Research Summary
The report discusses the recent rally in Bitcoin (BTC), the role of institutional investors in the crypto market, the potential impact of spot Bitcoin ETFs, and the controversy around the usage of Bitcoin ordinals. It also highlights the performance of other cryptocurrencies like Ether (ETH) and the influence of traditional financial markets on the crypto space.
Key Takeaways
Bitcoin’s Recent Rally and Institutional Interest
- Bitcoin’s Rally: The report notes a significant rally in Bitcoin, with around $256 million in short Bitcoin liquidations since the start of December. This rally is not mirrored in traditional markets like the S&P 500 or the Nasdaq, suggesting unique factors at play in the crypto market.
- Institutional Interest: The report highlights a surge in institutional interest in cryptocurrencies, with the CME futures basis rising to 29% annualized on Bitcoin and 27% on Ether. This suggests institutions without access to Bitcoin or Ether spot may be paying a premium for crypto exposure.
Spot Bitcoin ETFs and the Role of BlackRock
- Spot Bitcoin ETFs: The report discusses the importance of spot Bitcoin ETFs in the digital assets narrative. It mentions the updated S-1 filings by BlackRock and Bitwise, which signal a high level of scrutiny by the SEC and remove some potential grounds for denial.
- BlackRock’s Role: BlackRock’s filing addresses concerns from custody arrangements to creating an Intraday Indicative Value (IIV) calculation for increased shareholder transparency. The filing also details a $100,000 seed capital investment and a process for its conversion into “Seed Creation Baskets” during its launch.
Onchain Net Long Positions and Leverage
- Onchain Net Long Positions: The report notes an increase in onchain net long positions, driven by new and returning flows to the crypto space rather than leverage. This suggests a potential for more levered upside due to the capacity for further capital deployment into 2024, contingent on financing conditions.
Controversy Around Bitcoin Ordinals
- Bitcoin Ordinals: The report mentions a controversy around the usage of Bitcoin ordinals, following comments from a Bitcoin Core developer. However, it notes that this conversation is still in the discussion phase and has not reached consensus within the community.
Actionable Insights
- Monitor Institutional Interest: Given the increasing institutional interest in cryptocurrencies, it may be beneficial to keep a close eye on institutional investment trends and their impact on the crypto market.
- Understand the Impact of Spot Bitcoin ETFs: As spot Bitcoin ETFs become a significant part of the digital assets narrative, understanding their potential impact on the market could provide valuable insights.
- Assess the Role of Leverage: With the increase in onchain net long positions driven by new and returning flows rather than leverage, assessing the role of leverage in the crypto market could be insightful.
- Stay Updated on Bitcoin Ordinals: Given the ongoing controversy around Bitcoin ordinals, staying updated on developments in this area could provide important insights into Bitcoin’s technical and social governance.
