- Crypto Pragmatist by M6 Labs
- State of the Market: Bitcoin ETFs Flatter to Deceive
State of the Market: Bitcoin ETFs Flatter to Deceive
Despite the price slump this past week, ETFs have been a major success.
The ETFs were expected to be a major market booster, but the price has flattered to deceive, more or less. Despite the price slump this past week, ETFs have been a major success. Bitcoin has now claimed the position of the second-largest commodity ETF in the United States, surpassing silver. Dive in for more details. 👇
State Of The Market: ETF Euphoria Dissipates
Digital asset investment products received significant inflows of $1.18B last week, although this did not break the previous record set by futures-based Bitcoin ETFs in October 2021, which totaled $1.5B. Trading volumes for digital asset investment products reached a record high of $17.5B last week, a substantial increase compared to the 2022 weekly average of $2B. These volumes accounted for nearly 90% of daily trading volumes on trusted exchanges, indicating heightened activity.
ETF Updates and Market Slump
Bitcoin has now claimed the position of the second-largest commodity ETF in the United States, surpassing silver. Spot Bitcoin ETFs have reached an impressive $27.9B in assets, securing ownership of 647,651 Bitcoins. Despite the market slump, the ETF is still a huge success.
The Grayscale Situation
Grayscale's decision to offload Bitcoin holdings has raised questions and eyebrows across the crypto community. This move comes as a response to several factors that have put Grayscale in a challenging position.
One of the primary reasons for Grayscale's BTC sales is the burden of high fees coupled with investor withdrawals. Grayscale's flagship product, the Grayscale Bitcoin Trust (GBTC), imposed a 1.5% annual fee, considerably higher than other ETFs available in the market.
This substantial fee difference prompted many investors to seek alternatives.
Furthermore, numerous investors initially acquired GBTC at a significant discount, up to 40%, which has since narrowed to zero. This narrowing of the discount prompted many investors to reconsider their positions and opt for more cost-effective options.
In the absence of a Bitcoin ETF, Grayscale was instrumental in becoming a significant BTC holder alongside the mysterious Satoshi Nakamoto. However, this position has been challenging to maintain, especially with the rise of low-fee ETFs in the market.
The consequence of these factors is a wave of investors leaving GBTC, requesting redemptions of their shares. To fulfill these redemption demands, Grayscale is compelled to sell BTC holdings.
This process could span weeks and may potentially result in fluctuations in the Bitcoin market.
As Grayscale navigates this challenging period, some investors are considering moving their funds to low-fee ETFs once the situation stabilizes.
Largest BTC holders. Grayscale currently holds around 617K of BTC. Source
TrueUSD (TUSD) experienced significant volatility and struggled to maintain its $1 peg. TUSD's value fell to as low as $0.984 and has not yet regained its peg.
TUSD circulating supply falls following struggles with depegging. Source: DefiLlama.
Bitcoin is currently in a precarious position as it hovers around the support of a three-month-old trendline.
The Relative Strength Index has already shown signs of deviation from this established trendline, indicating a potential shift in market sentiment.
Moreover, there is a looming possibility of a government shutdown in the United States, which, in some scenarios, could act as a catalyst for a market downturn.
However, it's worth noting that this outcome appears unlikely, given the presence of a stopgap bill. These factors combined create an air of uncertainty in the BTC market, with traders closely monitoring the situation for potential price movements.
Blue Chip and Majors Overview
BTC, ETH, and SOL Ranging
This past week has been pretty bearish for the market, with BTC, ETH, and SOL all suffering losses. BTC, ETH, and SOL dropped by 9%, 3.5%, and 2.5% this past seven days. Bitcoin is currently sitting on top of crucial support at $41K. Meanwhile, ETH is sitting around $2,500, while SOL is trending below $100. It seems like the market is moving in a range prior to a breakout. Some believe that the spot ETF approval was a “sell the news” event, while others believe that the market is gathering steam before exploding. Let’s see how the next seven days pan out.
Sei - The SEI token recently hit its all-time high just after the new year, rising to $0.87 on the back of an impressive 70% surge in seven days. However, the token’s price has dropped by 13% since then, currently trading at $0.7628.
Metis - METIS fell below the $100 mark after registering a drop of nearly 7% over the past 24 hours. While the token has been in the red over the past week, it has registered a staggering increase of 267% during the past month.
Chainlink - Most technical indicators are bullish when it comes to LINK. The token has registered an increase of 128% over the past year.
Klatyn - Klatyn has been in the news after the token’s price surged by 35% on the back of a merger proposal with Finschia, supported by Kakao and LINE.
Sui - SUI has registered remarkable gains over the past three months, with the token rising by a staggering 300%. This increase coincides with a 2200% surge in SUI’s total value locked (TVL).
Xai - The XAI token has been on an upward trajectory since the recent airdrop. The token surged by 35% following the airdrop and hit its all-time high of $1.21 on the 17th of January, 2024, just 16 hours ago!
Blur - The BLUR token has maintained its upward trajectory despite the unlocking of 50 million tokens, rallying by over 14%. The token went up by over 6% in the past 24 hours.
Chillz - The Chillz price rally on the 16th saw it become one of the biggest gainers, rising by 18% in a day. However, the token is down by over 8% over the past 24 hours.
dYdX - dYdX recently became the largest decentralized exchange by volume, surpassing Uniswap as trading volumes on dYdX v4 went past $600M. The token has registered a 13.7% increase over the past two weeks.
Astar - The ASTR token has registered an increase of 5.4% over the past week. However, its long-term gains are more impressive, with the token registering a 77% increase over the past 30 days.
Unibot - Telegram’s trading bot recently hit record use on Solana. Unibot’s UNIBOT token has seen its price rise by over 63% over the past month. However, the token is currently trading in the red, down by just over 12% in the past 24 hours.
Tezos - Tezos (XTZ) is currently trading at a price of $1.05, a decline of 3.67% in the last 24 hours and an increase of almost 2.5 % over the past week.
Orca - ORCA has registered an increase of over 15% after Bitget announced it was launching a spot P2P market that would allow traders to get early access to tokens not yet listed on major exchanges. The project features ORCA, BRC-20 token BTCS, and Depin project DIMO.
Solend - Solana’s Solend (SLND) token has seen a considerable rebound after its price dropped to $1.76 at the end of the first week of January. The token has significantly recovered since, rising by 45% over the past week. SLND is currently trading at $2.97.
Toshi - Ethereum-based DeFi project Toshi (TOSHI) has affiliations with several notable individuals. The TOSHI token has a supply limit of 100,000 with no further mints planned. The token’s price peaked in December 2023, rising to $0.0002348. However, the token’s price has since dropped, and it is currently trading at $0.0001751.
Dogwifhat - Dogwifhat (DIF) registered a staggering surge of nearly 50%, rising to $0.48 as Solana-based meme tokens make a strong comeback. However, the token has since retreated, dropping to its current level of $0.43.
Popcat - Popcat is another Solana-based meme coin that is ruling the meme coin market, along with the likes of BONK, JTO, and WIF. The token has registered a staggering increase of 548% over the past couple of weeks and is currently trading at $0.03191.
Myro - In just over a month, the MYRO token has registered a stunning increase of 650%. In fact, the token is up 33% over the past 24 hours. This increase can be attributed to several factors, such as celebrity endorsements, social media exposure, and the overall growth of the Solana ecosystem.
Polkaswap - Polkaswap is an open-source, non-custodial decentralized exchange protocol. PSWAP is currently trading at $0.0052, down by 0.8% over the past 24 hours. However, it has been extremely bullish in the long run, registering an increase of nearly 400% over the past 30 days.
Redacted - Redacted (BTRFLY) recently announced its strategic integration with Chainlink Cross-Chain Interoperability Protocol (CCIP). While the BTRFLY token is down by over 9% in the past 24 hours, it has registered an increase of 106% during the past month.
Hive Mapper - HiveMapper (HONEY) is another Solana-based token that recently defied markets, rising to a high of $0.257 even as the market retreated. Since then, the token has continued its upward trajectory and is currently trading at $0.270. This marks an increase of over 27% during the past two weeks.
Connext - Connext raised $7.5M in June 2023, valuing the company at $250M. At the time, it announced plans to launch a token. The NEXT token has been extremely bullish over the past month, registering an increase of nearly 80%.
INJ - Injective Protocol’s INJ was one of the best-performing tokens of 2023 and carried this momentum into 2024. The token hit its all-time high of $45.01 on the 9th of January. This represents a staggering 2000% increase over the past year. However, the price may face volatility as the token braces for an unlock of nearly $150M worth of INJ tokens scheduled for the 21st of January.
Celestia - Celestia reached an all-time high of $20.16 on the 15th of January. The token has been quite bullish since its launch and has risen by nearly 50% over the past 30 days.
Guest Post: On-Chain Wizard
Today we've seen very strong smart $ interest in 2 new launches: SAVM and ONDO. Smart money is still holding $1mm of SAVM currently, across 22 smart holders. Current smart $ favorites (by number of smart wallets): MUBI, RSTK, MXH, BANANA, SAVM, and OLAS
Smart Money Movements
Recently, Roko has once again garnered the keen attention of smart money, marking a resurgence in interest over the past few days.
In anticipation of a promising 10% yield come June 2024, smart money has been diligently accumulating PT-eETH, strategizing for future gains.
An intriguing observation unfolds as smart money demonstrates notable accumulation in plsARB, prompting speculation about an imminent peg.
The maneuvers of smart money extend to USDR as well, strategically playing the RFV game plan through calculated accumulation.
Merchant Moe maintains its enduring popularity among smart farmers on the Mantle platform, offering a reliable avenue for yield generation.
Cleopatra emerges as yet another preferred protocol on Mantle, capturing the allegiance of discerning smart yield farmers.
Seamless Protocol celebrates increased adoption from the discerning realm of smart money, further solidifying its position among other DeFi protocols on BASE.
The rise of KelpDAO continues unabated, with smart money recognizing its potential and contributing to its growing traction.
Vertex, a standout protocol on Arbitrum, secures its position as one of the most favored choices among the Arbitrum smart money.
Notably, Velocimeter on the Mantle network has become a focal point, drawing substantial attention and interest from the smart farmers.
Which section gave you the most value?