4 Dec, 23

Weekly Crypto Market Wrap, 4th December 2023

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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

Winners & Losers

Data source: TradingView

Market Highlights

  • Last week – a lot of action in US rates. The action began with Fed speaker Waller, who is conventionally a hawk, stating that rate cuts were off the table – expecting a run of soft inflation prints continued into early Q2 2024. As a result, backend curve duration rallied as interest rates fell across the board. The market-wide sentiment was further bolstered with the PCE numbers coming in lower than expected.

Data Source: https://www.ustreasuryyieldcurve.com/

  • Coinciding with a little risk-on action is the expected positive BTC ETF announcement between Jan 5th and 10th from the SEC. Combine this with 4-year seasonality (the halving rally), and we have serious fire in the cauldron. I honestly didn’t think we’d be breaking the 40s into the December ‘lull’, but we are screaming into the 42s as I write this, and it looks like I will end up owing the team that beer. This time. 

Data Source: tradingview.com

  • Technically, you really have to zoom out to see where the next resistance could be.  Going back to early 2022, we have prior highs at the 48,000 level which coincides with the trendline resistance from mid-2021. It’s a long way off, but with the current momentum, stranger things have happened. If I was betting man, again, I’d say we don’t get there this month. There is a Goldilocks scenario being priced into markets right now, and I don’t think we are out of the woods just yet. I won’t be betting on this one though.

Data Source: tradingview.com

  • MicroStrategy announced they have acquired an additional 16,130 BTC for $593.3 million at an average price of $36,785 per bitcoin. Gotta hand it to Michael Saylor, the guy has hands of steel. The media were all over his unrealised losses when BTC was down at 15K, and Microstrategy now holds 174,530 BTC acquired for 5.28 billion at an average price of 30,252 per bitcoin. One in every 138 BTC is owned by Microstrategy. If you follow Saylor’s thinking – if the financial system ends up in the place he thinks it will, Microstrategy could be one of the most powerful global entities around – essentially the reserve bank of BTC. 

Derivatives

  • If we see the short liquidations substantially spike on this move through 40,000, I think we get some reversion back below the figure – but if liquidations stay relatively muted, this move could have some legs. Watch the orderflow for cues.


Data Source: theblock.co

  • A good indication of the leverage buildup can be seen in the CME – hedge funds building some notable short exposure. Many would be jumping on the basis trade, but at 3:1 leverage, at least a few would be feeling the burn at these levels. Some short covering is expected as Chicago opens up today.

Data Source: theblock.co

  • Speaking of the CME – with all the institutional adoption and fall of just about every centralised exchange founder out there, it’s no surprise that CME volumes are catching a  bid, both in futures and options. With prime brokers and trading firms (including us) working to close the Crypto/TradFi gap – I expect to see a significant uptick in volumes on the CME, and a compression of the basis arb that we’ve been seeing over the past few years.

Data Source: theblock.co

Protocols and Alts

  • Cosmos is considering a network fork with a new token, $ATOM1, following the implementation of a 10% inflation cap on $ATOM, as proposed by co-founder Jae Kwon. If you’re interested in a long Sunday read on the topic of Cosmos – our innovation team have put together a comprehensive overview of the ecosystem. Cosmos is a layer-0, which basically means it connects all layer-1 blockchains allowing each to focus on their best parts. Game-changing stuff.
  • Chainlink has updated its staking to v0.2, expanding the pool to 45 million $LINK, with current stakers given priority for migration before it opens to early access users on December 7th, and the general public on December 11th.
  • $DYDX has begun trading on the dYdX Chain, including a $20 million incentives program over six months, and daily rewards of 50k $DYDX. This coincides with the unlocking of 84.4% of its circulating supply, valued at $488 million. 

Data Source: TokenUnlocks

Happy trading out there, watch the leverage! 

Jonathan de Wet, CIO

What to Watch 

  • US Jolts Job Openings and AUS quarter GDP, on Tuesday.
  • Bank of Canada rate statement, on Wednesday.
  • US preliminary inflation expectations report, on Friday.

Insights

Zerocap is thrilled to announce our partnership with AUDD. We have integrated the Australian Dollar stablecoin into Zerocap’s offerings, revolutionizing digital asset trading in Australia and APAC.

* Index used:

  Bitcoin    EthereumGoldEquities        High Yield Corporate Bonds      CommoditiesTreasury Yields
BTCETHPAXG        S&P 500, ASX 200, VT      HYG  SPGSCIU.S. 10Y

FAQs

  1. What impact does Zerocap’s partnership with AUDD have on the stablecoin market?
    • Zerocap’s integration of the Australian Dollar stablecoin, AUDD, into its services could significantly influence the stablecoin market by enhancing liquidity and providing more options for traders and investors in the APAC region.
  2. How does BlackRock’s Bitcoin ETF proposal refinement affect investor sentiment?
    • BlackRock’s efforts to refine its Bitcoin ETF proposal and attract more investors could boost confidence in the cryptocurrency market, potentially leading to increased institutional investment and broader acceptance of digital assets.
  3. What are the implications of FTX’s approval to sell assets worth $873 million?
    • FTX’s approval to sell assets worth $873 million to repay creditors highlights the ongoing repercussions of the platform’s collapse and may influence market dynamics, particularly in terms of liquidity and investor trust in crypto exchanges.
  4. How does the e-CNY exchange service by Standard Chartered China impact the digital currency landscape?
    • The launch of e-CNY exchange services by Standard Chartered China marks a significant step in the adoption of China’s central bank digital currency (CBDC), potentially influencing the global digital currency landscape and encouraging other countries to accelerate their CBDC initiatives.
  5. What could be the market impact of the large number of altcoins unlocking at the end of the year?
    • The unlocking of a significant number of altcoins towards the end of the year could lead to increased market volatility and liquidity, affecting altcoin prices and potentially presenting both risks and opportunities for traders and investors.
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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.

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