It's Crunch Time | Bitcoin ETF Yes Or No?

Bitcoin Crashes Following Matrixport ETF Concerns

A dramatic turn of events transpired this week when the cryptocurrency markets experienced a significant downturn last Wednesday, triggered by the sudden news that the highly anticipated approval of the Bitcoin ETF in January was increasingly unlikely. Within two hours, Bitcoin plummeted by 10.43%, following Matrixport's declaration that it anticipated a blanket denial of all ETF applications. This led to a colossal liquidation event, erasing a staggering $500 million worth of positions and obliterating gains since the beginning of January. The fallout also resulted in a $2 billion decline in open interest due to widespread liquidations.

A spot Bitcoin ETF represents a pivotal and unprecedented moment in financial history, enabling investors to invest in the world’s largest cryptocurrency asset without the necessity of acquiring the underlying asset on a cryptocurrency exchange. The cryptocurrency has been on an upward trajectory in recent months, propelled by the Securities and Exchange Commission's (SEC) newfound willingness to let institutional and large investment entities invest directly in Bitcoin. A pivotal high court decision mandated that the SEC could no longer dismiss Spot ETF. Initially, the SEC voiced concerns about the ETF structure, however, recent dialogues between investment heavyweights like Blackrock and Greyscale with the SEC suggest a collaborative effort to find a compromise.

While SEC Chairman Gary Gensler has been opposed to cryptocurrencies in the past, internal pressures from within the SEC may sway him towards approving the Spot ETF. Matrixport expressed optimism, suggesting that a Bitcoin ETF might gain approval in the second quarter of 2024. This potential development could act as confirmation for the continuation of the current bull market, with investors eagerly anticipating and positioning themselves for the positive shift. In the wake of last week's developments, news broke on Friday that financial exchanges could be getting ready to list several Bitcoin Spot ETFs within the next few days after the exchanges that will list them filed amended S-1 applications, casting doubt on the Matrixport report.

TRB Token Soars, Only To Plummet in a Whirlwind Dump Within a Day

New Year's Eve turned chaotic for investors in the decentralized protocol, Tellor Tributes, as a tumultuous buy and sell program triggered a massive liquidation event. The native token, TRB, experienced an astounding 170% surge on the Binance exchange within 8 hours, followed by an 80.76% plunge in the next 8 hours. The rollercoaster ride saw TRB rise from $232.76 to $629.04 at its peak, plummeting to $121.00 within 24 hours.

This dramatic price swing, almost tripling its lowest point, reflected the risky bets taken by traders, possibly exacerbated by Tellor's development team's involvement. Speculations arose when a wallet associated with the team moved funds to Coinbase, potentially contributing to the market's unprecedented volatility. The event led to a record-breaking $40 million in short bets and $17 million in long bets liquidated in a single day.

Tellor Tributes, an Ethereum-based Oracle Protocol facilitating data sharing across different chains, utilizes the TRB token for staking rewards, enhancing network security. Despite the market turbulence, TRB has surged over 1000% since the previous year, showcasing resilience amid the chaos.

Michael Saylor Begins Sale of MicroStrategy Shares to Fortify Bitcoin Holdings

The Executive Chairman of MicroStrategy, the well-known crypto enthusiast Michael Saylor, has embarked on a strategic move to bolster his Bitcoin holdings. Saylor recently initiated the sale of 5000 shares from his personal MicroStrategy assets, with plans to liquidate a total of $216 million over four months. This financial maneuver comes as Saylor's stock options, granted in 2014, near their expiration date on April 30th, 2024.

Saylor, a staunch advocate for the future of the world's largest cryptocurrency, has consistently emphasized his belief in Bitcoin's potential. By selling his MicroStrategy shares, he not only aims to fulfill personal obligations but also seeks to augment his Bitcoin wealth. Operating within the allowed window of January 2nd to April 26th, Saylor plans to sell a maximum of 400,000 shares. His strategy involves the monthly liquidation of 5000 MSTR shares and the distribution of his 315,000 stock options awards.

This financial manoeuvre comes on the heels of Saylor's consistent Bitcoin acquisitions, including a substantial $615 million purchase on December 27th, 2023. As a result, MicroStrategy's Bitcoin holdings now stand at an impressive 189,150, valued at $8.5 billion at the time of writing. Saylor's unwavering belief in Bitcoin has proven advantageous for both MicroStrategy and its owner, as the cryptocurrency has experienced a remarkable surge, surpassing a 170% increase from its November 2022 low and retracing over 50% of its decline from the all-time high of $69,000.

TECHNICAL ANALYSIS

Bitcoin (BTC)

We start this week's analysis by delving into the Bitcoin 4-hour chart. The world's premier cryptocurrency has showcased remarkable volatility in recent weeks, exhibiting significant fluctuations in both upward and downward directions. Following its consistent climb to new 20-month highs at $45,879, the current price finds itself positioned squarely in the middle of an ascending trendline channel, evident in the chart with blue arrows. Notably, there have been instances where the price touched the lower trendline and fell slightly short of reaching the upper trendline.

Navigating this scenario proves challenging, as the price's central location within the channel complicates trading in both directions on this specific timeframe. The Relative Strength Index (RSI), a momentum-tracking indicator, hovers in the mid-range, signifying potential movement in either direction. A glance at the monthly chart reveals the price managing to sustain itself just above the 50% level at $42,208, derived from the all-time high of $69,000 to the November 2022 swing low of $15,476.

In conclusion, we find ourselves in a decisive "wait-and-see" phase, aligning with the current fundamental landscape. Making speculative predictions about an upward or downward price movement amid this range appears risky. A decisive break below the lower 4-hour trendline and a daily close would signal a bearish development, warranting increased caution. However, given the overarching trend marked by higher daily highs and higher lows, the path of least resistance continues to favour the upside. We will continue to monitor Bitcoin on a weekly basis.

Bitcoin Dominance - BTC.D (Excluding Stablecoins)

This week, our 2nd chart centres on Bitcoin Dominance, a metric tracking percentage movements against altcoins, excluding major stablecoins. The chart below illustrates BTC.D's upward trajectory, anticipating crucial fundamental news.

On the daily chart, the price has reached the all-important 0.618 Fibonacci (Fib) level, extending from October's high of 59.96% to the prior weekly low of 55.14%, which comes in at 58.12%. This coincides with a robust resistance line denoted by green arrows. Despite the 50-day exponential moving average (EMA) crossing below the 100-day EMA, possibly indicating a reversal of the long-term upward trend, the situation remains somewhat uncertain. The market, having witnessed nine consecutive up days with strong momentum, teeters on the brink of a significant news event that could shape Bitcoin's medium-term trajectory. The RSI indicator is approaching overbought territory.

Shifting to the monthly chart on the right, resistance emerges at the 50% level between January 2021's major monthly high and May 2021's monthly low, registering at 58.95%. This aligns with resistance indicated by black and green arrows. While not a Fibonacci number, this point holds significance as the midpoint between bullish and bearish sentiments. The key level to watch on the upside is the 0.618 fib level at 62.96%. Our monitoring of BTC.D will persist in the coming weeks.

Total Crypto Marketcap (TOTAL)

In our final analysis of the week, our focus turns to the Total Marketcap chart, encompassing the entire spectrum of cryptocurrencies. Presently, the chart reflects a state of significant indecision, mirroring the ongoing developments in the crypto space. While the Total chart has exhibited a robust uptrend since reaching its price bottom in January of the preceding year, there's a discernible deceleration in momentum. This is evidenced by the emergence of a bearish divergence between price and the RSI indicator.

The divergence becomes apparent when the price achieves higher highs, yet the RSI momentum indicator registers lower lows, as indicated by the downward-sloping line at the bottom of the daily chart amidst rising prices. Adding to the cautious outlook is the presence of a generally bearish ascending wedge pattern. It's vital to recognize that these patterns have the potential to break upward, and a downside break cannot be confirmed unless there's a daily close below the horizontal support indicated by the green zone around $1.5 trillion. Making a comprehensive bearish case remains challenging until such confirmation occurs.

However, whichever direction the price takes upon breaking out of the wedge, it is more likely to produce a solid move. This could signify either a continuation of the upward trend or the initiation of a downtrend, whether that translates to a new bear market or a temporary setback within the overarching uptrend. It is important to note that the 50-day Exponential Moving Average (EMA) is still maintaining its distance from the 100 EMA and still climbing.

A deeper analysis of the monthly chart reinforces the theme of indecision, characterized by the appearance of a Doji candlestick on the current monthly bar. Although we are only entering the second week of the candle, it aligns with the daily chart, with the price hovering around the 0.382 major monthly fib level from November 2021 to the monthly November 2022 swing low at $1.599 trillion.

Traditional Finance In Short

Events This Week

• Atlanta Fed President Raphael Bostic speaks, Monday

• US House returns from recess, Monday

• Australia retail sales, Tuesday

• Japan Tokyo CPI, household spending, Tuesday

• Eurozone unemployment, Tuesday

• World Economic Forum’s global risks report released, Wednesday

• US wholesale inventories, Wednesday

• Deadline for US Securities & Exchange Commission to vote on Bitcoin ETF applications, Wednesday

• New York Fed President John Williams speaks, Wednesday

• US CPI, initial jobless claims, Thursday

• China CPI, PPI, trade, Friday

• France CPI, Friday

• UK industrial production, Friday

• US PPI, Friday

• Bank of America, Bank of New York Mellon, BlackRock, Citigroup, JPMorgan Chase and Wells Fargo report fourth-quarter results, Friday

• Minneapolis Fed President Neel Kashkari speaks, Friday

In Conclusion

There is little doubt that the markets are at a critical juncture this week, and the potential for a  significant price move in either direction can be seen. The trajectory significantly depends on the imminent news headlines discussed in the fundamental analysis featured in this newsletter. The price is undeniably correlating with these developments, and as the market searches for indications in the upcoming days, exercising patience is advisable. I anticipate that we might uncover the answers we seek by the time we reconvene for the next newsletter week, and I look forward to this eagerly.