6 Nov, 23

Weekly Crypto Market Wrap, 6th November 2023

Zerocap

Zerocap

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

Week in Review

Winners & Losers

Data source: TradingView

Market Highlights

Geopolitics

Strikes continue with force from Israel into Gaza. Things are becoming less clear globally, with the US now also urging Israel to take a humanitarian pause. Netanyahu has been clear in his messaging, that “[t]here will be no ceasefire without the return of our hostages.” The world is becoming more divided every day – on the one hand very few back Hamas’ actions, but the military response now has the world’s eyes – and it’s estimated that at least half of those killed in Gaza have been children. 

It’s an impossible situation in many ways – Israel and the world cannot sit by and watch any group act in the way Hamas did. Israel has been forced into a corner, where action is the only possible response. The challenge will be weighing this response in a way that does not lose support from their largest allies.

We are watching US Secretary of State Antony Blinken’s visit to Palestinian authorities in the West Bank to shed some light on how the US is thinking about this evolving situation. Amazingly, the VIX has fallen back below 15, which suggests some market complacency on a potential breakdown of global relations.

Macro 

Powell spoke with dovish undertones following the Federal Reserve’s decision to maintain interest rates for the second consecutive meeting on Tuesday. The Fed Chair hinted at a willingness to keep the option for future rate hikes open but missed several opportunities to take a more hawkish stance. “Immaculate disinflation” could be on the horizon. Economists love buzzwords, and this one has been making the rounds – an attempt to explain a situation where inflation cools or turns negative, without causing a spike in unemployment. 

Although some signs of job market weakness have arisen this week, on the whole, they are still robust – and this week’s numbers have just accelerated talks of the countdown to potential rate cuts. This led to a rally in risk assets, with notable changes in various markets: BTC +1.3%, ETH +5.7%, NDX +5.95%, and a slight decline in Gold by -0.7%. Importantly, the premise of rate hikes saw BTC behave in line with risk-assets, a relationship that has recently broken down. 

BTC

Having approached the $36,000 mark earlier in the week, the ascending wedge is closing in on a significant break. Technicals look primed for a topside move, particularly alongside event risk (BTC ETF announcement) and a falling VIX (risk asset buoyancy). A catchup of market alignment to geopolitical risk could be a catalyst for a downside move. Topside resistance beyond 36,000 sits at 38,000, dating back to levels in mid-2022. On the downside, retesting 31,000 (the prior highs) would be possible, filling the gap from the initial push higher a few weeks back. On balance, we see gamma hedging from options dealers as potentially driving prices higher from this point.

Data Source: TradingView

Derivatives

The CME volumes continue to pump, signalling some serious institutional adoption. Coinbase has also opened up crypto futures trading to US investors – which means that CME, CBOE and Coinbase are the only licensed venues for trading futures in the US. Combine this with an expected spot ETF BTC decision – and we have the recipe for a more regulated landscape for trading and hedging, particularly in the US. JP Morgan is calling for BTC at 125K USD by the end of 2025, and Standard Chartered is holding course on its more aggressive forecast of 120K USD by the end of 2024. 

It’s tough not to see a higher crypto market cap over the next few years – Apple’s market capitalisation ballooned as it was embedded into more and more ETFs (Apple currently sit in 337 of them). The medium-term catalysts are there – the BTC halving in 2024. And the short-term catalyst for a break above 36K is there, from a derivatives orderflow perspective – the options dealers need to hedge their gamma above 36K – with an estimated 20M of buying for every 1% move. 20M doesn’t necessarily move the market, but the prop funds tend to front-run this kind of orderflow leading to strong breaks. 

All in all, we’ve got some major catalysts to keep an eye on into the Christmas lull. Don’t blink, or you miss it!

Best of luck trading out there!

What to Watch 

  • Australia’s RBA rate statement, on Tuesday.
  • US unemployment claims and FED chair Powell speech, on Thursday.
  • UK monthly GDP report, on Friday.

Insights

“Market sentiment in the space is actually at an all-time high.”

In this latest Ausbiz interview, Zerocap CIO Jonathan de Wet dissects the surge in Bitcoin’s value and investor optimism around the potential US Bitcoin ETF approval. He also addressed the broader crypto market trends, institutional interests, and the impact of current global events on crypto dynamics.

For a clearer picture of Bitcoin’s trajectory and insights into the digital currency landscape, watch the full interview through the link above.

* Index used:

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

FAQs

  1. What are the implications of Sam Bankman-Fried’s fraud conviction for the crypto industry?
    • Sam Bankman-Fried’s conviction may lead to heightened scrutiny and potentially stricter regulations within the crypto industry, affecting how crypto businesses operate and how investors approach the market.
  2. How will the UK Treasury’s stablecoin regulations affect the digital currency market?
    • The UK Treasury’s plan to regulate stablecoins could provide a clearer legal framework for their use, potentially leading to greater adoption and integration into the broader financial system.
  3. What does the record high profitability of Bitcoin addresses indicate for the market?
    • The increase in profitable Bitcoin addresses suggests a strong market sentiment and could signal continued investor interest and confidence in Bitcoin as an asset class.
  4. How does the correlation between Bitcoin price and mining energy use impact investors?
    • Understanding the correlation between Bitcoin’s price and its mining energy consumption can help investors make more informed decisions regarding the sustainability and long-term viability of their Bitcoin investments.
  5. What could be the market impact of Ripple Labs powering Georgia’s central bank digital currency?
    • Ripple Labs’ involvement in Georgia’s central bank digital currency could showcase the practical use of blockchain technology in traditional finance, potentially influencing investor sentiment and the adoption rate of digital currencies by other central banks.
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.

Like this article? Share
Latest Insights

6 Nov, 23

Hong Kong Bitcoin ETFs Likely Coming Soon

Hong Kong Bitcoin ETFs are close to becoming reality, as Hong Kong stands on the brink of approving its first spot Bitcoin ETFs, the global

6 Nov, 23

Bitcoin Halving Prices: A Timeline

Bitcoin halving events are significant milestones in the cryptocurrency’s history, as they directly impact the rate at which new bitcoins are created and, consequently, the

6 Nov, 23

What are the main Australian Digital Currency Laws?

Australia has emerged as a progressive nation in terms of digital currency regulation. The country’s approach aims to balance innovation in the fintech sector with

Receive Our Insights

Subscribe to receive our publications in newsletter format — the best way to stay informed about crypto asset market trends and topics.

Want to see how bitcoin and other digital assets fit into your portfolio?

Contact Us
Ready to sign up?
Create an Account