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Wen Optimism Back?


The News From Planet Ruby—Friday, January 26, 2024

  • Signal: 125k ETF inflows
  • Noise: 107k GBTC outflows

Price Discovery Awaits For TradFi

The S&P 500 decisively broke through its last ATH and is now exploring clear blue sky, potentially targeting 5,000. The Dow Jones is in the same position, eyeing 40,000, as is the NASDAQ. The Chinese stock markets, on the other hand, have had a rough week, and they're down over 50% from their 2018 peak.

China’s Hang Seng Down Over 50% From Peak
The chart for the Hang Seng could reasonably be mistaken for that of bitcoin.

Lenders are also having second thoughts about interest rates. Santander has increased some mortgage rates, after weeks of falls from the major banks.

It's early days, but a renewed period of dollar weakness may be on the cards. The DXY has been pushing higher, but hasn't successfully reclaimed 104. We're now waiting for continuation back lower than 103, or else another attempt at making a higher low.

Paint It Red

At some point, that optimism in the TradFi markets will spill over to crypto, but for now, there's a correction to wait out.

This was the week in which the crypto crash intensified, with bitcoin plummeting below $40,000: A key support level and a psychologically-important round number. Grayscale selling, partly driven by FTX dumping its shares, meant that the ten ETFs actually experienced net outflows on several days. Overall, Grayscale has lost over 106,000 BTC. On Wednesday, GBTC sent an incredible 19,200 BTC to Coinbase, worth $770 million, to settle Tuesday outflows. Ouch.

BTC ETF flows (@CC15Capital)
Figures for Thursday are not yet available.

Since launch, of course, total net flows are still firmly positive, with the other nine more than offsetting the bleeding from Grayscale (at least for now). By the end of this week, BlackRock's IBIT will have accumulated more than $2 billion in bitcoin alone.

What Is Grayscale Playing At?
Grayscale knows that even if their AUM is cut in half, 1.5% on ten billion dollars is a whole lot more money than 0.25% on $20 billion.

So far, BTC has put in a low at $38,500, which is 21.5% down from the $49,000 top on ETF launch day: A relatively mild correction by bitcoin's usual standards.

Bitcoin Dominance sunk to 51%, but then recovered as BTC reclaimed $40k: Possibly a sign that the worst is over. The total crypto market cap briefly fell below $1.5 trillion.

Grayscale: Everyone's Favorite Villain

The crypto community needed someone to blame for bitcoin's 20% crash, and they found it in Grayscale.

Grayscale mugging meme
Grayscale might be villains, but they're not behind the crash.

GBTC has experienced billions of dollars in outflows. This has been more than offset but buying from the other nine, though in the last few days, there have been net outflows as Grayscale's sales overwhelm the market. Still, bitcoin has managed to retain the $40k level, which is impressive under the circumstances.

Overall, 125,000 BTC have been bought by the new ETFs (yesterday's figures have not been fully reported yet). Net flows stand at 19,000 BTC. The "newborn nine", to borrow Eric Balchunas's phrase, have a market cap of 25% of GBTC, and that's after just the first two weeks.

As Balchunas points out, if we need a villain to blame for the dumping, it's not the ETFs themselves.

In other news, MtGox may finally be about to start payouts to creditors, almost exactly 10 years after the exchange halted withdrawals. Tesla's filings showed that the company sold no bitcoins in Q4  2023. And Craig Wright has been found to have faked key documents in the COPA trial.

Finally, while Microstrategy's purchases have been put into perspective by the ETFs' acquisitions, it's still coming up to that time.

What's New In The SKALEVERSE?

As the SKALE network adds new partners and dApps, its devs aren't taking a breather either. SKALE has the fastest-growing blockchain Github for January!

That's all for this week!

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