November 22nd, 2024
Market Overview:
Digital assets experienced another record week, as Bitcoin registered several new all-time highs and came within touching distance of $100,000.
- Bitcoin continued setting records, breaking through $95,000 for the first time before stopping just short of large sell walls at the landmark $100,000 value
- Bitcoin showcased consistent growth throughout the week, rising from a Friday low of $87,670 to a new record high of $99,100 in late Thursday trading
- Ether also performed positively, almost doubling its growth rate from last week as it bounced back strongly from reaching its lowest ratio versus Bitcoin in over three and a half years
- Ether displayed a comparatively flat chart throughout most of the week, before a sharp rise on Thursday as the broader market gained momentum
- After trading primarily between $3,080 and $3,170, the leading smart contract blockchain rose above $3,400 for the first time since July early on Friday; registering a weekly high of $3,421 (up from a low of $3,020 last Friday)
- The total market capitalisation of digital assets hit a new record of $3.3tn early on Friday, buoyed by all-time highs from Bitcoin and other major assets like smart contract platform Solana
- At the time of writing, 94 of the top 100 digital assets by market capitalisation posted growth over the last seven days
- According to industry monitoring site DeFi Llama, total value locked in DeFi gained over $10bn, for a current value of $116bn
Digital assets continued their bullish momentum, with major assets such as Bitcoin and Solana hitting new all-time highs. Relevant cabinet appointees in the forthcoming Trump administration began to emerge, BlackRock expanded its tokenised fund across multiple new blockchains, MicroStrategy broke its record for Bitcoin purchases, the SEC lost its chair and a major court case, Charles Schwab signalled intent to enter crypto, and much much more.
What happened: Bitcoin continues record run, nears $100,000
How is this significant?
- Bitcoin bullishness went ballistic this week, as the world’s leading digital asset followed up last week’s new record levels above $75,000 by breaking through $80,000 for the first time
- This was swiftly followed by $85,000 and $90,000, falling just shy of $95,000 on Wednesday
- After a new record on Wednesday, Bitcoin had to cool down and consolidate a bit, as it topped 20% weekly growth at one point
- This week’s growth also took Bitcoin above 100% year-to-date growth, after ringing in the New Year at approximately $42,280
- Bitcoin overtook silver by market capitalisation to make it the 8th-most valuable asset in the world this week—and at its peak on Wednesday it also leapfrogged petroleum giant Saudi Aramco to 7th place
- On Monday, Bitcoin experienced its biggest daily gain ever (denominated in dollar terms), increasing by over $8,300 as it surged above $88,000
What happened: ETF News
How is this significant?
- Digital asset ETFs showcased mixed performances this week, as Bitcoin (unsurprisingly) posted strong overall inflows, whilst Ether—despite surging in market capitalisation—saw a sea of red
- According to CoinShares data published on Monday, digital asset investment product inflows topped $2bn once again, registering $2.2bn in the trading week ending November 15th
- This increased 2024’s record (year-to-date) inflows to $33.5bn, and pushed total AUM above $138bn
- It also marked four out of the last five weeks (the odd one out featuring pre-election de-risking) experiencing inflows within around 10% of $2bn
- Spot Bitcoin ETFs saw substantial outflows ($370m) last Friday amidst widespread profit-taking, but soon returned to form as every trading day this week (at the time of writing) registered nine-figure inflows
- On Tuesday, no fewer than three funds (BlackRock’s IBIT, Fidelity’s FBTC, and ARK Invest’s ARKB) showcased inflows above $200m ($216m, $256m, and $267m respectively)
- This was followed on Wednesday by another mammoth day of business for IBIT, as the industry-leading ETF added $626.5m in net buys
- IBIT once again exceeded $600m inflows on Thursday, as it and FBTC confirmed three consecutive days of comfortable nine-figure inflows, and overall daily inflows topped $1bn
- Bitwise’s BITB also posted respectable inflows with $68m on Thursday, whilst Grayscale’s converted 1.5% fee GBTC fund also registered rare consecutive inflows at $54m and $13m
- Such strong inflows helped to push the overall AUM for Bitcoin ETFs above $100m within just ten months of launching; “ranking them among the most successful fund category launches ever”
- Bloomberg’s chief ETF analyst Eric Balchunas was once more wowed by the “Bitcoin industrial complex” (i.e. Bitcoin ETFs, plus shares from crypto proxies Coinbase and MicroStrategy), which set several consecutive volume records, including $70bn on Thursday
- He also noted that US Bitcoin ETFs reached the $100bn AUM milestone twice as fast as Bloomberg’s initial estimates, putting them at 82% the value of gold ETFs as of Thursday
- His colleague James Seyffart meanwhile spotted issuer Calamos Investments filing for a novel "Bitcoin 80% Protection Strategy ETF", seeking “ to provide Bitcoin exposure that has a maximum loss of 20%” (with a capped upside to pay for the downside protection)
- The firm expanded this strategy by also filing for 90% and 100% protection ETFs
- BlackRock and Fidelity both posted record years for ETF performance, driven by their spot Bitcoin products
- Ether ETFs told a very different story than their Bitcoin brethren this week, facing consistent outflows across the board
- These outflows however paled in comparison to the previous week’s inflows, moving them back into net-negative post-launch territory
- Elsewhere in digital assets, several more filings came in for spot Solana ETFs, looking to capitalise on the growing retail usage of the second-largest smart contract blockchain
- The newest filings on the block came from issuers 21Shares and VanEck
- Parallel to pure crypto ETFs, MicroStrategy volatility ETFs featured in the top five most traded this week, acting as a proxy for crypto due to MicroStrategy’s substantial Bitcoin exposure strategy
- Perhaps the week’s most significant story in ETFs came not from spot products, but from the options market, as Nasdaq approved trading
- The new source of liquidity may bring several benefits including reduced volatility within the asset, as Galaxy Digital head of research Alex Thorn explained “options will help dampen volatility and and as volatility comes down people can take larger position sizes”
- Alison Hennessy, Nasdaq’s head of ETP listings, said the move was driven by tangible demand; “Getting these options listed on IBIT into the market I think will be very exciting for investors because that’s really what we have heard from them”
- Such demand was realised on the first day of options trading; IBIT registered $1.9bn in notional exposure, with a 4.4:1 Calls to Puts ratio
What happened: Political news
How is this significant?
- According to new polling data—albeit from crypto research firm Paradigm, and thus possibly flavoured with bias—the digital asset industry may well deserve the return on investment many expect it to seek following massive campaign funding
- Paradigm’s phone-based polling (citing a 3.46% margin of error) believed that over a fifth of crypto holders were still “up for grabs” on the eve of Election Day, but Democrats “failed to persuade” them as the party remained ambiguous towards crypto (at least compared to Republicans)
- The company’s regulatory affairs VP Justin Slaughter cites crypto ownership as a specific factor in the election result based on the data; “Current crypto owners ultimately voted for Trump over Harris by a margin of 55-42. Non-crypto owners were tied. This was the margin of difference in the popular vote. Crypto mattered at the ballot box, as we have been saying for years”
- Political optimism was once again identified as a key factor behind recent market bullishness; BTC Markets Pty CEO Caroline Bowler told Bloomberg “This price rally is being fed by the frequent pro-crypto news linked to the incoming Trump administration”
- Reuters reported via industry sources that several crypto firms are “jostling for seats” on a Crypto Advisory Council (likely housed under the National Economic Council) within the upcoming Trump administration
- According to the report, such a council would recommend establishing a Bitcoin Strategic Reserve, advocated by senator Cynthia Lummis
- Additionally, some sources stated that Trump is considering a “Crypto Czar” role to oversee the asset class within the White House, noting several meetings with the crypto C-suites crowd in Mar-a-Lago
- FOX Business identified former CFTC chair Chris Giancarlo—affectionately nicknamed “crypto dad” within DeFi for his blockchain advocacy—as the frontrunner for said role; which he told FOX he would be “honoured” to accept
- Meanwhile, the Financial Times reported plans for president Trump’s Truth Social media platform to acquire institutional digital asset exchange Bakkt in an all-stock deal, leading Bakkt’s shares to surge 162.5%
- The New York Times revealed filings by Trump Media for a new platform called “TruthFi”, a service “for crypto payments, financial custody services and trading in digital assets”
- Speculation followed that TruthFi (a nod towards DeFi) could be the new post-acquisition identity of Bakkt, but parties on both side of the deal declined to comment on any specifics of ongoing deals
- Across the pond, a senior government minister confirmed last week's reports regarding forthcoming digital asset legislation in the UK
- Economic Secretary to the Treasury Tulip Siddiq revealed that there will be a single overarching regime for crypto assets, including stablecoins and staking services, as “Doing everything in a single phase is simpler and it just makes more sense”
- Other global economies were beneficiaries of a crypto boon thanks to the shifting political winds; particularly in Asia
- Bhutan’s Bitcoin holdings grew further in value, to a total 36% of GDP, validating a long-running strategy based on using the nation’s abundant hydroelectric power to mine the asset
- Ujjwal Deep Dahal, CEO of sovereign wealth fund Druk Holdings, told Bloomberg that Bitcoin is material to its “core internal asset management and diversification strategy”
- In South Korea, Bitcoin trading surged, lifting the nation’s leading exchange, Upbit, two percentage points to a total 4.3% of global value
- Upbit volumes also overtook the Korean stock exchange, eclipsing Kospi index stocks
- Furthermore, Korea’s isolated exchange policy (limiting citizens to Korea-based exchanges) led to the return of the so-called “Kimchi Premium”, where digital assets trade above the global average value within the Republic
What happened: BlackRock deploys tokenised “BUIDL” fund across additional blockchains
How is this significant?
- Following the recent expansion of the BENJI tokenised money market fund onto mainnet Ethereum by Franklin Templeton, BlackRock went one (or rather; four) better this week, expanding its tokenised BUIDL fund onto five new chains
- The new deployments include Aptos, Arbitrum, Avalanche, Optimism's OP Mainnet, and Polygon
- Of these, Arbitrum, Optimism, and Polygon are Ethereum Layer-2 scaling solutions, whilst the other two function as more independent blockchains
- A press release called this "the next step in the evolution of the tokenization market, enabling BUIDL to be used within leading blockchain-based financial products and infrastructure across ecosystems"
- Tokenisation partner Securitize's CEO Carlos Domingo declared "Real-world asset tokenisation is scaling, and we're excited to have these blockchains added to increase the potential of the BUIDL ecosystem... [and] increase efficiencies on all the things that until now have been hard to do"
- Later in the week, more BUIDL news broke; it became the first asset approved on Securitize's and Elixir's new "sToken vault" technology (based on the ERC-4626 Ethereum token standard)
- Elixir CEO Philip Forte explained "For the first time ever, holders of tokenized real-world assets can natively use their assets onchain in DeFi, accessing unified liquidity via [fully-collateralised yield-bearing synthetic dollar] deUSD
- He added that”users continue to accrue yield directly from Securitize while keeping isolated collateral exposure. We believe this is just the first step to bridge the gap of liquidity between institutions and DeFi"
- In other tokenisation news, Bitfinex Securities launched tokenised US Treasury bills in El Salvador this week, issued on the Lightning Network Bitcoin sidechain
- Goldman Sachs head of digital assets Mathew McDermott confirmed that the investment bank plans to spin out its digital asset platform—primarily used to issue digital assets via blockchain—”within the next 12 to 18 months, subject to regulatory approvals”
- Additionally, UK-regulated exchange/custodian Archax announced new tokenised RWA (real world assets) on its platform, in the form of funds from State Street, Fidelity International, and Legal & General Investment Management (LGIM)
- CEO Graham Rodford stated “Tokenised real-world assets, and in particular funds, are really gaining momentum. The industry sees the path to additional distribution and liquidity that tokenisation brings, as well as the new innovative use cases like collateral transfer”
What happened: Charles Schwab outlines crypto asset ambitions
How is this significant?
- Incoming Charles Schwab CEO (and current company president) Rick Wurster signalled a turnaround for the previously-cryptosceptic firm, embracing digital assets once he takes leadership on January 1st
- He told Bloomberg Radio “We will get into spot crypto when the regulatory environment changes, and we do anticipate that it will change, and we’re getting ready for that eventuality”
- The $9.85tn AUM finance giant would instantly be one of the largest—and potentially most influential players in the space; as far back as 2021 (when it still cited regulatory clarity as its concern), Schwab said it would be “highly competitive” and “disruptive” upon entering the market
- These “anticipated regulatory environment changes” relate to the incoming Republican administration, and its pro-crypto stance
- Launching digital asset services would be a data-driven decision by Schwab; an October survey of ETF investors conducted by the asset manager found that crypto was the top ETF investment priority for Millennials, and second-highest overall
- Wurster recognised client success via crypto ETFs and also expressed regret on a personal level for not seeking digital asset exposure sooner, saying “Crypto has certainly caught many’s attention, and they’ve made a lot of money. I have not bought crypto, and now I feel silly”
What happened: Stablecoin news
How is this significant?
- The stablecoin space saw a deluge of developments this week, across a plethora of platforms
- Stablecoin issuer Paxos acquired Finnish electronic money institution (EMI) Membrane Finance, thereby gaining MiCA-compliant access to the EU via Membrane’s licence
- In a press release, the firm declared “Upon completion of the acquisition, Paxos will be a fully licensed EMI in Finland and the EU. Paxos intends to make its portfolio of assets and tokenization solutions compliant with Markets in Crypto Asset (MiCA) regulations”
- EU compliance regulations featured elsewhere also; Dutch fintech Quantoz (backed by stablecoin giant Tether) announced the development of regulatory-compliant Euro- and US Dollar-pegged stablecoins
- Quantoz also secured investment from digital asset exchange Kraken, which will be one of the initial two venues listing the new EURQ and USDQ stablecoins
- Stablecoin firm BVNK has launched a new funding round seeking $50m investment, leveraging the recent $1.1bn acquisition of stablecoin platform Bridge by payments giant Stripe
- The aforementioned Stripe expanded its stablecoin-powered crypto payment services to the Aptos blockchain this week
- Stripe crypto head John Egan stated “Adding support for the Aptos blockchain inside our crypto products broadens consumer and merchant access to more efficient global fund flows with stablecoins, whether it be a retailer accepting payments from around the world, or a platform paying creators no matter where they are”
- Stablecoin-centric digital asset startup Yellow Card was identified as a driving force behind the “stablecoin boom” in Africa, processing over $3bn in payments
- Founder Chris Maurice entered the space after witnessing a Nigerian friend charged extortionate fees for sending remittances; he told Bloomberg “At this point, everybody that you can name and is doing business in the African continent is either using stablecoins in some shape or form or they are just sitting on a ton of local African currencies”
- FXC Intelligence head of content Lucy Ingham stated “Businesses need to move money internationally, both big and small, and increasingly small. And I think that is a really under-appreciated thing that lots of small businesses are settling and operating internationally in the way they would have not done a decade ago”
What happened: Regulatory news—Gary Gensler to step down as SEC chair
How is this significant?
- In a week warmly received by an industry that long felt itself unfairly targeted by regulators, the SEC had to concede not one, but two major losses
- Firstly, commission chair Gary Gensler announced he would step down from his role in January, in line with the change in administration
- Gensler—who became somewhat of an industry bogeyman during his tenure due to constant enforcement actions—commented that “The SEC has met our mission and enforced the law without fear or favour”
- Upon entering his role, Gensler was warmly received due to his background teaching a course on blockchain at MIT and praising several digital assets; but sentiment soon soured when he contradicted previous praise and publicly opined that “everything other than Bitcoin” was likely a security
- General response to his departure can perhaps best be summed up by Coinbase chief legal officer Paul Grewal; “My mom always told me if I didn’t have anything nice to say, don’t say anything at all. So I’m just gonna sit this one out”
- Industry sources reported his replacement could be unambiguously pro-digital assets, as the Trump transition team reportedly favours former crypto lawyer Teresa Goody Guillden for SEC chair
- The end of Gensler’s tenure was also marked with another major legal defeat; a Texas judge ruled the commission’s broad change to “dealer” definitions in order to include crypto exchanges, DeFi platforms, and even traders
- Judge Reede O’ Connor found that the decision “exceeded the SEC's statutory authority”, decreeing that the entire rule must be “thrown out in full”
- He wrote “The court concludes that the SEC exceeded its statutory authority by enacting such a broad definition of dealer untethered from the text, history, and structure of the Exchange Act”
- Blockchain association CEO Kristin Smith told industry publication TheBLock that the attempted rule change had been emblematic of Gensler’s “anti-crypto crusade”; “Following today’s ruling, the agency’s overreach is rolled back and the digital asset industry is protected from this unlawful rule”]
What happened: Exchange trading volumes hit 12 month high
How is this significant?
- Trading volume on digital asset exchanges was buoyed by the recent market upswing, reaching a 12 month high this week
- Daily volumes (as a 7-day moving average) of $117bn were nearly triple the yearly average of $44bn
- By mid-November, exchanges with USD-denominated trades already reached $229bn; roughly equivalent to the entire month of October
- Industry publication TheBlock notes several differences from the volume highs of the 2021 bull market, including “established institutional infrastructure and a more positive regulatory outlook” and “broader market participation from more traditional asset allocators”
What happened: Chinese court affirms digital assets’ status as legal property
How is this significant?
- Hong Kong’s South China Morning Post (SCMP) newspaper reported a ruling from the mainland China courts this week which appeared to enshrine a positive acceptance of digital assets within the nation’s legal frameworks
- According to the ruling from a Shanghai court, it is “not illegal for individuals to hold crypto[assets]”, confirming legality of ownership in China
- However, this doesn’t quite equate to free reign for trading; Judge Jie still noted that “Chinese business entities are not allowed to take part in cryptocurrency investments or token issuance at will”, arguing “that is why laws and regulations always maintain a high-pressure crackdown on speculative activities in crypto asset trading”
- The SCMP previously published that Trump’s embrace of crypto could spur the CCP into restoring the country’s digital asset market, after officially banning it in 2021 (although as of September, the over-the-counter crypto market in the country was still estimated at $75bn)
What happened: MicroStrategy accelerates Bitcoin acquisition strategy with $4.6bn buy
How is this significant?
- Just a week on from its second-largest Bitcoin purchase ever, corporate Bitcoin flagbearer MicroStrategy made it’s largest purchase ever—by a considerable margin
- On Monday, the enterprise software firm confirmed a $4.6bn Bitcoin buy, acquiring 51,780 between November 11th and 17th according to SEC filings
- This was followed on Thursday by a further $3bn debt offering of convertible senior notes due 2029 at 0% interest
- MicroStrategy stated “Our treasury strategy is designed to provide investors varying degrees of economic exposure to Bitcoin by offering a range of securities, including equity and fixed-income instruments”
- Prior to the record purchase, MicroStrategy’s (then-)$26bn Bitcoin holdings already eclipsed the cash coffers of business titans like IBM, Nike, and Johnson&Johnson
- According to Bloomberg, only around a dozen companies (including the likes of Nvidia, Tesla, GE, Apple, and Amazon) hold more assets in their corporate treasuries
- On Wednesday, MicroStrategy was the most-traded stock in America, ousting Nvidia and Tesla from top spot for the first time in years
- However, it dipped 20% on Thursday after short-seller Citron Research wrote “$MSTR’s volume has completely detached from BTC fundamentals. While Citron remains bullish on Bitcoin, we’ve hedged with a short $MSTR position. Much respect to Michael Saylor, but even he must know $MSTR is overheated”