20 Nov, 23
Weekly Crypto Market Wrap, 20th November 2023
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
Week in Review
- BlackRock files S-1 form for spot Ether ETF with SEC.
- SEC delays decisions on a couple Bitcoin ETFs – Bitcoin futures at risk.
- Bitcoin blockchain network fees surge by more than 700% compared to last year as the market anticipates ETF approvals. Bitcoin miners reach record annual earnings at $44 million in a single day.
- Tether minted $4 billion USDT in a single month, CTO claims replenishing inventory.
- New stablecoin issuer, Verified USD Foundation launched Verified USD (USDV) stablecoin fully backed by tokenized US T-bills.
- Disney launches NFT platform with Dapper Labs.
- Former FTX executives team up to build new crypto exchange.
- ChatGPT’s OpenAI CEO Sam Altman is fired – company claims Altman “was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities.”
- Crypto is the second most popular investment asset in France; government report.
- Kazakhstan officially launches its central bank digital currency.
- UBS now allows their HNW clients to trade three crypto ETFs with them in HK.
- Cybersecurity experts back US Senator Warren’s crypto bill in Senate hearing.
- US consumer price inflation hits two-year lows.
- UK inflation also falls by more than expected in October to 4.6%, recording its lowest in two years.
- US new construction data above forecasts, new permit issuance (1.487M vs 1.471M prior) and housing starts (1.372M vs 1.358M prior) both higher than September.
- China shows growth in economic data with industrial output and retail sales beating market expectations in October +4.6% Y/Y and +7.6% Y/Y respectively.
Winners & Losers
Data source: TradingView
- As focus turns to Fed easing, we’re seeing the dollar on the backfoot and equities pushing higher (SPX +2.4% and NSDQ +2.4%). It’s a seesaw at the moment – any excuse by the market to realign pricing against rate expectations. We can’t stop looking at a few things right now – Mochi ice cream is the first. If you haven’t tried these, they are Japanese delights that are frighteningly delicious, and creating waist issues by the day. The other thing is the VIX – equally frightening in its complacency. We are way beyond ZIRP, and corporate bankruptcies are on the rise, yet we are hanging onto equity markets that are on a thread – buoyed by the big 7 – Apple (AAPL), Amazon.com (AMZN), Alphabet (GOOGL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA). It feels like any tremors could lead to a vol puke – which makes us think that buying intermarket volatility is an interesting and relatively cheap hedge right now.
- Despite the risk rally, we are seeing BTC hold a fairly tight range as a result of the pushback of the BTC ETF applications. Last week we called a retest of 36,000 with a move down to 33,000 into the Christmas lull period. Well, we got the 36K retest (ok, actually into 35K), which is now ranging between 35K and 38K. Our team is actually fairly split on what comes next – some are (personally) buying call spreads into Q1/2024, with others taking collars (hedging value) at these levels. With the delay in the BTC ETF approval, and the market pricing of rate cuts next year, not to mention BTC’s notable gains since mid-Oct (+37.5%), we’re erring on a move back into the range. At least into NYE, before we get some fresh expected newsflow in January. If we’re wrong, 40,000 is the next major topside level on a break of 38,000. Being wrong would also mean having to buy the entire office beer which is never a good end to the year.
Data Source: TradingView
- The options market’s response to the “8-day window” for the BTC spot ETF led to some reversion. After some spikes in front-end vol over the past fortnight, term structures are back in contango. The skew is still showing a decent bias towards calls on BTC and ETH (5-10 vol points) for longer-dated options contracts.
- ETH options dealers’ gamma positions remain net short, presenting the interesting potential for any more unforeseen Spot ETH ETF announcements. Gamma hedging above 2,140 would see levels not seen since May 2022. This said, on balance a spike to these levels on orderflow would likely not be sustained into the low liquidity Christmas period, leaving the potential for a perfect fade trade of the move.
Data source: Deribit
Protocols and Alts
- Polygon recently set a record for the highest number of daily transactions, reaching approximately 16.5 million by November 16th, up from 2.5 million on November 5th. The surge in transactions led to soaring gas prices on the L2/Sidechain, with transaction costs peaking at $5 for swaps, significantly surpassing the normal rates on the network. This sudden increase can be attributed to the substantial minting of PRC-20 tokens (POLS).
- PRC-20 tokens draw inspiration from the Ordinals, a protocol designed for generating tokens and NFTs on the Bitcoin network. Distinct to Ordinals, PRC-20s employ a strategy that utilises transaction calldata to generate tokens or unique NFT-like images embedded within the network transactions.
- While transaction volumes have subsided, if Polygon participants’ behaviour is reminiscent of the introduction of BTC Ordinals, we may see some isolated short-term positive price action in MATIC.
Data Source: Polygonscan.com
What to Watch
- Australia monetary policy meeting minutes, on Monday.
- US FOMC meeting minutes, on Tuesday.
- UK, France and Germany flash services/manufacturing PMIs, on Thursday.
- US flash services/manufacturing PMIs, on Friday.
“Bitcoin and Ether are clearly it. ETH in itself has become a yield-bearing asset as it’s moved from its original proof of work mining facility blockchain to now a proof of stake blockchain. This has implications.”
In his latest interview with Ausbiz, Zerocap CIO Jonathan de Wet delivers insights on the current state of the markets and cryptoland.
* 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|
- What is the significance of BlackRock filing an S-1 form for a spot Ether ETF?
- BlackRock’s filing for a spot Ether ETF with the SEC indicates a growing institutional interest in Ethereum. This move could potentially increase mainstream adoption and liquidity in the Ethereum market, signaling a significant step towards broader acceptance of cryptocurrencies in traditional finance.
- How have the SEC’s delays in Bitcoin ETF decisions impacted the market?
- The SEC’s postponement of decisions on several Bitcoin ETFs has created uncertainty in the Bitcoin market. This has affected Bitcoin futures and may have contributed to the surge in Bitcoin blockchain network fees, as investors and traders reassess their strategies in light of regulatory uncertainties.
- Why did Tether mint $4 billion USDT in a single month?
- Tether’s decision to mint $4 billion USDT in a month was attributed to replenishing its inventory. This action reflects the increasing demand for stablecoins in the cryptocurrency market and Tether’s role in providing liquidity.
- What are the implications of Disney launching an NFT platform with Dapper Labs?
- Disney’s entry into the NFT space, in collaboration with Dapper Labs, signifies the growing interest of major corporations in blockchain technology and digital collectibles. This move could lead to new forms of engagement with Disney’s content and characters, potentially transforming the landscape of digital collectibles and fan experiences.
- How does the launch of Kazakhstan’s central bank digital currency fit into the global trend of digital currencies?
- Kazakhstan’s launch of its central bank digital currency (CBDC) aligns with the global trend of countries exploring and adopting digital currencies. This move highlights the growing interest of national governments in leveraging blockchain technology for financial innovation and could influence the development of digital currencies worldwide.
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.
Like this article? Share
Read more about the partnership at AUDD’s detailed blog post. Zerocap is proud to announce a groundbreaking partnership with AUDD, bringing the Australian Dollar stablecoin
Within the blockchain landscape scalability and interoperability have emerged as some of the premier problems faced by users. Decentralised applications (DApps) are spread across a
Receive Our Insights
Subscribe to receive our publications in newsletter format — the best way to stay informed about crypto asset market trends and topics.