The News From Planet Ruby—Friday, January 19, 2024
- Signal: Diamond hands
- Noise: Dimon
Hello Inflation My Old Friend
"Inflation never falls in a straight line." This was the explanation given by British Chancellor Jeremy Hunt when UK inflation figures showed a surprise rise to 4% this week. (Awkwardly, that was largely due to tax increases on tobacco and alcohol.) The same picture of stubborn inflation was repeated in Europe. ECB President Christine Lagarde suggested that a rate cut might have to wait until the summer.
European and UK stonks fell sharply on the news. In the US, the S&P 500 and NASDAQ similarly suffered a correction, partly due to strong US retail sales data that also cast doubt on the Federal Reserve's likelihood of early rate cuts. The DXY rose past 103, reflecting a less-bad situation in the US than in Europe and the UK. In the land of the blind, the one-eyed man is king.
Bitcoin Holds $40k For Now
Crypto had a tough time last week, as traders sold the ETF news and sent BTC down 15%. The correction stopped above $40k, and we're now waiting to see whether bitcoin will roll over again, or chop around the low $40,000s until it's time to move up. At the time of writing, BTC is trading around $41,000.
During the average bull market, bitcoin puts in multiple corrections of 20-40%, typically lasting between one and three months. This is the first major correction since the mid-July pullback from $32,000, which took BTC back under $25,000 by mid-September. If BTC doesn't break $40,000, this will be a very light correction by previous standards. $37,000 and $32,000 will be areas of interest should that immediate support fail.
Bitcoin dominance has dropped to 51% as alts fared slightly better than BTC.
It's All About The Flows
ETF interest continues to drive the narrative in the crypto world, even if it doesn't currently appear to be making a difference to price action. There are a number of reasons for this, including traders with a short-term horizon selling the news, ETF providers using OTC buys to avoid incurring slippage, and of course GBTC outflows. Nonetheless, the amount of BTC being hoovered up by the ETFs is remarkable, as are the trading volumes.
GBTC outflows constitute a large percentage of total volume, though not remotely enough to offset the inflows to other ETFs. BlackRock is unsurprisingly in the lead. Figures are incomplete due to the delays entailed in TradFi's reporting processes, but we now have a rough picture for week 1, thanks to X/Twitter users who have compiled the data for trading volumes and flows. @CC15Capital provides the following summary table:
The data indicates that a huge amount of BTC is being traded. Ultimately, the only figure that matters is the total net flows (that is, the amount of BTC being taken off the market). As things stand, the ETFs have pulled in over 30,000 new BTC, including GBTC outflows, and these are unlikely to be released any time soon. If the trend continues, it can only be a matter of time before this starts to impact spot prices.
In other news, President Trump has made it a campaign promise that he will never allow a CBDC on his watch, though it's not clear how well he understands the concept. Coinbase has been back in court with the SEC, and the judge appears sympathetic with at least some of their arguments that the case should be thrown out. Lastly, Jamie Dimon's face has been saying things about Bitcoin again.
What's New In The SKALEVERSE?
The SKALE network hit another major milestone this week, with $3 billion saved in transaction fees, thanks to its zero-gas approach!
That's all for this week!