Crypto Market Update

Equities are mixed this morning, with the SPY 0.09%  gaining 0.30% and the QQQ decreasing 0.31%, weighed down by a 5% drop in NVDA. The DXY has dropped 0.32%, although it has not boosted crypto assets. BTC has fallen more than 3%, briefly dropping under $61k after news of Mt. Gox repayments beginning in July (more below). ETH has followed suit, declining to $3,300 despite the likelihood that spot ETFs begin trading next week. Altcoins are holding up despite the decrease in majors, with TOTAL3 only declining 1.16%. Some top-performing alts include LDO, WIF, and INJ, which have gained 5.84%, 5.30%, and 4.64%, respectively. As mentioned in last week’s Core Strategy note, Lido presents a favorable risk to reward, with the ETH ETF potentially providing a tailwind in the near term.  

Mt. Gox Repayments to Begin in July

In a letter to creditors, Mt. Gox Rehabilitation Trustee Nobuaki Kobayashi said that preparations for distributions of Bitcoin and Bitcoin Cash have been made, and payments can commence from the beginning of July. Mt. Gox was exploited in 2014 for 850,000 Bitcoin, and creditors have patiently been waiting for their repayments. Mt. Gox has 142,000 BTC (~$8.6 billion) and 143,000 BCH (~$51 million) to distribute by October 2024. Kobayashi iterated that Mt. Gox has taken sufficient time to ensure safe and reliable repayments to creditors, including technical remedies for safe payments and compliance considerations across different countries. The repayments will be made to crypto exchanges in the order that they completed the required steps. Although Bitcoin has sold off following the news, in our view, it is likely that many creditors have already hedged their positions or are long-term believers in Bitcoin and the immediate market impact of distributions will be less severe than many anticipate.

Riot Withdraws Bitfarms Bid and Proposes New Board Members

Riot Platforms has announced its requisition of a Special Meeting of Bitfarms’ shareholders to reconstitute the board of directors. The meeting will give Bitfarms shareholders the opportunity to vote on the removal of Bitfarms’ interim CEO Nicolas Bonta and Director Andres Finkielsztain, and Riot has nominated three potential candidates as their replacements. Riot believes Bonta and Finkielsztain bear direct responsibility for poor corporate governance and the inability of the company to realize Bitfarms’ full potential. Over the course of a year, Riot has tried to constructively engage with Bitfarms regarding a potential transaction between the companies, and Riot claims that good faith negotiations are impossible without change to the Bitfarms Board. Riot attempted a hostile takeover bid, accumulating a 14.9% stake in Bitfarms, and also proposed purchasing all Bitfarms common shares for $2.30 / share. Riot has withdrawn its acquisition proposal but remains committed to pursuing a transaction to create the largest publicly listed Bitcoin miner. Riot concluded that it stands ready to engage and deal with a new Bitfarms board to pursue a mutually beneficial transaction.

Technical Strategy

Bitcoin’s decline is now extending for its third week, and many are starting to take notice given the large retracement back below 61.8% Fibonacci retracement levels of the prior advance from early May. Momentum remains downward sloping and is just nearing daily oversold levels using RSI.  However, DeMark based exhaustion counts remain premature, and volatility has picked up over the last 24 hours. Overall, two scenarios seem feasible, technically speaking. First, this BTC selloff finds support at/near early May lows at $56.5k, which helps to form a giant three-month Triangle pattern which results in a push back to new highs.  Second, $56.5k is undercut which would result in weakness in an Elliott-wave style ABC pattern down to $44-$48k, which is based off of projections from the initial selling which started in March.  Given that the Bitcoin cycle composite seems to suggest weakness until July expiration, one cannot rule out a move to the mid-$40’s in my view.  However, it should be right to consider buying weakness down near May lows initially as the first real area of downside support.  On the lack of this holding, then one should hold off on immediately looking to buy dips until some evidence of stabilization arises in the mid-$40’s.

Daily Important Metrics Crypto Size Bullish signal is tied to the crypto market growing Market cap 2.24T $-101.7B (-4.34%) BTC Dominance 53.87 % (-0.32%) Stablecoins Increase in circulating stablecoins is a Bullish signal In Circulation +$113B (0.00%) In Exchanges +$20B (-0.18%) BTC Metrics A decrease in Bitcoin on exchanges is bullish, indicates investors are moving coins to cold storage # BTC Exchanges +$2.3M (0.07%) Funding Rates Positive funding rates indicate traders are Bullish Aggregate +0.6514 (0.1719) Binance +0.9993 (1.6453) Bitfinex -0.0180 (0.0010) Bitmex +0.9608 (0.1009) ByBit +0.3481 (0.0127) Deribit +0.0203 (0.2248) Huobi +1.0000 (1.0000) Kraken +0.4912 (0.1953) Mean +0.6514 (0.1719) OKex +0.5912 (0.6164) Sentiment BMI : 36 (100.00%) Futures A positive spread between Futures Prices and Spot Prices is Bullish CME Price $61,160 (-4.82%) Spot Basis $-33 (-0.05%) Volume 166,432 (36.48%) Open Interest 299,479 (0.50%) Options all exchanges Higher open interest change in a bull market is bullish for the sector Volume 6,299 (22.34%) Open Interest 264,192 (0.69%) Vol. Put/Call Ratio 0.6172 (-11.21%) OOI Put/Call Ratio 0.4556 (-1.39%) All metrics as of 2024-06-24 12:00:29 All Funding rates are in bps Crypto Prices Symbol Market Cap Last Price Daily Change Year to Date Relative to BTC YTD BTC $1.20T $60,842 -5.10% 44.06% ETH $401B $3,281 -5.64% 44.21% 0.10% SOL $59B $127 -3.77% 24.82% -13.36% DOGE $675,303 $0.0007 -7.64% -99.24% -99.47% All prices as of 2024-06-24 12:22:51 Exchange Traded Products (ETPs) Symbol Prem. to Nav Last Price Daily Change Year to Date Relative to BTC YTD BITW -32.38% $33 -3.27% 42.32% -1.21% ETHE -1.03% $31 -7.18% 57.30% 9.19% News Quick Bits The Block Mt. Gox to distribute $9 billion of bitcoin, bitcoin cash repayments from beginning of July Mt. Gox is set to begin distributing bitcoin and bitcoin cash repayments from July, according to the Rehabilitation Trustee. The Block Deutsche Bank-backed Taurus expands digital asset custody, issuance offerings to Stellar Taurus joins financial institutions like Franklin Templeton, WisdomTree and Circle in using Stellar for real-world asset tokenization. The Block Japanese firm Metaplanet Inc. to buy bitcoin worth $6.3 million through bond issuance The Tokyo-listed investment firm plans to purchase 1 billion yen worth of bitcoin with the capital raised through an upcoming bond issuance. Market Data The Block Ethereum gas prices, Bitcoin miner revenue both approach record lows Ethereum's median gas price fell below 3 gwei for the first time since 2020 as Bitcoin miners continue to feel the impact of the latest halving. Regulation The Block Hong Kong parliament sets up crypto legislative subcommittee Johnny Ng, a Hong Kong lawmaker, said his office is collecting policy recommendations from the global Web3 industry. Fundraising and M&A The Block Berachain liquid staking protocol Infrared raises funds from Binance Labs in token round Infrared Finance, a Berachain liquid staking protocol, has raised an undisclosed sum from Binance Labs in a strategic funding round. The Block Verida raises $5 million to protect user data amid rise in generative AI  Verida has raised $5 million in a seed funding round that included participation from O-DE Capital Partners, ChaiTech Ventures and Simurg Labs, among other investors.  Mining CoinDesk Bitcoin Mining Sector Is Attracting Growing Investor Interest Following Core Scientific Deal: JPMorgan Iris Energy is best positioned to take advantage of the HPC/AI opportunity, the report said.