BTC to New ATH Market Cap, Negative ETF Flows on Friday (But There's a Twist)

• $BTC has soared to a new all-time high market cap, and is currently hovering just above $67k, with its sights set on $69k. Meanwhile, $ETH is slightly behind, inching up to just under $3600. The market appears to be adopting a barbell strategy, with Bitcoin maintaining its strength, yet beyond meme coins, few assets are significantly outperforming. The sustained rallies in $DOGE, $BONK, $PEPE, and $SHIB unmistakably signals the resurgence of speculative enthusiasm in the market. On the crypto equities side, COIN is outperforming, reaching a new YTD peak and its highest level in over two years, while MSTR is also surging, potentially aided by a short squeeze. Interestingly, the miners are not faring as well, mostly showing declines for the day. This could be attributed to several factors, including the massive rally they enjoyed last year, coupled with a persistently high 10Y yield, and lingering concerns about the halving event and its impact on their profitability due to the reduced block reward. We still view these as outperformers this year. In traditional markets, equities are showing mixed performance, with major indices remaining relatively flat so far today. Interest rates are up, but the DXY remains flat. Non-digital gold continues its ascent as well, marking another YTD high today. A wealth of macro data is on the agenda this week, including Services PMI tomorrow, JOLTs on Wednesday, an ECB rate decision on Thursday, and additional employment data on Friday.
• On Friday, despite a net inflow of $350 million into all ETF products excluding GBTC, Bitcoin ETFs collectively experienced a net outflow of $140 million. This was primarily due to nearly $500 million in outflows from GBTC. We suspect that the substantial GBTC outflows observed on Thursday and Friday, nearly $1 billion in total, may be linked to redemptions associated with the Genesis bankruptcy proceedings. It is plausible that Genesis is redeeming their GBTC shares, previously acquired as collateral on loans issued, to redeem cash and subsequently purchase Bitcoin. They would then pay this BTC to Gemini, their top creditor. This theory aligns with Gemini's recent announcement, indicating their intention to return BTC to their Earn customers in kind. Therefore, we conjecture that the bulk of the GBTC outflows could essentially be net neutral. Based on the premiums observed on Coinbase today, it seems likely that we will witness a shift back to an aggregate net inflow.

Source: Farside Investors, Fundstrat