Newsletter Volume 65
THE MARKET THIS WEEK
In the United States, major banks and financial institutions are lobbying the Securities and Exchange Commission (SEC) to redefine crypto assets, potentially allowing them to play a more significant role in the crypto market, particularly as custodians for recently approved spot Bitcoin exchange-traded funds (ETFs). A coalition of trade groups, including the Bank Policy Institute, American Bankers Association, Financial Services Forum, and Securities Industry and Financial Markets Association, addressed a letter to SEC Chair Gary Gensler on February 14, emphasizing the absence of American banks as asset custodians in the approved crypto products.
According to recent research by Coin Metrics, the possibility of nation-states destroying the Bitcoin and Ethereum networks through 51% attacks is deemed unfeasible due to the exorbitant costs associated with such endeavors. 51% attacks involve a malicious actor controlling over 51% of the mining hash rate in a proof-of-work system or 51% of staked crypto in a proof-of-stake network. Despite theoretical risks of altering the blockchain to undermine trust, the impracticality of executing such attacks due to prohibitive costs offers reassurance about the networks’ resilience.
Federal Reserve Governor Christopher Waller countered criticisms of digital currencies potentially destabilizing the U.S. dollar by highlighting stablecoins’ reliance on the dollar, suggesting that as decentralized finance (DeFi) gains traction, it could strengthen the fiat currency. Stablecoins, pegged to fiat currencies like the U.S. dollar, serve as a crucial component of the crypto ecosystem and contribute to its stability.
The introduction of spot Bitcoin ETFs as a modern alternative to gold investment has attracted significant net inflows since their launch on January 11. However, this shift has coincided with substantial outflows from gold ETFs, such as the SPDR Gold Shares (GLD) and the iShares Gold Trust (IAU). Investors withdrew approximately $2.6 billion from GLD and $507 million from IAU between January 11 and February 14, as reported by ETF.com. This trend reflects a potential reallocation of assets from traditional gold investments to new crypto-based options.
KEY METRICS
Total Crypto Market Cap : $2.04 T
Bitcoin Market Cap : $1.01 T
Ethereum Market Cap : $338.54 B
ETH/BTC Ratio : 0.05
Ethereum Gas Price : 20 gwei
DeFi TVL : $102.24 B
Fear and Greed Index : 72 (Greed)
Federal Reserve Balance Sheet : $7.63 T
Weekly Spotlight on IC15
The global cryptocurrency market continued its upward trend for the second consecutive day, buoyed by increased Bitcoin accumulation by large investors known as whales. The IC15 Index surged by 1,751 points to reach 59,143 by 4 p.m. Major contributors to this rally included Bitcoin, Solana, Litecoin, and BNB, which saw gains in the range of 2–5%. However, Chainlink and Toncoin experienced slight declines of 2.75% and 0.41%, respectively.
Regulatory developments also made headlines, with the Hong Kong government announcing a public consultation to regulate over-the-counter (OTC) crypto trading, focusing on anti-money laundering and counter-terrorism financing measures. Additionally, Kraken, a leading crypto exchange, obtained its fourth license in the European market, receiving approval from the Dutch National Bank (DNB) to offer its products and services to Dutch consumers.
Despite the positive sentiment, the global cryptocurrency market started the week on a slightly lower note, with the IC15 Index down by 432 points to 60,503 by 4 p.m. Solana, Avalanche, Polygon, and Cardano were among the major losers, experiencing declines in the range of 3–5%. Tron and Toncoin were among the few gainers, with marginal increases of 0.41% and 0.10%, respectively.
Bullish sentiment prevailed in the cryptocurrency market, with the IC15 Index witnessing a significant gain of 1,554 points to reach 64,993 by 4 p.m. Polkadot, Tron, Ethereum, and Cardano were the major contributors to this rally, recording gains in the range of 2–4%. Meanwhile, Litecoin and Toncoin experienced losses in the 1–4% range. Bitcoin surpassed the $51,000 mark and reached a market capitalization of $1 trillion, reflecting the ongoing bullish momentum. Additionally, efforts to foster innovation and strengthen cybersecurity in the cryptocurrency space were observed, with initiatives such as seeking budget support from the Singaporean government and regulatory measures in the Isle of Man to safeguard investors and comply with global standards.
BATTLE OF THE BULL AND BEAR
The Bitcoin market is currently experiencing bullish momentum, with traders anticipating a price surge to $55,000 in the near future. Titan of Crypto, a prominent trader, confirmed this sentiment, projecting a BTC price target of $55,400 in his analysis on X (formerly Twitter) on February 14. Despite facing resistance around $52,000, Bitcoin bulls remain optimistic about breaking through all-time highs, fueled by what Titan of Crypto describes as “very bullish momentum.”
However, some traders and analysts are expressing caution amidst the bullish sentiment. Believable Crypto, another trader and analyst, warned of the possibility of a bear market, even if Bitcoin surpasses existing all-time highs and reaches $100,000. He highlighted the cyclic nature of market dynamics, suggesting that prolonged periods of upward momentum are often followed by significant corrections. Similarly, TXMC Trades, a trader and YouTuber, advised against placing unwavering trust in ETF inflows as a sustainable driver of Bitcoin’s price growth.
Market observers are also monitoring the dynamics between Bitcoin and traditional assets like gold. While Bitcoin ETFs have seen substantial inflows totaling $3.89 billion since their launch on January 11, leading gold ETFs have experienced outflows of $2.39 billion so far in 2024. This trend suggests a shift in investor sentiment away from traditional safe-haven assets like gold towards cryptocurrencies like Bitcoin.
Eric Balchunas, a Bloomberg intelligence analyst, highlighted the contrast between the performance of gold ETFs and Bitcoin ETFs, noting that while Bitcoin ETFs are attracting inflows, gold ETFs are witnessing significant outflows. This divergence is further underscored by the decline in gold prices in 2024, contrasting with Bitcoin’s price increase of 23.5% over the same period.
The ongoing debate between gold and Bitcoin as store-of-value assets continues, with each asset attracting its own set of investors and proponents. While gold has historically been favored during times of economic and geopolitical uncertainty, Bitcoin’s appeal as a digital alternative with potential for significant returns has garnered increasing attention from investors seeking diversification and growth opportunities in their portfolios.
Weekly Spotlight
In the United States, major banks and financial institutions are advocating for a redefinition of crypto assets with the Securities and Exchange Commission (SEC), aiming to potentially expand their role in the crypto market, particularly as custodians for recently approved spot Bitcoin exchange-traded funds (ETFs). A coalition of trade groups, including prominent organizations like the Bank Policy Institute and the American Bankers Association, addressed a letter to SEC Chair Gary Gensler on February 14, stressing the absence of American banks as asset custodians in approved crypto products.
Recent research by Coin Metrics suggests that the possibility of nation-states executing 51% attacks on the Bitcoin and Ethereum networks is impractical due to the exorbitant costs involved. Such attacks involve a malicious actor controlling over 51% of the mining hash rate or staked crypto in a network, potentially altering the blockchain. However, the prohibitive costs associated with such endeavors provide reassurance about the resilience of these networks.
Federal Reserve Governor Christopher Waller countered concerns about digital currencies destabilizing the U.S. dollar by highlighting stablecoins’ reliance on the dollar, suggesting that as decentralized finance (DeFi) gains traction, it could strengthen the fiat currency. Stablecoins, pegged to fiat currencies like the U.S. dollar, play a crucial role in the crypto ecosystem and contribute to its stability.
The introduction of spot Bitcoin ETFs as a modern alternative to gold investment has led to significant net inflows since their launch on January 11. However, this shift coincides with substantial outflows from gold ETFs, such as the SPDR Gold Shares (GLD) and the iShares Gold Trust (IAU). Investors withdrew approximately $2.6 billion from GLD and $507 million from IAU between January 11 and February 14, reflecting a potential reallocation of assets from traditional gold investments to new crypto-based options.
Despite bullish sentiment in the Bitcoin market, some traders and analysts are expressing caution about potential future trends. While traders anticipate a surge to $55,000 in the near future, there are warnings of a possible bear market, even if Bitcoin surpasses existing all-time highs and reaches $100,000. This caution is based on the cyclic nature of market dynamics, where prolonged periods of upward momentum are often followed by significant corrections.
In the global cryptocurrency market, regulatory developments and bullish sentiment continue to influence trading patterns. While initiatives such as the public consultation on OTC crypto trading in Hong Kong and Kraken’s licensing approval in the European market contribute to regulatory clarity, slight fluctuations in market performance are observed. However, overall, the market remains optimistic, with major cryptocurrencies experiencing gains and efforts underway to foster innovation and strengthen cybersecurity in the industry.
