Overview
The price of Bitcoin is attempting to find stability following a significant decline, suggesting that the excessive excitement may have subsided. Last week marked the long-awaited debut of Bitcoin’s exchange-traded funds (ETFs). Speculators had high hopes for the event to increase Bitcoin’s price, but unfortunately, their expectations were not met. The Crypto Fear & Greed Index, which previously showed “extreme greed” with a score of 76, has now dropped to a neutral level of 52. This is an encouraging indication as it suggests that a significant portion of the excess may have been removed from the system. Now that the “sell the news” event has passed, traders will likely shift their attention to the macroeconomic data. The United States Federal Reserve has captured the attention of many, as there are expectations of rate cuts beginning as early as March.
Fundamental Updates
Let’s delve into the significant developments shaping the crypto market landscape:
- Bitcoin ETF spot volume exceeds $10 billion: The total trading volume for the 11 spot bitcoin ETFs surpassed $11.1 billion on Wednesday, marking a significant milestone in their fourth day of trading. Grayscale, BlackRock, and Fidelity maintain a significant stronghold, accounting for over 90% of the overall trading volume. Despite a decrease in daily volume, it dropped to $1.5 billion from Tuesday’s total volume of $1.8 billion for the new products. The trading volume for the first two days of this week is significantly lower compared to last Friday’s $3 billion and the $4.6 billion on the first day.
- BlackRock and Fidelity’s spot bitcoin ETFs attracted the most new capital among the 11 crypto-based instruments traded on various exchanges on Tuesday. Both funds have attracted over $400 million in inflows. In the medium to long term, the emergence of ETFs is highly beneficial for the crypto industry as a whole. It significantly increases BTC’s visibility among many investors and opens up opportunities for potential inclusion in 401(k) portfolios. Nevertheless, it will require some time for the inflows to accumulate, and the recent excitement may have attracted short-term traders looking for quick profits
- ProShares files 5 indirect Bitcoin ETFs: ProShares, a leading exchange-traded fund (ETF) issuer in the United States, is preparing to launch numerous Bitcoin ETFs with indirect BTC exposure during the early days of spot Bitcoin ETF trading on local stock exchanges. According to a filing with the US Securities and Exchange Commission (SEC) on January 16, ProShares intends to introduce leveraged and inverse Bitcoin ETFs. The ETFs target daily investment returns based on Bitcoin price rises and losses, as measured by the Bloomberg Galaxy Bitcoin Index (BGCI). ProShares’ prospectuses specifically suggest the introduction of five new Bitcoin ETFs: Plus Bitcoin ETF, Ultra Bitcoin ETF, UltraShort Bitcoin ETF, Short Bitcoin ETF, and ShortPlus Bitcoin ETF. ProShares Plus Bitcoin ETF and ProShares Ultra Bitcoin ETF seek daily investment outcomes equivalent to a 1.5x and 2x rise over BGCI’s daily performance, respectively.
- The other three funds, ProShares UltraShort Bitcoin ETF, ProShares Short Bitcoin ETF, and ProShares ShortPlus Bitcoin ETF, target daily investment returns based on the opposite of the BGCI’s daily performance at -2x, -1x, and -1.5x, respectively. ProShares clarified in the filing that the funds do not explicitly short Bitcoin, but rather attempt to profit from price declines.
Key Data Points
- Total market capitalization: The total market capitalization of the crypto market is currently around $1.751 trillion. This is a net $147 Billion change from last week.
- Bitcoin dominance: Bitcoin dominance, which tracks the percentage of the total market capitalization that is held by Bitcoin, is currently at around 47.5%. This is 2.66% down from last week.
- ETH dominance: ETH dominance, which tracks the percentage of the total market capitalization that is held by Ethereum, is currently at around 17.3%. This is 2.36% up from last week.
Bitcoin Price Analysis:
The bears are attempting to make a comeback as Bitcoin breached and closed below the support-turned-resistance line at $44,919 . At or around the $45,000 price level, any recovery effort is likely to encounter selling pressure. An indication of a sentiment shift from purchasing on dips to selling on rallies would be a price decline from the overhead resistance. A price of $40,000 or less is conceivable for the BTC/USDT pair.
If buyers surpass the obstacle at $44,919, it would indicate that the corrective phase might have concluded, which contradicts this assumption. Proceeding from there, they will attempt to attain the psychologically significant threshold of $47,000
BTC Technical Indicator:
Macro Updates:
- Chinese Premier Li Qiang’s statement at the World Economic Forum indicates that China will not rely on massive stimulus to revive growth despite deflation concerns.
- Despite achieving its 5% growth target in 2023 without massive stimulus, China recorded its worst deflationary streak since the Asian Financial Crisis.
- Li emphasized the need to avoid short-term growth while accumulating long-term risk and suggested structural reforms.
- Chinese-listed stocks in the US fell following Li’s comments, with the Hang Seng China Enterprises Index having its worst day since October 2022.
- Global growth is expected to weaken, but the US economy could pick up if the Fed takes a dovish turn.
- The Fed’s turn may favor the US, while the ECB and Bank of England’s hawkish stances obscure the European outlook.
- While lower interest rates may boost markets, stubborn inflation or a recession remain possible. The timing of the Fed’s turn and its impact on certain markets remain uncertain.
Bitcoin returns were -9.5% for this week. The Alpha Blue Chip Focused Strategy returns were -12.57% during the same period (12 January -18 January). The Top Cap Digital Assets Strategy and Arbitrage Opportunities & Balanced Strategy returns were 0.57% and 2.9%, respectively.
