M6 Labs Bitcoin Weekly

BTC Surging, Ethiopia New Crypto Hub, MicroStrategy Load-Up

GM, Anon! It appears that momentum is picking up in the market once again. ETF inflows have been robust, and Bitcoin is showing strong upward movement. Could we be on the verge of reaching new ATHs? Signs point to yes! Let’s dive in!

Bitcoin Updates & Metrics

  • As reported by the Financial Times, major investment firms such as BlackRock, Fidelity, Grayscale, Invesco, and Bitwise have initiated advertising campaigns for Bitcoin spot ETFs on Google's platform. 

  • Amidst the upcoming Bitcoin halving event, mining costs have surged prompting miners to optimize operations for profitability. Additionally, Canaan secured over $50M in financing, signaling confidence in the mining hardware sector, while industry veteran Jihan Wu assumed the role of CEO at Bitdeer.

  • BitFuFu, Bitmain's mining subsidiary, is poised for a United States listing via a Special Purpose Acquisition Company (SPAC) in the near future. 

  • Sam Altman is actively pursuing $7T in funding to tackle the global chip shortage. This ambitious endeavor aims to mitigate the semiconductor supply constraints that have impacted various industries worldwide.

  • Ethiopia has rapidly ascended as one of the primary recipients of Bitcoin mining machinery globally. 

  • Ark Invest CEO Cathie Wood said that Bitcoin is actually replacing gold as a value storage asset.

  • As the Bitcoin halving approaches, BTC miner CleanSpark is gearing up for reduced fees.

  • Kraken and OKX are among the latest crypto exchanges expanding into new markets. Kraken has recently completed registrations in the Netherlands, Spain, Italy, and Ireland, ahead of the forthcoming implementation of the EU’s MiCA regulation.

  • The New York Attorney General has broadened its legal action against Digital Currency Group, tripling the projected scale of fraudulent activities to over $3B.

  • Coinbase's latest report highlights the potential cost-saving benefits of blockchain technology, suggesting that consumers could collectively save a substantial $74B in credit card transaction fees. 

Updates across various sectors:

  • Federal Reserve Chairman Powell suggested a potential delay in interest rate cuts until after March to ensure sustainable achievement of the 2% inflation target. Expectations are for three cuts this year, though at a slower pace.

  • US Treasury Secretary Yellen called for crypto legislation to address enforcement gaps, while concerns over central bank digital currencies and AI's power were expressed by Trump.

  • The SEC introduced a rule that could require DEX liquidity positions above $50M to register. Additionally, a judge ruled in favor of the SEC in demanding Ripple disclose financial statements.

  • Market-wise, New York Community Bank stock dropped by 25%, raising asset concerns, while Major French Bank SocGen announced plans to cut around 900 jobs.

  • Solana partnered with Abu Dhabi Global Market to boost web3 adoption in the UAE, while OKX faced potential probes in South Korea

  • Thailand exempted value-added tax on crypto gains, contrasting India's controversial stance.

  • Hong Kong initiated an inquiry into Worldcoin over data privacy concerns. 

  • Michael Saylor capitalized amidst market stagnation by acquiring an additional 850 BTC.

  • In ETF updates, Ark Invest and 21Shares adjusted their joint application for a spot Ethereum ETF, focusing on cash-based transactions and hinting at ETH staking. 

  • FTX filed a motion to offload a stake in AI startup Anthropic, while Binance faced a data leak on GitHub.

  • Lastly, Chinese scholars stressed the importance of addressing crypto-related money laundering, with revisions to China's Anti-Money Laundering Law expected by 2025.

Inflows and Outflows Overview: Last week, digital asset investment products attracted substantial inflows, reaching $708M, bringing the year-to-date total to $1.6B, with global assets under management now standing at $53B.

  • Bitcoin dominated these inflows, representing 99% of the total, while Solana also recorded noteworthy inflows of $13M.

  • In the US, newly launched ETFs averaged $1.9B in inflows over the past four weeks, totaling $7.7B since inception.

  • However, there were minor outflows totaling $5.3M from short-bitcoin products.

  • Despite this, trading volumes in ETPs decreased compared to the previous week but remained considerably higher than the 2023 average.

  • Regionally, the US observed $721M in inflows, with a notable slowdown in outflows from existing issuers.

  • Additionally, there were significant outflows of $147M from one blockchain equities issuer, while others experienced inflows totaling $11M.

In January, the crypto venture capital sector witnessed 113 publicly disclosed investment projects, marking a 10.8% increase from December 2023 and a 1.8% increase from January 2023.

  • DeFi emerged as the leading industry, securing approximately 19% of financing, followed by infrastructure projects at 12%, NFT/GameFi and CeFi each representing around 12% and 6%, respectively, with L1/L2 making up roughly 4%.

  • Despite a 28.6% decrease from December 2023, the total fundraising amount for January reached $650M, showing a 3.2% increase from January 2023.

  • Notable funding rounds included HashKey Group's Series A funding, Core Scientific's successful equity offering, Flowdesk's Series B round, and Sygnum's strategic financing round. 

  • Additional investments were made in projects like Portal, Polymer Labs, Ingonyama, Axiom, Kiln, and SkyArk Chronicles, reflecting the diverse range of initiatives drawing investor interest in the crypto space.

The market share of altcoins relative to Bitcoin has retreated to 34% after reaching a peak of 53% in December. 

  • The rise in BTC dominance suggests a preference among investors for Bitcoin over other digital assets at the moment, with the spotlight on Bitcoin intensifying due to the growing traction of spot Bitcoin ETFs. 

  • As investors seek exposure to Bitcoin through regulated investment vehicles like ETFs, the demand for Bitcoin is bolstered, driving its dominance within the crypto market. 

  • Concurrently, the dip in altcoins from their recent local high indicates a relative decline in investor interest and confidence in alternative crypto for the moment. 

  • This downturn can be attributed to factors such as profit-taking, market corrections, or a reevaluation of risk appetite among investors. 

The increasing net inflows, which include Grayscale outflows, indicate a growing trend where the new issuers of spot bitcoin ETFs are more than compensating for the outflows from Grayscale.

  • Data from SoSoValue reveals notable trends in Bitcoin spot ETFs, with February 7 marking the ninth consecutive day of net inflows, amounting to a total of US$146M. 

  • Despite this overall positive trend, the Grayscale ETF GBTC experienced a single-day net outflow of US$80.78M. 

  • Conversely, the remaining nine ETFs, excluding Grayscale, witnessed a combined net inflow of US$226M, indicating significant investor interest. 

  • Notably, Fidelity's ETF FBTC recorded a substantial single-day net inflow of approximately $130M, reflecting growing confidence and capital allocation in the crypto market.

As the initial hype around spot Bitcoin ETFs begins to subside and trading activity normalizes, the landscape of Bitcoin investment vehicles is evolving. 

  • GBTC, which initially commanded the lion's share of daily trading volumes among ETFs, has seen its dominance diminish. 

  • While GBTC once represented over half of the daily trading volumes, it now accounts for approximately 30% of the market. 

  • Notably, last week saw the emergence of a new leader in trading volumes: IBIT.

On February 9th, Bitcoin ETFs experienced a robust net inflow of $541.5M, indicating significant investor interest in the BTC ETF and the crypto market in general. 

  • Notably, Invesco witnessed an outflow, marking the first instance of a non-GBTC product experiencing a net outflow day.

Source: BitMEX Research

Recent data indicates a notable uptick in Google search volumes for Bitcoin, suggesting a resurgence of interest in the crypto. 

  • This increase in search activity is often considered a leading indicator of retail investor sentiment and participation in the market. 

  • While institutional investors may be leading the current wave of activity, the growing search interest implies that retail investors could soon follow suit. 

  • Despite this surge in interest, retail investor participation in the market has yet to fully materialize, indicating that there may still be room for further growth as broader awareness and adoption of Bitcoin continue to expand.

The recent uptick in Bitcoin's value surpassing $47K reveals a noteworthy trend: more than 92.5% of its circulating supply is currently in a profitable state. 

  • However, historical data suggests that such high levels of profitability among holders have previously heralded potential price peaks, whereas lower levels of profitability have indicated possible price bottoms. 

Bitcoin Ecosystem

The top collections by volume on Magic Eden consist of nearly half of Bitcoin NFT collections.

  • Interestingly, this marketplace, which was once solely dedicated to Solana, is now experiencing growing traction with Bitcoin collections. Currently, the two most popular collections are Bitcoin-based: Quantum Cats and RSIC.

Top collections NFT collections by volume over the last 7 days on Magic Eden. Source: Magic Eden. 

Following the recent sale of Quantum Cats, the collection has surged to the top position in terms of volume, experiencing a remarkable 3x increase in mint price.

  • Similarly, Bitcoin Puppets have exhibited strong performance, with their floor price steadily rising.

Top Ordinals collections by volume over the last 7 days. Source: Magic Eden.

Recently, there has been a spotlight on Bitcoin NFTs; however, certain BRC-20 tokens have experienced significant surges in price.

  • One notable example is Jigo, which has seen a remarkable increase in value. Additionally, MBTX has also demonstrated positive price performance amid this trend.

Top BRC-20 collections by volume over the last 7 days. Source: OKX NFT Marketplace.

Binance Research recently published a report shedding light on the evolving landscape of Bitcoin Ordinals. 

  • The report highlights the emergence of Bitcoin Ordinals across various sectors, including DeFi, NFTs, and tooling, indicating a nascent yet growing ecosystem. Inscriptions and BRC-20s have played pivotal roles in driving activity within the Bitcoin ecosystem, attracting new talent, accelerating project updates, and fostering innovation.

  • Moreover, inscriptions have expanded beyond Bitcoin to encompass other EVM-compatible chains, initially causing network disruptions due to surging trading activity. 

  • However, this activity has since subsided, raising questions about potential resurgences on EVM-compatible chains. 

  • The report also delves into platforms facilitating inscription participation, encompassing trading, inscription, storage, and other related actions.

  • Check out the report here.

Sora Ventures recently released an insightful graphic outlining the Bitcoin ecosystem, shedding light on its various components and emerging standards. 

  • Of particular note are the numerous Bitcoin standards that are beginning to emerge on the far right of the graphic. This suggests a growing diversification within the Bitcoin ecosystem, indicating potential advancements and adaptations in the broader crypto landscape. 

  • Additionally, the graphic highlights the expanding DeFi ecosystem, a development that many considered improbable not long ago. This underscores the rapid evolution and maturation of decentralized finance in the Bitcoin ecosystem.

UniSat, an important inscription protocol, announced that OKX Ventures has taken the lead in their Pre-A funding round. 

  • This collaboration signifies a significant milestone in UniSat's journey, demonstrating the strong partnership between the two entities since 2023 within the Bitcoin ecosystem.

  • Accompanying OKX Ventures are esteemed partners SWC Global, Vitalbridge Capital, and ABCDELabs

Magic Eden has unveiled a new cross-chain rewards program, enticing users with "Diamonds" as points for NFT trading activities. 

  • These Diamonds are associated with a fresh multi-chain wallet and are set to be linked to an upcoming NFT token collaboration with a Non-Fungible DAO. 

  • While the specific utility of Diamonds remains undisclosed, Magic Eden hints at potential redemption options. Notably, the program extends special rewards to "Solana OGs" through a retroactive drop available until March 3. 

  • Users can accumulate Diamonds through various marketplace engagements, such as purchases, listings, and collection offers, with larger transactions and listings closer to the floor price yielding more Diamonds. 

  • Additionally, certain trending collections offer a 50% Diamond bonus, and users can further enhance their Diamond earnings with a Loyalty score tied to exclusive activity on Magic Eden. 

  • Traders who have dealt with ordinals on Magic Eden may also qualify for these rewards.

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