Research Summary
The report analyzes the performance of Bitcoin and other cryptocurrencies in the context of the recent launch of spot Bitcoin ETFs in the US. It also discusses the potential impact of upcoming macroeconomic events, including the Federal Reserve meeting and the expiration of the Bank Term Funding Program. The report further provides an overview of the crypto and traditional markets, as well as insights from Coinbase Exchange.
Key Takeaways
Bitcoin Performance Amid ETF Launch
- Sluggish Performance: Despite the launch of spot Bitcoin ETFs in the US and $824M in net inflows since January 11, Bitcoin’s performance has been sluggish. This could be due to the rebalancing of allocations from less efficient Bitcoin holding vehicles to more efficient ones like ETFs.
- ETF Outflows: Between January 22 and 24, there were around $371M in net ETF outflows. It’s unclear what part of this includes reported FTX sales of their remaining 22.3M shares outstanding in Grayscale Bitcoin Trust (GBTC).
Market Dynamics and Liquidity
- Market Liquidity: The unwinding of Bitcoin spot inventory and CME futures, which were stocked up ahead of the ETF launch, may have impacted market liquidity and disrupted CTA signals.
- Open Interest in CME Bitcoin Futures: Open interest for CME Bitcoin futures seems to be stabilizing near 22,400 contracts ($4.5B), suggesting many of those positions have been unwound, which may relieve some short-term Bitcoin pressure.
Upcoming Macro Events
- Federal Reserve Meeting: The Federal Reserve meeting on January 30-31 is a key macro event to watch. The board’s policy stance, particularly regarding potential cuts in March and the tapering of the quantitative tightening program, will be crucial.
- Expiration of the Bank Term Funding Program: The Bank Term Funding Program (BTFP) will expire on March 11, and officials have signaled that it will not be extended. This could heighten Bitcoin’s narrative as a safe haven asset amid potential instability in existing systems.
Crypto and Traditional Market Overview
- Bitcoin Price: Bitcoin prices have triggered some key liquidation levels on the way down. As of January 18, Bitcoin was priced at $39,826 with a market cap of $781B.
- ETH Performance: ETH started to underperform once again this week, with the ETH/BTC cross trading down from its local high of 0.06 to 0.055.
Actionable Insights
- Monitor Bitcoin Performance: Keep a close eye on Bitcoin’s performance amid the recent launch of spot Bitcoin ETFs in the US and the rebalancing of allocations from less efficient Bitcoin holding vehicles to more efficient ones.
- Assess Market Liquidity: Evaluate the impact of the unwinding of Bitcoin spot inventory and CME futures on market liquidity and CTA signals.
- Stay Informed on Macro Events: Stay updated on upcoming macro events, including the Federal Reserve meeting and the expiration of the Bank Term Funding Program, and their potential impact on the crypto market.
- Track Crypto Market Trends: Monitor the performance of Bitcoin, ETH, and other cryptocurrencies, and track market trends to understand the overall health of the crypto market.
