Crypto News

Bitcoin Spot ETFs Shatter Records: Skyrocketing Daily Volume Hits All-Time High

The Bitcoin Spot Exchange Traded Funds (ETF) market reached new heights last Monday, with a staggering $2 billion in trading volume recorded. Leading the surge was VanEck’s HODL ETF, which alone saw approximately $400 million in trading volume, marking a remarkable spike. This surge translated at one point to a daily increase of around 1400% for VanEck’s Bitcoin Spot Fund.

Following closely behind was the WisdomTree Bitcoin Fund (BTCW) with approximately $222 million, trailed by BitWise’s ETF with around $178 million in volume. The sudden uptick in activity can be attributed, in part, to President’s Day on Monday, with trades made over the weekend settling as markets reopened.

Eric Balchunas, an analyst at Bloomberg, observed that the heightened volume wasn't driven by a single large investor (Whale), but rather by 32,000 individual trades. This flurry of activity contributed significantly to Bitcoin's price surging to multi-month highs of $52,985 on Tuesday, underscoring the enduring appeal of the world's largest digital asset.

The influx of funds into Spot Funds coincided with a notable increase in outflows from Gold ETFs, possibly indicating a shift in investor interest towards Bitcoin Spot ETFs amid the current risk-on environment in traditional financial equities in the U.S. Since the launch of Bitcoin Spot ETFs on January 11, the two largest ETFs, iShares Bitcoin Trust (IBIT) and Fidelity Wise Origin Bitcoin Fund (FBTC), have seen nearly $10 billion in inflows.

With the Bitcoin Halving scheduled for April this year, the upward trajectory of Bitcoin Spot ETFs may well continue in the short to medium term, as investors seek exposure to this burgeoning asset class.

Kraken Unleashes Legal Motion: Slams SEC Lawsuit with Motion to Dismiss

Kraken's legal battle intensified last week with the filing of a motion to dismiss a lawsuit brought against the cryptocurrency exchange by the Securities and Exchange Commission (SEC). This marks the third time the SEC has targeted Kraken over alleged violations, specifically focusing on the exchange's staking services, which the SEC contends qualify as the sale of securities. The SEC argues that Kraken's offerings meet the criteria outlined in the Howey test, which determines whether an investment contract exists based on the promise of profits derived from others' efforts. Another allegation levied against Kraken is the mishandling of customer funds.

In response, Kraken contends that the SEC is misapplying the Howey test, asserting that the agency's definitions are more applicable to commodities than securities. Moreover, Kraken challenges the SEC's jurisdiction and authority, denying any wrongdoing on their part. A ruling favoring the SEC could compel Kraken to cease its staking services, potentially setting a precedent that could affect other exchanges right across the space.

Conversely, a favorable outcome for Kraken would establish a clearer regulatory framework and could bolster confidence in the cryptocurrency market. The parallels between Kraken's case and the SEC's actions against Ripple Labs are evident. Ripple Labs succeeded in proving that its services did not constitute securities to the general public in a similar legal battle last year.

However, ongoing disputes regarding Ripple's transactions and written agreements with institutional investors are still ongoing. 

The outcome of this legal dispute carries significant implications, not only for Kraken but for the broader cryptocurrency landscape. A favorable resolution for Kraken would not only validate its operations but could also guide other entities navigating regulatory challenges in the cryptocurrency space. Overall, a win for cryptocurrency in these legal proceedings could catalyze industry-wide progress and stability.

Back Of The Net: Paris Saint-Germain Become Football’s First Blockchain Validator

Renowned French football club, Paris Saint-Germain (PSG), has achieved a groundbreaking milestone by becoming the premier top-tier football organization to assume the role of a blockchain validator. The blockchain platform they have embraced is the Chiliz Chain, which coincidentally hosts their $PSG Fan Tokens. A validator functions as a custodian within the blockchain network, meticulously inspecting and authenticating transactions to facilitate seamless operations across the entire system.

PSG boasts a robust rapport with the Chiliz Chain (CHZ) dating back to September 2018 when they pioneered the creation and issuance of the football club's inaugural fan-centric digital tokens. These tokens were subsequently hosted and disseminated by the Chiliz Chain, allowing enthusiasts to acquire and trade them through various platforms, including the Socios app and assorted exchanges. Upon acquiring such tokens, fans gained the ability to engage in trading activities within different markets on the Chiliz Chain.

Since the inception of this collaborative endeavour, the cumulative value of PSG tokens has surged to approximately $28 million. PSG's strategic agenda includes utilising the proceeds generated from its role as a validator to repurchase additional PSG tokens. This initiative, by the football club, is meant to elevate the token's market value and fortify its sustainability over time. Pär Helgosson, Paris Saint-Germain's head of Web3, articulated the club's vision in a statement, emphasizing their commitment to optimizing future interactions to harness network effects, thereby enhancing the value and revenue potential for all stakeholders within this burgeoning digital economy.

While PSG stands alone as the pioneer among football clubs in venturing into becoming a blockchain validator, it's worth noting that other notable clubs such as Manchester United, Juventus, Arsenal, and several others have also ventured into the creation of fan-based tokens. The success of PSG's initiative may set a precedent, potentially motivating other football clubs to follow suit. Whether this trend gains momentum remains to be seen, but a successful outcome could undoubtedly spur widespread adoption within the football community and further mainstream adoption into the cryptocurrency realm.

Binance Strikes Substantial Plea Deal With The Department Of Justice 

Binance finalized a settlement with the Department of Justice (DOJ) last week, agreeing to a $4.3 billion fine related to violations of sanctions and anti-money laundering laws. Last November, the company admitted guilt to these charges. Founder Changpeng Zhao also pleaded guilty to violating the Bank Secrecy Act and facilitating a financial institution's violation of the same. As a result, Zhao resigned, and his sentencing is scheduled for April 2024.

Crypto Analysis

Bitcoin (BTC)

Bitcoin has been moving sideways over the past week, which, in itself, is not bearish. Given the prevailing upward trend, there's a strong chance of continuation. The price has spiked the 10-day EMA and, at the time of writing, is still above it, indicating bullish momentum. Both the 100-day and 50-day EMAs are sloping upwards. The StochasticRSI is in oversold territory, and the RSI momentum indicator suggests a potential upward move towards new highs.

Looking at Bitcoin's price, it's approaching the upper end of an upward-moving parallel channel, potentially reaching close to the $55,000 area if it hits the top line. It's important to watch for any topping divergences on a smaller timeframe as it approaches that area. Failure to do so may result in the price breaking through the top line and continuing its uptrend. On the other hand, any topping formations could see a bounce off the topline and a return towards the middle of the pattern.

Examining the lower timeframe, specifically the 4-hour chart, allows us to focus on the price action, revealing that we are currently within the consolidation area. Assuming the price is in continuation mode, two potential scenarios emerge. The first involves a direct breakout from the consolidation, possibly followed by a retest before resuming the upward trend. Alternatively, the second scenario could favour larger players, commonly referred to as whales, who may strategically push the price below the green-shaded zone at around $51,000. This manoeuver, known as a liquidity hunt, involves triggering stop losses from short sellers before driving the price upward again. It's crucial to monitor any breaches and subsequent closes below the green-shaded area. If such movements occur on strong volume and momentum, it could signal a larger retracement in the price.

As we turn to the monthly chart, we observe that the price is testing the 0.786 Fibonacci level, on an extremely bullish candle, 3 and a bit weeks into the current month, calculated from the highest body open of November 2021 to the lowest body open of January 2023, which sits at $51,721. This level holds significant importance as it marks two major points on the monthly chart: the all-time-high candle and the lowest open candle which is the intervening low between that high and the current price. However, given the intensifying price action, there's a growing indication that this level may not hold over the long term.

To conclude, there's nothing on these charts that even remotely suggests bearish sentiment. Everything indicates a continuation of this bull market and a potential move to new all-time highs in the near to medium-term future. However, it's imperative to monitor Bitcoin every week, as we always do, as nothing can ever be taken for granted in the dynamic world of cryptocurrency markets.

Bitcoin Dominance (excluding major altcoins)

The last time we examined Bitcoin Dominance, the price was at the top of a range following three successive lower highs, attempting to break back above the lower trendline of a bearish monthly rising wedge. The reason for revisiting this chart is the apparent turn to the downside in Dominance, evident as we currently break through the 0.618 Fibonacci level from the most recent daily swing, spanning from the January low of this year to this month’s high, sitting at 56.35%. Recent price action over the past couple of weeks, and a rapid move well below the 10-day EMA suggests a potential further decline, possibly signaling the onset of a major alt-season.

Cross-referencing this chart with the Ethereum vs. BTC chart provides additional perspective, indicating that altcoins, particularly driven by Ethereum, may be gaining momentum. The RSI momentum indicator is heading towards oversold territory, but with limited support until reaching the (1) line at 55.18%.

Examining the weekly chart, we currently detect the bearish rising wedge formation, as previously outlined some weeks back. While it's feasible to sketch out a fresh wedge pattern, I've opted to maintain this one for the sake of continuity. The first indication of weakness occurred with the break and subsequent close below the pattern in the middle of December last year. The inability to reclaim the lower upward-sloping trendline, coupled with the recent drop, further dampens the bullish case. On the chart below, two possible scenarios emerge:

The first scenario entails a bounce off the black horizontal support line indicated by the three green arrows, representing the bullish case. However, given the bearish price action, the more probable scenario is the second one: a break below the support line, followed by a possible retest of that line and a subsequent drop to new monthly lows.

The RSI indicator is mid-ranging, suggesting the potential for movement in either direction, mirroring the sentiment seen on the daily chart. We will continue to monitor the Dominance chart for any further developments.

Ethereum vs Bitcoin (ETH/BTC)

This week's final chart focuses on the Ethereum vs Bitcoin chart (ETH/BTC), chosen to complement the analysis of the Bitcoin Dominance chart above. Alt-seasons are often initiated by Ethereum’s dominance against Bitcoin, and the price action below, combined with the BTC.D chart above, suggests a potentially bullish outlook for altcoins in the near term.

Firstly, note the double bottom pattern on the daily chart and the current significant attempt of a break above the (3) black horizontal trendline at 0.06025, which could potentially trigger such an alt-season. However, caution is warranted regarding the overbought RSI momentum indicator, as it may indicate an overextended move. Nevertheless, it's essential to recognise that the indicator can remain in overbought territory for prolonged periods during a strong uptrend, and its significance must be validated by price action.

A glance at the monthly chart presents an even more optimistic scenario for Ethereum and altcoins, with a successful test of support around the 0.0500 area, indicated by a notably bullish green candle. Nonetheless, it's important to consider both sides of the equation. At the time of writing, we are attempting to break above monthly resistance shown by the black horizontal line and coupled with the multiple taps of the blue arrows at that resistance but the bullish price action may negate any negativity around this area. In the bearish scenario, a close back below the daily resistance line on the daily chart could bring the monthly support level back into play, potentially leading Bitcoin to outperform altcoins. Continued monitoring of these factors is crucial for assessing market dynamics moving forward.

In Summary

There's little doubt that the entire cryptocurrency space remains firmly on an uptrend. Bitcoin appears to be consolidating sideways to slightly down, while the Bitcoin Dominance chart is trending downwards, and the ETH/BTC chart is attempting a breakout to the upside. Although I haven't included the Stablecoin chart this week, it's worth noting that it is on a decline. Collectively, these indicators suggest that unless there's a significant upward spike in Bitcoin or indeed a sudden drop in the entire cryptocurrency space over the next few weeks, we could be on the verge of a substantial altcoin rally that outpaces Bitcoin.

Once again, it's crucial to emphasise the importance of closely monitoring current price action, as market dynamics can change rapidly. None of the analysis provided here should be construed as financial advice, and it's essential to conduct thorough due diligence before making any investment decisions. I eagerly anticipate the developments of the next week.

Macro News & Analysis

CryptoLaw Founder John Deaton Takes On Anti-Crypto Elizabeth Warren for Massechusetts Senate Seat

Republican and Marine veteran John Deaton announced last week he’s running against Democrat Senator Elizabeth Warren who is campaigning for her third term in office. Deaton is the founder of CryptoLaw and has experience supporting the crypto industry, including XRP holders in the SEC vs Ripple lawsuit.

This is significant for bitcoin and cryptocurrency adoption as Senator Warren is vocally critical of, and actively working against, the crypto industry as part of her campaign. Warren is considered one of the most powerful and progressive voices in the US Senate and has close ties to SEC Chair Gary Gensler.

Nvidia Beat Earnings, Sparks Global Equities Rally

Probably the most critical and anticipated earnings report was published last week as Nvidia (NVDA) announced its Q4 results. Shares jumped higher in post-market trading Wednesday, as the chipmaker reported a 265% increase in quarterly revenues and forward sales projections were revised upwards.

Nvidia’s share price opened over 16% higher on Thursday, briefly pushing its market cap over the $2 trillion mark and closed the week by dethroning Amazon’s (AMZN) of its spot as the third biggest company by market cap.

Nvidia’s earnings were so widely anticipated, the significant beat led not only to new record highs for NVDA but also new index all time highs in the US, Japan and in Europe.

German Capital Flight to US

German companies are increasing investments in the US with 2023 capex at a record $15.7 billion, further contributing to Germany’s industrial slowdown. The US is becoming more appealing for investment than Germany, with the strong US economy, attractive tax incentives and more pragmatic government policies.

The US Inflation Reduction Act and Chips and Science Act provide tax credits, subsidies and loans to incentivise investment in US manufacture as part of the global trend towards on-shoring and near-shoring.

Rising geopolitical tensions, uncertainty over transiting the Red Sea and Suez Canal each play a part in investment decisions. Combined with the loss of cheap natural gas from Russia and lack of energy infrastructure investment in Germany, names such as BASF and Volkswagen are increasingly choosing US certainty over putting capital to work locally.

Earlier this month, a survey by the German American Chambers of Commerce found that 96% of the 224 companies questioned planned to expand investments by 2026. Just last week, the German Chamber of Industry and Commerce published a forecast that the US would overtake China as the country’s top trade partner by 2025.

Events This Week

Earnings Reports

Economic Calendar

Monday

• Japan CPI

• US Home Sales

• Dallas Fed Manufacturing Index

• ECB President Christine Lagarde Speech

Tuesday

• Bank of England Governor Andrew Bailey speaks

• Germany, France consumer confidence

• US Conf. Board consumer confidence, durable goods

Wednesday

• Reserve Bank of New Zealand rate decision

• Eurozone business, economic, consumer confidence

• FTSE 100 index review

• US GDP

• Atlanta Fed President Raphael Bostic, Boston Fed President Susan Collins, New York Fed John Williams speak

• G-20 finance ministers and central bank chiefs meet

• Japan industrial production, retail sales

Thursday

• Australia retail sales, CPI indicator

• France, Germany and Spain CPI

• US PCE Deflator, personal income, personal spending

• Chicago Fed President Austan Goolsbee, Atlanta Fed President Raphael Bostic, Cleveland Fed President Loretta Mester speak

• MSCI index changes, including the removal of 66 Chinese firms from the MSCI China Index, come into effect at the close

Friday

• China official PMI, Caixin manufacturing PMI

• Japan consumer confidence

• Eurozone CPI, manufacturing PMI

• US ISM Manufacturing, University of Michigan consumer sentiment

• US House funding bill deadline to avert a government shutdown

• Atlanta Fed President Raphael Bostic, San Francisco Fed President Mary Daly speak