on Tuesday of last week. This single-day influx marked the highest amount ever recorded, propelling the IBIT fund's assets under management (AUM) to $5.2 billion. Following closely behind is Fidelity's Wise Origin Bitcoin Fund (FBTC), boasting $4 billion in AUM since the official launch of Bitcoin Spot ETFs on January 11, 2024.

The day after the ETF launch witnessed another significant inflow, surpassing previous records with $386 million pouring into the markets. Bloomberg Intelligence reporter Eric Balchunas notes that BlackRock's IBIT now ranks in the top 7% of all ETFs by size, achieved in just 23 trading days. While Grayscale's GBTC fund remains the largest Bitcoin Spot ETF with a staggering $22.8 billion in AUM, it has experienced approximately $5.2 billion in net outflows since its inception. However, data from BitMEX Research indicates that the 10 other ETF funds collectively added $3.8 billion since last Tuesday, offsetting the outflows from GBTC.

Analysts anticipate further growth, foreseeing a secondary acceleration in the coming months as Bitcoin ETFs become available on national account platforms. Bitcoin itself reached a 25-month high on Thursday, soaring to $52,816, marking a 241% increase from its November 2022 lows. The anticipation and subsequent launch of Bitcoin Spot ETFs played a significant role in this surge. Moreover, with the upcoming Bitcoin halving scheduled for April, which will slash block rewards for miners by 50% to 3.125, as is customary every four years, experts speculate that Bitcoin may reach an all-time high by the end of 2024.

Coinbase and Ledger Live Collaborate: New Integration Enhances Cryptocurrency Convenience

Ledger Live, a renowned hardware wallet manufacturer, and top crypto exchange Coinbase has joined forces to streamline the process of buying, selling, and transferring assets between a crypto exchange and a self-custody hardware wallet through Coinbase Pay. Self-custody involves investors directly managing their digital assets without relying on third parties. Previously, when purchasing a cryptocurrency on a centralised exchange, the exchange held custody of the coin's address, effectively owning the asset. Conversely, the coin holder possesses the actual address on platforms like Ledger Live.

Traditionally, swapping cryptocurrency on an exchange can involve sending Bitcoin, Ethereum, or stablecoin, exchanging tokens from the hardware wallet to the exchange, swapping the cryptocurrency for the desired one, and potentially transferring it back to a self-custodial wallet. This process was time-consuming and prone to costly errors.

Now, with the integration seamlessly built into the Ledger Live app, users can buy, sell, and swap directly from Coinbase, facilitating smoother transactions, especially for newcomers to cryptocurrency. While Ledger Live previously attempted a similar integration with FTX, the now-defunct cryptocurrency exchange owned by Sam Bankman-Fried, the partnership with Coinbase offers a more promising and secure venture in light of FTX's demise.

Taurus & Lido: Liquid Staking Gets A Tradfi Banking Boost

Last week, liquid staking received a significant boost with the announcement of a partnership between cryptocurrency custody firm Taurus and staking giant Lido. This collaboration aims to facilitate Swiss banks in offering Ethereum staking rewards to their customers. In traditional staking, investors lock up their tokens for a specified period and receive rewards, typically in the form of the cryptocurrency's native token. However, a drawback of this method is the inability to access the original equity while tokens are locked up. Liquid staking addresses this issue by providing investors with Liquid Staking Tokens (LSTs) instead of locking up their tokens. In this case, stETH represents the staked assets, while the issuer retains the original assets. This arrangement allows investors to trade LSTs on various cryptocurrency exchanges, providing liquidity and flexibility. With the recent interest from Swiss banks and the support of Finma, Switzerland's financial regulatory authority, Taurus and Lido are poised to expand their staking services. They will likely seek to enter the global market in due course.

Crypto Analysis

Bitcoin (BTC)

Bitcoin maintained its upward trajectory last week, reaching a pinnacle not seen in 25 months at $52,816 on Thursday's trading session, only to encounter resistance and form a local peak by the end of Friday, pull back into Saturday then attempt to recover into Sunday and at the time of writing is holding at the highs. The extent of any potential retracement, if any, remains uncertain at this juncture but seeing as the price is consolidating at the highs at the time of writing, there is every likelihood of a continuation of the up trend. It's imperative to first identify key levels on the chart in the event of any pullback, monitor for signs of divergence or weakness, and adjust strategies accordingly. The recent surge to these levels makes it premature to determine whether a significant peak has been reached. Vigilance over the coming days is essential, particularly by zooming into shorter timeframes such as the hourly or 4-hour charts, to identify any secondary highs with divergence or notable downward candles.

In the week ahead, attention should be directed towards pivotal areas on longer timeframes. Beginning with the daily chart, the focus turns to area around the 0.382 Fibonacci level, calculated from the January 23rd swing low to last Friday's swing high, this Fibonacci level is situated at $47,368. This zone of support coincides with a convergence of former resistance turned potential support, as indicated by the thickened black line and two blue arrows on the daily chart. If price does indeed break the recent monthly highs then new Fibonacci levels will need to be taken. Observing how the price reacts upon touching the 10-day EMA is crucial; this moving average often acts as a magnet and can assist in making informed decisions regarding whether the price has become excessively extended, a scenario evident from the chart. Both the StochasticRSI and RSI momentum indicators are signaling extreme overbought conditions, potentially signaling an impending retracement when interpreted alongside other technical factors.

Turning to the monthly chart, it's prudent to apply the Fibonacci tool to the extremes of wicks and the highest and lowest open and close points. This approach reveals a spike at the 0.786 level, traced from the highest monthly close in November 2021 before the previous all-time high, down to the significant low in December 2022, registering at $51,721. While this level was briefly surpassed earlier this week, the price retreated below it and currently sits back above it as I write this analysis. 

It's essential to acknowledge that while a retracement appears likely at some point, this does not necessarily signify the onset of a major pullback. There remains the possibility of a daily retracement followed by a resumption of the uptrend, potentially leading to new all-time highs, as discussed in last week's analysis but at this current moment in time, the world’s largest digital asset looks like it will continue to the upside. However, as is customary in financial markets, whether in cryptocurrencies or traditional finance, all possibilities must be considered. Monitoring of the Bitcoin chart will continue on a weekly basis.

TOTAL3 (Altcoins excluding Ethereum)

This week, our focus returns to the Total3 chart, which aggregates all altcoins except Ethereum. Similar to the Bitcoin chart discussed earlier, Total3 has demonstrated resilience since October of the previous year, showing consistent strength without substantial pullbacks. While altcoins experienced a downturn over the weekend the resurgence back towards highs, it is easy to see that like Bitcoin, the Total 3 has held its ground remarkably well, suggesting that this may have just been a short-term temporary interruption in the broader trend. Although there's a minor bearish divergence observable in the RSI daily momentum indicator from the early January swing high to the most recent one on Thursday, there's no cause for significant concern at present. Price action remains above the 10-day EMA, with both the 100 and 50-day EMAs still exhibiting upward slopes, consistent since October of the previous year.

Furthermore, the price has successfully tested a zone of former resistance now acting as new support, this zone being breached to the upside on Thursday. This is evident from the green horizontal pattern and the 3 blue arrows to the left of the chart, in the $520B to $530B range. Turning to the monthly chart, we observe the next resistance level comes in at the 0.382 Fibonacci level, calculated from the opening and closing prices from the November 2021 all-time high to the significant monthly low of December last year. This level sits at $609.351B, combined with a confluence of resistance shown by the blue arrow to the left of the chart. 

In the week ahead, it's prudent to monitor altcoins closely for any signs of divergence on shorter timeframes or any notable weakness in price action. However, considering all factors, this appears to be a healthy pause within the overarching uptrend. Continued observation will be key to assessing the evolving market dynamics.

Near Protocol (NEAR)

The third chart of the week features Near Protocol, a topic we explored a few weeks ago. I've chosen this particular asset due to recent developments. Last time we looked at Near, we noticed the possibility of a double bottom spanning the two weeks between the end of January and the beginning of February. Indeed, we did get a double bottom confirmed when we broke and closed above the blue horizontal line last Monday, as seen on the daily chart.

Following this key event, the price retested the resistance line one day later and then once again on Saturday. At the time of writing, this level has successfully turned into new support, as can be seen by the two red arrows on the marked blue line. The next line of resistance is at the 0.618 level of the late December swing high to the late January swing low, which comes in at $3.79, shown by the multiple green arrows to the left of the chart and the thick black horizontal line at the 0.618 Fibonacci level.

Furthermore, price is supported by the 10-day EMA, and the 100 and 50-day EMAs continue to rise, which is a bullish sign. Although the RSI momentum indicator is in overbought territory, there are no bearish divergences to be wary of.

Turning to the four-hour chart on the right, we can take a closer look at the price action and the cluster of candles, zoning in on the most recent break of that consolidation area shown by the three blue arrows to the left of the chart. If the price were to hold this area, there is every chance of further upside towards that 0.618 daily Fibonacci level.

Glancing at the weekly chart below, we notice another attempt by the price to breach the 50% level between the August 2022 swing high and the October 2023 swing low, marked at $3.539. While not an exact Fibonacci level, this area still commands attention as it signifies the midpoint between bullish and bearish sentiments. Given that the price previously tested and breached this level, there's a strong likelihood of a repeat, potentially pushing the price towards the $4.14 mark, representing the 0.618 level with a previous area of resistance, as indicated by the blue arrow.

What follows remains uncertain, but repeated testing often precedes breakthroughs. A decisive move above $4.14 could rekindle interest in the August 2022 swing high at $6.11. Beyond that, there appears to be minimal weekly resistance until approximately the $7.40 mark. We'll continue monitoring the Near Protocol chart for any significant developments.

Macro News & Analysis

Inflation, GDP & Recessions

Last week saw a hot US producer price index (PPI) print, the UK & Japan entered mild recessions, and China’s deflation battle continues. Discussing Germany’s decline in manufacturing activity, Volker Treier, foreign trade chief at Germany’s Chambers of Commerce and Industry, said “[t]he speed of structural change is dizzying”.

That all sounds very gloomy, and for Germany and China, it is. However, according to official data, the US economy continues to be strong. The UK isn’t doing so bad either, with continued rising wages, lower inflation and increased consumer spending.

Is Low Unemployment the Last Bastion of Economic Hope?

Stock markets are rallying, with many global stock markets at or near all-time highs. Talk of rate cuts, while dampened somewhat by last week’s data, remains on the table this year. Job markets are tight, with unemployment at record lows and insufficient workers to fill vacancies.

There’s much talk of a soft/no landing, implying inflation has been beaten, and both economies and markets can push through the most aggressive rate hiking cycle since the 1970s without crashing.

But when everyone thinks a recession has been avoided and things look set to return to normal, a crash landing tends to happen. So, is everything about to crash? Are we finally due for a proper recession after 15 years without one? Unlikely, it would seem, is the answer.

With continued quantitative easing by central banks since 2008 and unprecedented fiscal spending during and after COVID, I struggle to see how deep economy-wide recessions are possible. Could I be wrong? Of course. But sometimes the crowd is right.

Growing Worry of Credit Event in Real Estate

There is, however, a rise among money managers over concerns about a credit event in the near future. According to Bank of America’s latest Global Fund Manager survey, one in six polled cites a credit risk as their primary concern versus one in eleven in December’s survey. China’s property market collapse and US commercial real estate are the primary causes for concern.

Marathon Asset Management Chairman Bruce Richards said in a LinkedIn post last week that smaller banks’ loan books appear “on a trajectory towards 8-10% default rates”. According to NBER working paper Monetary Tightening, Commercial Real Estate Distress, and US Bank Fragility, a “10% default rate on CRE loans – a range close to what one saw in the Great Recession on the lower end – would result in about $80 billion of additional bank losses”.

The authors say had this happened in 2020, while interest rates were low, “not a single bank would fail”. However, following asset value losses since the monetary tightening in 2022, the authors find CRE distress could induce “anywhere from dozens to over 300 mainly smaller banks” at risk of solvency runs, where marked-to-market asset values don’t cover liabilities if we see a repeat of March 2023’s bank runs.

The authors warn, “[t]hese findings hold significant implications for financial regulation, risk supervision, and monetary policy transmission”. With March only a couple of weeks away and the Federal Reserve’s Bank Term Funding Program (BTFP) ending a year after its creation in response to March 2023’s interest rate-induced bank failures, we could have a bumpy ride ahead.

Crypto Causes a Stir in Washington

Meanwhile, in crypto land, US House Majority Whip Tom Emmer questioned Treasury’s Head of FinCEN and OFAC about Hamas’s reported usage of digital asset fundraising. During the House Financial Services Committee hearing, Treasury undersecretary Nelson confirmed WSJ’s findings to be inaccurate, and that crypto was not a preferred tool for terrorists.

This Week’s Events

Tuesday

Reserve Bank of Australia Feb. meeting minutes

Canada Inflation

China loan prime rates

BHP Group Ltd earnings

European Central Bank publishes negotiated wage data

Wednesday

Eurozone consumer confidence

FOMC meeting minutes

Atlanta Fed President Raphael Bostic speaks

Thursday

Eurozone CPI, PMI

European Central Bank meeting report

Fed Governor Lisa Cook, Minneapolis Fed President Neel Kashkar speak

Friday

China property prices

European Central Bank’s Isabel Schnabel speaks

Earnings Calendar