Market update
It’s fair to say things aren’t going exactly to plan with the Bitcoin ETFs, with massive outflows from Grayscale sucking much of the fun out of the launch. Bitcoin finishes the week down 6.7% to trade around A$60,430 (US$39.74K), while Ethereum lost 8% and is trading around A$3,529 (US$2,317). Almost everything else was down: Solana (-11%), XRP (-8%) and Cardano (-9%), however, Dogecoin only lost 1% on hopium that the new ‘Xpayments’ account on X might see DOGE added as a payment method. A retracement in the lead-up to the halving is normal according to Rektcapital, who points out that at the same stage in the cycle in 2016 Bitcoin had lost 16%, and in 2020 it was 63%. In traditional markets, the S&P 500 has hit a new all-time high, although there are concerns that interest rate cuts won’t come as quickly as hoped. The Crypto Fear and Greed Index is at 55, or Greed.
It’s been a historic week, with the launch of multiple Bitcoin ETFs in the US marking a “potential paradigm shift in the global perception and use of digital assets,” according to Morgan Stanley. However, the expected billions have failed to flow in yet, with the SEC’s bungled approval process, investors fleeing Grayscale’s GBTC and delayed and incomplete TradFi reporting all playing a role. The Bitcoin price climbed to around A$73,000 (US$48.7K) on the 11th and then fell to under A$63K (US$41.9K) on the weekend, with Google searches for “why is Bitcoin dropping” increasing 1,100%. Bitcoin finished the week down 9.1% to trade at A$63,921 (US$42.7K), while Ethereum gained 8% to trade at A$3,771 (US$2,515). Solana fell 2%, XRP and Dogecoin were both flat, and Cardano lost 2%. The Crypto Fear and Greed Index has retreated to 52 or Neutral for the first time since October.
Bitcoin volatility increased this week ahead of the January 10 deadline in the US for a decision on the Bitcoin ETFs. The price fell below A$63K ($42K) on a report that the ETF would be denied and then surged again today on renewed confidence to top A$70K (US$47K). Alex Thorn, head of research for Galaxy, says that after ETF approvals, such sharp price action could become a thing of the past: “Volatility will likely dampen, along with inter-crypto cyclicality given AUM stickiness.” The price surge saw Bitcoin’s market cap once again overtake Facebook‘s. At the time of writing, Bitcoin was up 5% on the same time last week to trade at A$69,763 (US$47,100). Ethereum was flat this week and is trading around A$3,480 (US$2,328). Solana fell 11%, XRP lost 9%, Cardano was down 14%, and Dogecoin retreated 12%. The Crypto Fear and Greed Index is at 76 (+5) or Greed.
Welcome to 2024, which is widely expected to see falling interest rates, rising stock prices and Bitcoin ETF approvals that change crypto forever. Then again, all of last year’s predictions about a looming recession and a stock market crash turned out to be wrong, so who knows what will really happen? The Nasdaq gained 43% in 2023 thanks to the AI boom, and the S&P 500 was up 24%. Like crypto, most of the significant gains happened from October onward, which also saw the ASX 200 flip from underwater to finish with a 7.8% gain. Bitcoin started 2023 at A$24,350 (US$16,530) and finished at A$62,335 (US$42,734), which equates to a 155% return (or 157% in US dollars due to currency fluctuations). But it was soundly beaten by more than a dozen crypto-related stocks, including Marathon (up 591%), Coinbase (418%), Riot (359%) and MicroStrategy (336%). Bitcoin finished the week up 3% to trade around A$65,945 (US$43,508), while Ethereum gained 2.2% to trade around A$3,430 (US$2,369). After huge recent gains, Solana fell 9% this week, XRP lost 2.2%, Cardano was flat, and Dogecoin lost 3.3%. The Crypto Fear and Greed Index is at 71 or Greed.
We’re just one month before the final deadline for Ark Invest’s Bitcoin ETF application. It’s the expected trigger for approval of up to a dozen spot Bitcoin ETFs, a mere 125 months after the Winklevoss twins submitted the first application. To celebrate, the Bitcoin price reversed an entire week’s worth of gains by falling 6.5% in 20 minutes yesterday. But sentiment is so high the reversal was seen by many as bullish — the expected correction after two months of climbing prices. “Corrections shake out ‘weak hands’ and leverage, allowing for a stronger foundation for eventual moves higher,” tweeted analyst Will Clemente. Bitcoin finishes the week down 1% (at the time of writing) to trade around A$63,770 (US$41,517), while Ethereum was flat at A$3,425 (US$2,228). XRP was also flat, but Cardano surged 37%, Avalanche leapt 76.5%, and Dogecoin was up 5.9%. The Crypto Fear and Greed Index is at 67 or Greed.