Crypto Market Update

Despite the favorable environment for risk assets, crypto is broadly lower thus far today due to concerns over activity from Mt. Gox wallets early Tuesday morning (more on this below). BTC 0.96% dropped below $67k after briefly revisiting the $70k level during a Memorial Day crypto rally. ETH 0.07% is also weaker compared to yesterday’s price action but is still outperforming BTC on the day, currently trading around $3850. SOL -0.37% is marginally outperforming BTC as it attempts to regain the $170 level. Memecoins are outperforming once again, with SOL-based memes BONK -3.56% and WIF -6.24% both showing outsized gains over the past two days. TIA 0.10% , a consistent underperformer over the past few months, is also showing signs of life, up 16% over the past 24 hours. Long-term rates are higher today, with the US 10Y back above 4.5%, but the DXY N/A% is lower. Major equity indices are green, with tech and energy leading the way higher. Significant macro data this week includes the Q2 GDP growth rate estimate on Thursday and core PCE, personal income, and personal spending data on Friday.

Mt. Gox Wallet Activity

Back in late April, we noted that Mt. Gox is finally preparing to distribute approximately 140k BTC 0.96% and BCH 1.97% to creditors, potentially by late May or early June. The market reaction over the past 12 hours is due to the BTC labeled as belonging to the Mt. Gox trustee moving on-chain, likely on its way to being distributed to creditors. This marks the first significant movement of assets from Mt. Gox’s cold wallets in over five years. Despite assurances from rehabilitation trustee Nobuaki Kobayashi that no sale had occurred and the assets were being managed securely, the market reacted bearishly, with Bitcoin dropping to as low as $67,680 after reaching a high of over $70,000 on Monday. We maintain that any negative impact on BTC should be mitigated by the long-term nature of creditors and hedged exposure from funds. Conversely, we consider BCH less favorable in this environment.

SMLR Adopts Bitcoin Treasury Strategy

Semler Scientific (SMLR -1.01% ) announced the acquisition of 581 bitcoins (BTC) for $40 million, propelling its stock price up by 25% in early U.S. trading on Tuesday. Semler Scientific, Inc. provides technology solutions to improve the clinical effectiveness and efficiency of healthcare providers. Their main product, QuantaFlo, is FDA-cleared and measures arterial blood flow in the extremities to aid in the diagnosis of cardiovascular diseases such as peripheral arterial disease (PAD) (in other words, nothing fundamentally related to crypto).

SMLR, which had a market cap below $200 million before the price surge, reported $62.9 million in cash and equivalents at the end of Q1, along with $15.9 million in revenue and $6.1 million in net income for the quarter, making the $40 million investment in BTC fairly significant. Chairman Eric Semler highlighted Bitcoin’s emergence as a major asset class with unique characteristics as a scarce and finite asset, viewing it as a viable inflation hedge and a safe haven amid global instability, and preferable to gold due to its digital nature and architectural resilience. This move exemplifies another cash-rich corporation turning to Bitcoin as an investment vehicle to preserve and grow its treasury. If it wasn’t obvious by now, the institutional acceptance of BTC is here, and we are likely to see more of this type of treasury strategy going forward.

Technical Strategy

Bitcoin cash has slipped to multi-day lows potentially on news of Mt.Gox preparing to distribute both BTC and BCH 1.97% to creditors. Tuesday’s break to multi-day lows likely brings about a retest of the minor uptrend from early May and the area near $440-$448 is thought to be important support for Bitcoin Cash in what looks to be minor support of a mild uptrend from early May. This bounce has unfolded thus far as a three-wave move and while this doesn’t have to bring about a move to new monthly lows, it will be important to remain above $422 that marked the lows from 5/13/24. Any break of $422 would result in a decline to $350 in all likelihood which looks premature at this time. Overall, i expect this minor weakness likely should make BCH 1.97% an attractive risk/reward at 440-448 and likely holds and start to turn back higher in early June. Upside areas of interest lie near $529, then $558 on gains in the month ahead.

Daily Important Metrics Crypto Size Bullish signal is tied to the crypto market growing Market cap 2.57T +$2.3B(0.09%) BTC Dominance 52.33 % (-0.17%) Stablecoins Increase in circulating stablecoins is a Bullish signal In Circulation +$112B (0.02%) In Exchanges +$20B (-0.38%) BTC Metrics A decrease in Bitcoin on exchanges is bullish, indicates investors are moving coins to cold storage # BTC Exchanges +$2.3M (0.03%) Funding Rates Positive funding rates indicate traders are Bullish Aggregate +1.8161(0.8598) Binance +1.4958(0.5013) Bitfinex +1.4124(1.4225) Bitmex +1.3523(0.3523) ByBit +1.3527(0.3527) Deribit +4.7033(3.7805) Huobi +1.0560(1.0560) Kraken +3.3660(1.2078) Mean +1.8161(0.8598) OKex +3.2633(2.4873) Sentiment BMI : 42 (100.00%) Futures A positive spread between Futures Prices and Spot Prices is Bullish CME Price $68,435(-0.01%) Spot Basis $-111(-0.16%) Volume 412,391(102.99%) Open Interest 268,697(0.78%) Options all exchanges Higher open interest change in a bull market is bullish for the sector Volume 15,340(114.31%) Open Interest 260,625 (-1.22%) Vol. Put/Call Ratio 0.8025 (16.86%) OOI Put/Call Ratio 0.4860 (3.43%) All metrics as of 2024-05-28 16:01:15 All Funding rates are in bps Crypto Prices Symbol Market Cap Last Price Daily Change Year to Date Relative to BTC YTD BTC $1.35T $68,324 -2.96% 61.77% ETH $463B $3,856 -2.60% 69.48% 4.77% SOL $76B $168 -1.36% 65.56% 2.34% DOGE $217,098 $0.0002 -10.35% -99.76% -99.85% All prices as of 2024-05-28 12:02:35 Exchange Traded Products (ETPs) Symbol Prem. to Nav Last Price Daily Change Year to Date Relative to BTC YTD BITW -0.32 $38 -1.46% 61.80% 0.02% ETHE -0.01 $36 2.34% 84.58% 14.10% News Quick Bits CoinDesk Medical Device Maker Semler Scientific Stock Rises 25% After $40M Bitcoin Investment The company announced its Bitcoin treasury strategy Tuesday morning. The Block Bitcoin price falls below $68,000 following transfer worth $9.6 billion from Mt. Gox cold wallet The price of bitcoin fell below $68,000 following a transfer worth $9.6 billion from a Mt. Gox cold wallet. Fundraising and M&A The Block RWA stablecoin issuer Anzen Finance raises $4 million in seed funding Cash-flowing real world assets (RWAs) collateralize Anzen's digital dollar USDz, which can be staked throughout other DeFi protocols. The Block Oracle developer Switchboard raises $7.5 million in Series A funding Switchboard plans to use the funding to build out its oracle tools and expand use cases with web3 developers and community members. The Block Decentralized AI project GaiaNet raises $10 million in funding round  GaiaNet, an AI infrastructure firm, has raised $10 million to support the development of decentralized networks for generative AI tools. Mining CoinDesk Riot Plans Hostile Takeover of Bitfarms; Proposes $2.30 Per Share Bitfarms' shares were up nearly 6% at $2.13 as of 14:00 UTC following Riot's announcement. Web 3.0 CoinDesk Solana Validators to Get More SOL as Fee Proposal Passes in Favor Over 77% of Solana governance participants voted in favor of giving validators the full priority fee amount per transaction. CoinDesk Ethereum-Based Domain Protocol ENS Seeks Own L2, Possibly With ZkSync ENS’s proposal, dubbed “ENSv2,” will completely overhaul the network’s registry system, and transform it into a layer 2, an auxiliary network that provides cheaper transaction fees that is settled on Ethereum.