Crypto Research

BY POPULAR DEMAND, WE ARE RE-SENDING THIS BITCOIN PRICE IMPACT OF SPOT ETF REPORT FROM JULY 24, 2023 The Bitcoin spot ETF was finally approved. And we are seeing the surge in price of Bitcoin because of attractive supply and demand dynamics.We received multiple requests to resend this report from July 24, 2023 which looked at supply and demand dynamics if a spot ETF was approved.In short, we believe a...

FLOWS BEGET MORE FLOWS We have recently discussed the potential return of crypto being correlated with equities due to the new category of market participants entering the fold. However, price action this week suggests that inflows into the BTC ETFs may be throwing water onto that theory. It seems apparent that, at least in the near-term, that the ETF flows narrative is gaining steam, and it is likely that the...

ETH GAINING RELATIVE MOMENTUM Given the success of Solana and Bitcoin's persistent dominance in this bull market, many have been quick to write off ETH. There is no doubt that ETH faces its own set of challenges, including a complex modular stack and potential cannibalization by Layer 2 solutions, which, while crucial to ETH's scaling roadmap, can sometimes fragment liquidity and users. Despite these issues, ETH continues to advance along...

BREAKING AWAY While we maintain that macro conditions are still the most critical factor in assessing the medium/long-term trajectory of BTC prices, daily returns of the leading cryptoasset continue to exhibit a lack of defined correlation with any major macro asset. To us, the biggest reason for this sustained lack of correlation is the advent of the spot BTC ETF. A prime example of how ETFs are influencing BTC's performance...

WEATHERING THE STORM Heading into Q1, the key risks identified were: (1) A potential QRA supply shock, as long-term interest rates could surge due to a possible shift in bond issuance towards longer-duration securities, (2) the repricing of interest rate cuts, as the Federal Reserve downplayed expectations regarding the timing and frequency of such cuts, and (3) concerns regarding the dynamics between the expiration of the Reverse Repurchase Agreement (RRP)...

QRA IN LINE WITH MARKET EXPECTATIONS _THE RESULTS_ The Treasury’s quarterly refunding announcement (QRA) was the first of two major macro events to transpire on Wednesday. Leading up to this, on Monday, there was an indication that the net borrowing for the current quarter would be $760 billion, which is $55 billion lower than the initial $815 billion estimate, and the total funding needs for Q2 would be just over...

THE GBTC PROBLEM We have been watching spot BTC ETF flows closely since their launch two weeks ago, and while overall net flows remain decidedly positive, the market seems hung up on GBTC outflows. As a reminder, the outflows we care the most about are those from entities that are not rotating into other spot BTC ETFs. This is comprised of some speculative capital that played the run-up into ETF...

OUTLOOK OVERVIEW Thank you to everyone who joined our annual outlook call this week. We were fortunate to have a lot of success last year in helping our clients and subscribers navigate the crypto market and we look forward to leveling up again this year. For those who missed the outlook, the replay is now available, along with the deck, but a quick summary of our outlook is below.Big Takeaway:...

INITIAL THOUGHTS ON ETF LAUNCHES The past week has marked a pivotal moment in the evolution of the crypto industry, a testament to the remarkable journey of an asset class that emerged from a distrubuted community of open source software developers just 15 years ago. This was evidenced by the successful launch of all 11 eligible Bitcoin ETFs on Thursday morning. Assessing the success of an ETF launch is a...

QUICK RECAP First and foremost, we would like to extend a Happy New Year to all our clients and subscribers. The past year was indeed eventful, marked by banking crises, significant court victories, and BlackRock's foray into the sector – truly a remarkable journey. Our Core Strategy, though it lagged behind the King, performed well. This was particularly supported by the strong performance of our altcoin basket in Q4. We...

LET IT FLOW As we approach the holiday weekend and the final week of the year, which is typically marked by lower liquidity due to many stepping away from their desks, one might expect to see a dialing back of risk and a slowdown in trading volumes. However, contrary to these expectations, most data suggest animal spirits seem poised for a rally through the New Year. CME futures data, the...