Weekly Crypto Market Wrap, 12th February 2024

Download the PDF

Zerocap provides digital asset liquidity and digital asset custodial services to forward-thinking investors and institutions globally. For frictionless access to digital assets with industry-leading security, contact our team at [email protected] or visit our website www.zerocap.com

This is not financial advice. As always, do your own research.

Week in review

• Spot Bitcoin ETFs hit $10 billion milestone just one month after approval.
• BlackRock and Fidelity Bitcoin spot ETFs reach top 10 in January flows – BlackRock’s reach top 0.2% of all January’s ETF performances.
• Solana faces a major 5-hour outage. 
• North Korean crypto attacks rake in $3 billion, allegedly aimed to build nuclear weapons; UN report.
• MetaMask adds Robinhood wallet integration.
• Chinese stock market crashes 8% in mere hours – government intervenes.

Technicals

BTCUSD

Happy Year of the Dragon! We got the break higher from last week – and with some gusto. Risk was bid up, the S&P 500 screamed through 5,000 for the first time ever, and despite some hawkish undertones from Central Banks, the market has strongly made it known where it thinks things are going. The CBs have a challenge here.. asset inflation is, well, inflationary, but putting the brakes on too hard could cause a little chaos, so they’ll deal with this through the meeting minutes and speaking slots, hopefully throwing some water on the fire.

BTCUSD is sitting at 48,000, looking poised to make a run at 50. It’s come a long way, and I’d expect some volatility either way with the USD docket this week. US CPI, retail sales and PPI should create some directionality in risk. This said, with the BTC ETFs topping $10B this week, there is significant momentum building and we wouldn’t be surprised if we broke the 50 level this week.

The topside ascending trendline runs back to July 2021 – and is significant. If we get a break here, we’ve got a fairly clear run to 55,000. The biggest risk to this would be a substantial shift in monetary stance driven by outlier US data. 

Key levels

40,000 / 44,000 / 49,000 / 50,000 / 55,000

---

Spot desk 

Flows leading up to the Lunar New Year holiday remained focused on off-ramping, primarily in AUD and USD. We saw strong interest from customers offloading USDC as the new fee structure came into play. Circle has a challenge – and that’s net outflows, so a fee on some redemptions has been put in place.

Some BTC-related profit-taking flows took place from the Family Office and High Net Worth client group, while altcoin accumulation remained strong, particularly in meme coins. Venture Capital clients were also seeing their token investments unlock, which led to spot selling and taking forward NDFs to hedge risk. Given ETF momentum, we are seeing growing interest in BTC-related projects.

Reports suggest 75 million crypto investors remain active in China despite little to no government support for the industry. Thus, the Lunar New Year holidays will most likely reduce activities related to the Asian time zone.

Spot trade idea: STX (Stacks)

Stacks is a blockchain platform that extends Bitcoin’s functionality, enabling smart contracts and decentralised applications (dApps) on Bitcoin. It leverages Bitcoin’s security while offering more programmability, aiming to create a decentralised internet and digital economy. Transactions are secured by the Bitcoin network, arguably the most secure blockchain in the world.

This ecosystem is driven by sBTC, a token that is pegged to the price of BTC and can be used to pay for goods and services on the Stacks blockchain. The Nakamoto upgrade of Stacks is on the way in April, coinciding with the BTC halving – and we think the market is underpricing the value of this chain. 

Technically we’ve found support at 1.27, where we are seeing higher lows across the trendline from December. Price is currently having a shot at all-time highs. 1.72 has been retested, but we may get another shot given that BTCUSD is currently taking a breather at the 48,000 level.

Could look for an entry at 1.72, or ride the moment with a view to break highs around 2.05. This is a trade we are looking to hold until April. As always, do your own research! This is a higher risk trade given the variables.

* Zerocap, and members of its staff, currently hold this position.

---

Derivatives desk
WHOLESALE INVESTORS ONLY

Option skews getting bullish

As the BTC recovers back to near-the-spot ETF highs, option traders are positioning for more upside price action, with call IVs getting steadily bid over puts again. While they are still below the mid-October highs when BTC broke through the 30k mark, there has been a recent bias towards call buying, with the 50k & 55k strikes most popular. 

Trade idea

Take advantage of the relatively low implied volatility and high skew with a 30-day BTC 100% / 120% call spread. It’s a leveraged play with a defined downside, that takes advantage of the current momentum in BTC.

Cost: 5% for a max 20% payoff

Get in touch with the derivatives team at [email protected] for more information.

What to Watch

• Bank of England governor Bailey speaks, on Monday.
• US monthly and yearly CPI reports, on Tuesday.
• UK’s yearly CPI and Australia employment rate, on Wednesday.
• UK’s monthly GDP and US sales report, on Thursday.

* Index used:

Bitcoin	Ethereum	Gold	Equities	High Yield Corporate Bonds	Commodities	Treasury Yields
BTC	ETH	PAXG	S&P 500, ASX 200, VT	HYG	SPGSCI	U.S. 10Y

DISCLAIMER

Zerocap Pty Ltd carries out regulated and unregulated activities.

Spot crypto-asset services and products offered by Zerocap are not regulated by ASIC. Zerocap Pty Ltd is registered with AUSTRAC as a DCE (digital currency exchange) service provider (DCE100635539-001).

Regulated services and products include structured products (derivatives) and funds (managed investment schemes) are available to Wholesale Clients only as per Sections 761GA and 708(10) of the Corporations Act 2001 (Cth) (Sophisticated/Wholesale Client). To serve these products, Zerocap Pty Ltd is a Corporate Authorised Representative (CAR: 001289130) of AFSL 340799

This material is intended solely for the information of the particular person to whom it was provided by Zerocap and should not be relied upon by any other person. The information contained in this material is general in nature and does not constitute advice, take into account financial objectives or situation of an investor; nor a recommendation to deal. . Any recipients of this material acknowledge and agree that they must conduct and have conducted their own due diligence investigation and have not relied upon any representations of Zerocap, its officers, employees, representatives or associates. Zerocap has not independently verified the information contained in this material. Zerocap assumes no responsibility for updating any information, views or opinions contained in this material or for correcting any error or omission which may become apparent after the material has been issued. Zerocap does not give any warranty as to the accuracy, reliability or completeness of advice or information which is contained in this material. Except insofar as liability under any statute cannot be excluded, Zerocap and its officers, employees, representatives or associates do not accept any liability (whether arising in contract, in tort or negligence or otherwise) for any error or omission in this material or for any resulting loss or damage (whether direct, indirect, consequential or otherwise) suffered by the recipient of this material or any other person. This is a private communication and was not intended for public circulation or publication or for the use of any third party. This material must not be distributed or released in the United States. It may only be provided to persons who are outside the United States and are not acting for the account or benefit of, “US Persons” in connection with transactions that would be “offshore transactions” (as such terms are defined in Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”)). This material does not, and is not intended to, constitute an offer or invitation in the United States, or in any other place or jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer or invitation. If you are not the intended recipient of this material, please notify Zerocap immediately and destroy all copies of this material, whether held in electronic or printed form or otherwise.

Disclosure of Interest: Zerocap, its officers, employees, representatives and associates within the meaning of Chapter 7 of the Corporations Act may receive commissions and management fees from transactions involving securities referred to in this material (which its representatives may directly share) and may from time to time hold interests in the assets referred to in this material.  Investors should consider this material as only a single factor in making their investment decision.

Past performance is not indicative of future performance.