Friday, 1 December 2023

Market Summary

Market Summary 1 December 2023

Bitcoin Price: US$37,723.96 (-0.35%)
Ethereum Price: US$ 2,051.96 (+1.14%)  

The ProShares’ Bitcoin Strategy ETF (BITO) in the U.S. achieved a record-high assets under management (AUM) of $1.47 billion this week, surpassing the previous December 2021 record. This surge highlights a renewed institutional interest in bitcoin from regulated and accredited investors, aligning with the increasing number of bitcoin spot ETF applications in the U.S. Traded on the Chicago Mercantile Exchange (CME), BITO provides investors with a regulated means to access bitcoin-linked returns. The ETF’s popularity is evident in its average daily trading volume of $160 million, placing it in the top 5% of all U.S. ETFs. In a separate development, Bitcoin miner AntPool has announced a refund of a $3 million transaction fee, which occurred due to a likely user error. AntPool, though not obligated to return fees, opted to refund the unusually large amount after verifying the sender’s identity. Meanwhile, MicroStrategy, the largest corporate holder of Bitcoin, increased its holdings by 10% in November, acquiring 16,130 BTC worth approximately $608 million at current prices. The company now holds a total of 174,530 BTC purchased at an average price of about $30,252 per coin. This substantial purchase marks an acceleration in MicroStrategy’s Bitcoin buying activities, signaling continued confidence in the cryptocurrency.

JPMorgan reports tentative signs of a revival in the DeFi and NFT markets, attributing the upswing to improved sentiment in the crypto markets due to the expected approval of a U.S.-listed spot bitcoin ETF. Despite this positive trend, JPMorgan advises caution, indicating it might be too early to get overly optimistic about the medium-term trajectory for DeFi/NFT activity. The rise in trading activity and Lido’s involvement in liquid staking are seen as contributors to the recovery. However, challenges persist for the Ethereum blockchain, including issues related to network scalability, low transaction speeds, higher fees, and heightened competition from other layer-1 chains. In Brazil, the Senate approved new income-tax regulations imposing a 15% tax on cryptocurrency earnings held on international exchanges, affecting Brazilians earning more than $1,200 from foreign exchanges and single-shareholder investment funds. The move, if sanctioned, could be effective from Jan 1, 2024. Meanwhile, Bitcoin’s potential rally to $40,000 gains strength as over 37,000 BTC, worth $1.4 billion, have been withdrawn from exchanges since Nov. 17, signalling a preference for long-term holding strategies. The outflow, coupled with the expected launch of a U.S. spot ETF, indicates strong demand and weakening sell-side pressure, historically marking local price lows. Bitcoin’s positive momentum aligns with the Federal Reserve pausing its rate-hiking cycle, potentially leading to a net positive liquidity environment for markets in 2024. Bitcoin’s role as a reflection of net liquidity underscores the importance of positive liquidity for sustained bullish activity.

FTX and Alameda Research, two defunct crypto trading firms, have moved $10.8 million to Binance, Coinbase, and Wintermute using eight cryptocurrencies. These movements follow the firms transferring $551 million since Oct. 24 through 59 different crypto tokens. The recent transfer involved $2.58 million in StepN’s GMT, $2.41 million in Uniswap’s UNI, $2.25 million in Synapse’s SYN, and various amounts in other tokens. The transfers trace back to March when FTX and Alameda began recovering assets for investors. Meanwhile, eToro CEO Yoni Assia suggests that Bitcoin ETFs could drive adoption, especially among institutions. Assia notes that institutions prefer familiar infrastructure, and ETFs provide an accessible way for them to enter the market. He believes that Bitcoin ETFs could enhance Bitcoin’s legitimacy in the eyes of institutional investors. Additionally, a report suggests that Binance executives informed VIP traders about a potential $4.3 billion settlement with U.S. authorities two months before the details were publicly disclosed. The settlement requires Binance to pay $4.3 billion to various U.S. authorities, with CEO Changpeng “CZ” Zhao personally responsible for $150 million to the U.S. CFTC. However, Binance has disputed the depiction of the VIP event. Furthermore, Nayib Bukele, the President of El Salvador, has stepped down from office to focus on his 2024 re-election campaign. Bukele, known for recognising Bitcoin as a legal tender, resigned after the Legislative Assembly’s approval, and Acting President Claudia Rodríguez de Guevara is expected to serve until June 2024.


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