Crypto Market Update

Risk assets are experiencing a broad rally today, supported by relatively constructive macro data. The significant data point released today was the ISM Services PMI, which came in at 53.8, an expansionary figure above the expected 50.8, and well above the prior month’s 49.4. Importantly, prices paid came in at 58.1, below the expected 59, which is a positive sign from an inflation perspective. As expected, the Bank of Canada cut its benchmark overnight rate by 25 basis points to 4.75%, commencing the cutting cycle among G7 countries. The market anticipates a similar cut from the ECB tomorrow. BTC has rallied back to above $71k, attempting to break through the May 20th high of $72k. SOL is following suit, up a similar amount and attempting to move above $175, while ETH is still churning sideways just above the $3800 level. Major outperformers of the day include a pair of memecoins, ORDI and FLOKI, as well as STX, which has followed through on its strong performance yesterday, up another 10%. Rates are moving lower across the curve yet again, with the 10Y below 4.3% for the first time since early April. Major equity indices are in the green, with tech showing strong outperformance.

Flows Returning in a Big Way

Yesterday, we saw nearly $900 million in total net inflows into BTC spot ETFs, marking the second-highest daily total since their launch and the 16th consecutive day of aggregate net inflows. This suggests that recent economic data, which is trending towards a Goldilocks-like setup, is bringing flows back into the market. Fidelity had an impressive day with $379 million in inflows, while IBIT followed closely behind with $274 million.

Additionally, we are seeing some positive movement on the stablecoin front. Recently, this has been one of the more negative data points, with the aggregate stablecoin market cap declining towards the end of May and into June. However, we have seen stablecoin growth for 5 out of the last 6 days, another positive sign of flows returning to the market.

Source: DefiLlama, Fundstrat

Short Position Report on RIOT

Kerrisdale Capital released a short position report on Riot Platforms (RIOT), criticizing U.S. bitcoin mining companies for their unpredictable revenue, high capital costs, fierce competition, and regulatory challenges. They argue that Riot’s reliance on stock dilution, operational inefficiencies, and decreasing profitability make it a fundamentally poor investment compared to direct bitcoin holdings, predicting the stock will underperform as these issues become more evident to investors. Kerrisdale highlights the increasing global competition from new mining projects and the dominance of Chinese equipment suppliers. Our initial take is that it is hard to argue against the dilution point, which has disappointed many and is a major reason the company has underperformed year-to-date. However, we view that as already being priced in. Miners are historically a cyclical trade reliant on BTC’s reflexive performance, the company’s operational leverage, and occasionally squeezed short positions to outperform. Therefore, we have trouble seeing a favorable risk/reward in shorting RIOT here.

Technical Strategy

Maple’s rally to the highest closing levels since mid-April is a promising technical development that should propel this higher up to near $20.50 before much resistance.  Technically speaking, the recent two-month pattern resembles a reverse Head and Shoulders pattern and Wednesday’s breakout should help this begin a push back to retrace at least 50% but more likely 61.8% of the prior drawdown from late March without too much trouble.  Volume is likely to expand to at least the highest levels in a month as of today’s close, and any act of MPL closing near the highs of today’s range should help this breakout extend.  Pullbacks should encounter firm support near $15-$15.25 which would make this more attractive on a risk/reward basis.  However, given today’s surge, it’s more likely that immediate upside follow-through gets underway

Daily Important Metrics Crypto Size Bullish signal is tied to the crypto market growing Market cap 2.63T +$71B (2.79%) BTC Dominance 53.18 % (0.15%) Stablecoins Increase in circulating stablecoins is a Bullish signal In Circulation +$112B (0.03%) In Exchanges +$20B (0.48%) BTC Metrics A decrease in Bitcoin on exchanges is bullish, indicates investors are moving coins to cold storage # BTC Exchanges +$2.3M (-0.33%) Funding Rates Positive funding rates indicate traders are Bullish Aggregate +1.2570 (-0.0764) Binance +0.9990 (0.0074) Bitfinex +0.2914 (0.3130) Bitmex +1.0000 (-0.1383) ByBit +1.0000 (-0.1334) Deribit +1.1319 (0.5499) Huobi +1.0000 (1.0000) Kraken +1.5228 (-0.2183) Mean +1.2570 (-0.0764) OKex +2.8019 (0.0000) Sentiment BMI : 34 (100.00%) Futures A positive spread between Futures Prices and Spot Prices is Bullish CME Price $71,700 (3.36%) Spot Basis +$879 (1.24%) Volume 490,913 (-6.43%) Open Interest 286,716 (1.27%) Options all exchanges Higher open interest change in a bull market is bullish for the sector Volume 27,702 (61.92%) Open Interest 215,016 (-5.01%) Vol. Put/Call Ratio 0.8064 (59.79%) OOI Put/Call Ratio 0.5437 (16.16%) All metrics as of 2024-06-05 12:00:30 All Funding rates are in bps Crypto Prices Symbol Market Cap Last Price Daily Change Year to Date Relative to BTC YTD BTC $1.41T $71,406 1.74% 69.07% ETH $458B $3,811 0.27% 67.49% -0.94% SOL $80B $175 4.72% 71.89% 1.67% DOGE $366,427 $0.0004 69.02% -99.59% -99.76% All prices as of 2024-06-05 11:50:22 Exchange Traded Products (ETPs) Symbol Prem. to Nav Last Price Daily Change Year to Date Relative to BTC YTD BITW -32.38% $38 1.42% 62.66% -3.79% ETHE -1.90% $35 0.27% 82.67% 8.04% News Quick Bits The Block US lawmakers urge immediate action to rescue Binance exec from Nigerian detention The letter claimed Gambaryan has been refused adequate health care in a three-month detainment marked by “excessive and harsh treatment.” The Block Tether CEO warns email newsletter vendor used by crypto firms may be compromised CoinGecko COO Bobby Ong confirmed the warning, indicating the crypto data platform's newsletter service could be impacted. The Block BitMEX offers 200x leverage for ether perpetuals ahead of anticipated US spot ETFs BitMEX made an announcement on Wednesday that it will increase the leverage of its ethereum perpetual swaps to 200x. The Block Japanese crypto exchange DMM Bitcoin outlines funding plan to cover over $300 million in hack losses The crypto exchange said $32 million has already been procured, with a further $320.4 million in funds due over the coming days. CoinDesk Crypto Exchange DMM Bitcoin to Raise $320M to Pay Back Hack Victims Japanese exchange DMM Bitcoin outlined plans to raise $320 million to purchase bitcoin and pay back victims of last week's hack. Market Data CoinDesk Bank of Canada Begins G-7 Rate Cut Cycle, Trimming Benchmark Rate 25 Basis Points Lower interest rates in developed economies could be a tailwind for bitcoin prices. Fundraising and M&A The Block Bain Capital Crypto leads $35 million Series A for stablecoin minting protocol M^0 M^0, a decentralized stablecoin minting protocol, has raised $35 million in a Series A funding round led by Bain Capital Crypto. Mining CoinDesk Riot Platforms Falls After the Bitcoin Miner Is Targeted by Short-Seller Kerrisdale The short-seller has targeted MicroStrategy previously. Web 3.0 The Block Coinbase launches smart wallet with hopes of addressing crypto’s ‘pain points’ Cryptocurrency exchange's new wallet allows users to signup using Face ID, Google Chrome profile or fingerprint.