Weekly Crypto Market Wrap, 19th February 2024

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

Week in review

• Bitcoin ETFs currently pulling 10x more BTC than crypto miners can produce – BlackRock’s surpasses 100,000 BTC under management.
• VanEck admits to ETF marketing violation, agrees to SEC’s fine of $1.75 million.
• Ethereum gas transaction fees hit 8-month high as “NFT-hybrid” ERC-404 token hype continues.
• Bankrupt Celsius distributes $2 billion worth of crypto to 172k creditors.
• Australian cop accused of stealing 81 BTC during Melbourne police raid.
• US prices rose more than expected for January, strong inflation persists.
• UK economy in technical recession following GDP results for 2023 – Bank of England governor Bailey sees inflation data as “good news”.

Technicals

BTCUSD

We called the 50,000 level going last week on BTCUSD, and the momentum shot us straight up to 52,000. We’ve taken a very shallow breather, before moving higher again. Technically, price is very bullish – looking at a run for 55,000 this week. If we see price moderation, a retest of 49,000 coinciding with the ascending trendline break from mid-2021 would be a stellar entry point, however with the current sentiment in the market I wouldn’t be surprised if we leave 49,000 for dust in the short to medium-term. The fundamental narrative leading up to the halving is gaining speed, and equity markets are not seeing much of a response to the repricing of the Fed Funds curve, which is risk-on… for now. Swaps pricing is showing around 90 basis points of rate cuts in 2024 — a far cry from the 150 basis points at the start of February. 

Notably, the fuel behind this fire is also its greatest risk – if the goldilocks risk pricing is off, and we continue to see elevated inflation numbers, I’d expect to see some downside across all risk assets.

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

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Spot desk 

Spot flows were muted over the Chinese New Year period, with AUD flows dominating the desk. From hedge funds and real money investors we saw strong spot BTC flows, and some cautiously building ETH positions prior to an expected ETF announcement this year. Nothing is for certain though, so be careful trading the ETH Ethereum Trust (ETHE) basis – we think this has the potential to blow out if we get any shaky responses from the SEC.

SSV Network (SSV)

ETH infrastructure tokens are looking very promising. There has been a constant surge in activity noticed across Layer-2s  (OP/ARB/Base). The ETH Dencun upgrade is scheduled around the 13th March, It will introduce blob transactions and transient storage, which will help Ethereum better support Layer-2 networks. These features are expected to improve scalability and reduce costs. Combine this with the (expected) upcoming ETH ETF, and a growing staking curve (over 25% of ETH is now locked staking), and you have a strong foundation for growth.

SSV.Network is a permissionless protocol on Ethereum that enables the splitting of validator duties to trust-minimised node operators to increase resilience, uptime and liveness. The idea behind the platform is that it allows node operators to split their nodes, creating new staking economies across the ETH network. There is an airdrop coming up, and given the airdrop FOMO right now, we think that SSV network is a reasonable short-term momentum play, albeit with strong fundamentals given growth in ETH staking.

If you’d like to take a position, consider entering on momentum with initial targets at 38 and 42 (50% of position), with a stop loss below the ascending trendline. Trade duration 1 to 3 months, potentially holding 50% of position for longer if ETH is still on a bull run.

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

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Derivatives desk
WHOLESALE INVESTORS ONLY

Basis Rate gets interesting

Basis rates are heightened again – comparable to levels we saw during the Spot ETF mania in January. Investors looking to capture some of this yield premium could look into putting on a 6-month Basis trade which is paying roughly 14-15% annualised at the moment. 

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

What to Watch

• US consumer confidence report, on Tuesday.
• US preliminary quarter GDP, on Wednesday.
• Canada’s monthly GDP and US unemployment claims, 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

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