Bitget Hot Takes (April 08 - April 14, 2024) - Market Updates

Bitget Hot Takes is the exclusive weekly newsletter series by Bitget Academy, which sums up BGB performance, what's new at Bitget, and the latest market movements.

The latest Bitget Hot Takes can be found here: All About Bitget | Market Updates

Central Themes

• U.S. inflation data: hotter than expected, potentially delaying rate cuts further into the year.

• Less than 550 blocks until the fourth Bitcoin Halving.

• SOL and XRP both lost 20% of their value last week.

Week 15: Inflation Data Before The Halving

In March, U.S. consumer prices rose by 3.5% year-on-year, surpassing expectations largely due to increases in shelter and energy costs, defying predictions of a slowdown in inflation. The Consumer Price Index (CPI) rose by 0.4% monthly, pushing the annual rate up by 0.3 percentage points compared to February. Similarly, the core CPI accelerated to a 3.8% annual increase. As a result, stocks declined while Treasury yields surged, with market expectations shifting the anticipated initial rate cut by the FED from June to September.

Elevated inflation and delayed rate cuts are likely to heighten market volatility and enhance the appeal of safer asset yields. This could make volatile assets like stocks and cryptocurrencies, including Bitcoin, less attractive. Cryptocurrencies, often considered as inflation hedges, might face short-term price pressures due to a general aversion to risk in financial markets. The long-term effects will depend on broader economic conditions and evolving investor attitudes towards risk.

The sharp decline in Bitcoin prices over the weekend was primarily driven by heightened geopolitical tensions in the Middle East, which heightened fears of a broader regional conflict and prompted investors to shift capital towards safer, traditional assets. Bitcoin plummeted from over US$70,000 to near US$60,000, illustrating a rapid investor move away from digital assets in favour of more secure and historically stable assets such as gold and oil. Meanwhile, SOL and XRP both lost 20% of their value; SOL suffered the most, with prices plunging below US$150. This reaction was accentuated by the continuous operation of cryptocurrency markets, which, unlike traditional stock markets, remain open over weekends and allow for immediate responses to global events. The geopolitical unrest mentioned above erased approximately US$500 billion from the crypto market, underscoring the high volatility and sensitivity of digital assets to global tensions compared to traditional financial assets like stocks, bonds, and commodities.

The cumulative trading volume for U.S. spot Bitcoin ETFs has surpassed US$211 billion, less than three months after their approval by the SEC, featuring prominent funds from BlackRock, Fidelity, and Bitwise. The monthly number went up by 1.5 times in February to US$42.2 billion and 2.6 times in March to US$111.1 billion.

BlackRock's IBIT now dominates the spot Bitcoin ETF market, capturing about 50% market share and outperforming Grayscale’s GBTC, whose share declined from 50.5% to 23.5%. IBIT has seen substantial inflows, accumulating US$14.75 billion in three months (as of April 12, 2024) and 266,000 Bitcoin or nearing US$20 billion in assets under management (AUM), ranking it within the top 100 of all global ETFs.

On a side note, the SEC has postponed its decision on allowing options trading for spot Bitcoin ETFs, like those from Bitwise and Grayscale, until May 29, thereby extending the original comment period due to end April 14. This regulatory delay follows the January approval of several spot Bitcoin ETFs, which helped propel a 60% increase in Bitcoin’s price by significantly growing market assets to US$60 billion. The SEC previously approved options on Bitcoin futures ETFs since 2021. The decision delay might lead to market uncertainty and temporarily impact Bitcoin's price negatively, yet the eventual approval should stabilise and mature the Bitcoin market. Moreover, with the upcoming Bitcoin Halving, which cuts the block reward and new supply, the approval of new financial products could bolster Bitcoin's price further if demand sustains, by reducing supply and increasing market sophistication.

Setting The Tone: Monday Performance

Ether and other altcoins remained under pressure following a volatile weekend, with Ether briefly touching US$2,800 earlier today (April 16). Solana also retraced its steps, falling to around US$140 from a high of $155. Bitcoin's fluctuations were notable, retreating to US$64,000-something after nearly reaching US$67,000 yesterday.

Bitcoin’s imminent halving (expected on April 19) may trigger a short-term sell-off, as traders anticipate the event's typical impact on prices and mining profitability. This halving, the fourth in Bitcoin’s history, will decrease mining rewards from 6.25 to 3.125 BTC, intensifying the race among miners to secure the first block after the event, potentially worth millions due to the inclusion of a rare "epic sat" made tradable by the Ordinals protocol. Miners are scaling operations, maybe via the reactivation of older equipment to increase their chances of winning this lucrative block. The competition for this "epic sat" could even spawn a futures market, allowing miners to sell these rare assets in advance, highlighting the unique financial strategies emerging within the cryptocurrency mining sector.

Below are our guides to help you ride the upcoming Bitcoin Halving event:

What to Expect and Prepare for Bitcoin Halving 2024 as An Investor

Understanding the Impact of Bitcoin Halving and its Effect on the Cryptocurrency Market

Countdown to the Next Bitcoin Halving: What to Expect in 2024?

Bitcoin's Next Target: $100,000

Bitcoin Market Trends: Analyzing the Past to Predict the Future

Bitcoin Halving: Will We Land on the Moon?

Easy Steps to Purchase Bitcoin Before the Halving Rush

The Bored Apes Yacht Club (BAYC) NFT collection has seen its value plummet by over 90%, from a high of 120 ETH to just over 10 ETH. This decline is part of a wider fall in demand for Ethereum-based NFTs, compounded by the rise of new collections on Bitcoin and Solana platforms. Originally popularised in 2021 with celebrity endorsements, the collection's perks include access to exclusive events and digital status symbols. However, shifting investor focus and a less liquid market have drastically reduced prices. Despite this, Bored Apes remains the top Ethereum NFT collection by market capitalisation.

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