GBTC Selling Likely to Slow, SOL Nearing Key Support Level
Market Update
- Equities are advancing again after reaching new all-time highs last week, buoyed by a pullback in interest rates. Despite this positive trend in equities, gold prices have dipped, and the broader crypto market, including BTC, continues to face downward pressure. BTC is steadfastly maintaining the $40,000 level as its support, while ETH has retraced its recent rally to $2,700, now trading at $2,350. This retreat is mirrored in the broader altcoin market, which is also trending downward, exemplified by SOL retesting the $86 mark (more technical commentary on this below). Interestingly, crypto equities like COIN, MARA, and RIOT are outperforming BTC, each up by approximately 1%, seemingly benefiting from today's rate move. The week ahead is packed with key macro events. The BOJ's interest rate decision, which is unlikely to surprise but could bring new insights on stimulus and any changes to yield curve control, the ECB's rate decision, expected to hold rates but possibly provide guidance on future cuts, and U.S. GDP growth figures, where any significant deviation could trigger rate volatility. Additionally, Friday will see the release of the Core PCE index, the Fed's favored inflation measure, forecasted at 0.2%.
- Over the past two weeks, BTC has been challenged by (1) tougher macro conditions, evidenced by rallying rates and a strengthening DXY, and (2) significant selling pressure from traders unwinding their GBTC arbitrage positions along with the FTX bankruptcy estate offloading assets. Spot ETF flows since their inception show a net inflow of approximately $1.2 billion, consisting of around $4 billion in inflows partially offset by a notable $2.8 billion in outflows from GBTC. A Coindesk report released this morning indicates that FTX has completely sold off its GBTC stake, which is valued at nearly $1 billion. If this report is accurate, it suggests that the intense selling pressure from GBTC may soon subside, and a supply overhang will be removed from the market. Below are the daily aggregate net flows since the nine spot ETFs came to market.
Source: Bloomberg, Fundstrat
- On the topic of global flows, OSL, a crypto exchange licensed in Hong Kong, suggests that the region may introduce its first spot crypto ETFs by mid-year. As reported by the Hong Kong Economic Journal, OSL is currently in dialogue with five to ten fund companies about launching these ETFs. This move by OSL is in line with actions from other players like HashKey and Venture Smart Financial Holdings, who are also discussing or planning to introduce spot crypto ETFs. In support of these developments, the Securities and Futures Commission and the Hong Kong Monetary Authority have updated their policies, paving the way for spot crypto ETFs in a market that already features several futures-based crypto ETFs.
Daily Technical Strategy
Mark L. Newton, CMT
Head of Technical Strategy
Has Solana officially peaked out? Despite being down by more than 30% off its 12/25/23 Christmas day peak, the wave structure doesn't show this decline as being all that meaningful technically. Price is now nearing the 38.2% Fibonacci retracement level of its prior runup from last Fall. This level also lies just below two prior temporary lows made in early January 2024 which both intersected just above $85. While the uptrend from last October's lows has been broken and no counter-trend exhaustion, nor oversold conditions are present, it's likely that SOL should be nearing support sometime this week. From an Elliott standpoint the initial selloff played out as a three-wave decline into early January. Thus, it does look important for SOL to hold 84.50-$85. Under that level might allow for a brief test of $82, representing an alternative Fibonacci projection target. However, it's the break of $82 which would allow this consolidation to persist. A stronger downside target lies between $66.45-$72, which approximates a 50% retracement of the prior run-up and should be quite strong. However, there's no need for prices to have to retrace that meaningfully and the Ichimoku cloud on daily charts would suggest that the next couple days might bring about some support on any further weakness before stabilization and a resumption of its uptrend. Overall, given the corrective wave structure, this recent pullback does not appear damaging to SOL's prospects of getting back to new monthly highs. Furthermore, this could begin to stabilize and turn higher sometime this week.
Daily Important Metrics
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All metrics as of January 22, 2024 11:58 AM
All Funding rates are in bps
Crypto Prices
| Symbol | Market Cap | Last Price | Daily Change | Year to Date | Relative to BTC YTD |
 BTC | $796B | $40,603 | ↓ -2.52% | ↓ -3.86% | |
 ETH | $284B | $2,366 | ↓ -4.39% | ↑ 3.97% | ↑ 7.83% |
 SOL | $37B | $86.34 | ↓ -6.63% | ↓ -15% | ↓ -11% |
 ADA | $17B | $0.4903 | ↓ -4.55% | ↓ -17% | ↓ -13% |
 DOGE | $12B | $0.0839 | ↓ -3.30% | ↓ -5.71% | ↓ -1.85% |
 LINK | $8.5B | $14.93 | ↓ -3.61% | ↓ -0.23% | ↑ 3.63% |
 DOT | $8.3B | $6.52 | ↓ -5.47% | ↓ -20% | ↓ -16% |
 MATIC | $7.3B | $0.7560 | ↓ -4.43% | ↓ -21% | ↓ -17% |
 NEAR | $2.7B | $2.68 | ↓ -10% | ↓ -26% | ↓ -22% |
Exchange Traded Products (ETPs)
| Symbol | Premium to Nav | Last Price | Daily Change | Year to Date | Relative to BTC YTD |
| GBTC | ↓ -0.57% | $37.25 | ↑ 4.78% | ↑ 1.09% | ↑ 4.95% |
| BITW | ↓ -44% | $24.10 | ↑ 3.88% | ↓ -1.87% | ↑ 1.99% |
| ETHE | ↓ -15% | $19.73 | ↑ 4.50% | ↑ 1.39% | ↑ 5.25% |
| BTCC | ↓ -0.35% | $8.07 | ↑ 3.46% | ↓ -1.34% | ↑ 2.52% |
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