Bitget Hot Takes (March 18 - March 24, 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

• Bitcoin weekly low: US$60,808; Bitcoin spot ETFs saw the first week of net outflow since launch.

• The SEC delayed several spot Ether ETF applications and is currently seeking to classify Ethereum as a security.

• Interest rates decisions: unchanged in the U.S., first positive rate after eight years in Japan, and a rate cut of 0.25% by the Swiss National Bank.

 

Week 12: 'Healthy Correction' For Bitcoin

Twitter analysts and traders such as Peter Brandt and Michaël van de Poppe referred to the recent decline of Bitcoin to US$60,808 as a 'healthy correction' as it took place before the FOMC meeting/decision on March 20 and after the Bank of Japan (BoJ) raised their short-term interest rates to 0-0.1% for the first time in eight years, ending nearly a decade of their ultra-loose monetary policy. The interest rates decisions by the BoJ, the FED and the Swiss National Bank (SNB) present a complex backdrop for the cryptocurrency markets in that the Bank of Japan's increase in rates might signal a reduction in liquidity and a potential decrease in risk appetite, potentially leading to a shift away from non-yielding assets like cryptocurrencies in Japan. However, the FED's decision to keep rates unchanged and the SNB's rate cut could maintain favourable liquidity conditions in the U.S. and Switzerland, possibly offsetting some of the negative impacts and keeping cryptocurrencies attractive as alternative investments.

 

 

Ethereum turned out to be the biggest losers in the Top 5. The SEC's intensified legal efforts to classify Ethereum as a security, especially after the blockchain's transition to a PoS model, have cast doubts on the crypto industry's hopes for an Ethereum ETF, contrasting with the recent approval of Bitcoin ETFs. This scrutiny includes subpoenas to companies regarding their dealings with the Ethereum Foundation, signaling a broader crackdown amidst the second-largest crypto's uncertain legal status. SEC Chair Gary Gensler's stance suggests that PoS-based cryptocurrencies might be considered securities, although Ethereum has not been explicitly mentioned. This regulatory ambiguity is compounded by the SEC's previous approval of ETFs tracking Ether futures, overseen by the CFTC, which views Ether as a commodity. These developments introduce significant uncertainty into the approval process for spot Ether ETFs, potentially impacting the regulatory oversight of Ether futures markets and the broader classification and treatment of Ethereum within the financial regulatory framework.

 

Data shows that Bitcoin, often seen as digital gold, must've been withdrawn from CEXs for long-term holding, signaling a belief in its long-term value despite short-term price drops. Conversely, Ethereum flowing into exchanges could indicate a readiness among investors to trade or sell as a direct result of the SEC's hawkish stance against this crypto.

 

 

W12 is the first week with a negative net flow for spot Bitcoin ETFs. Almost US$2 billion flew out of the Grayscale Bitcoin Trust, and even the mighty BlackRock Bitcoin fund hit a record of only US$950 million in inflows in one week - the third-lowest since its launch. Invesco Galaxy, Hashdex and all three biggest futures Bitcoin ETFs had negative inflows. Possible explanations for mining stocks achieving double-digit gains when Bitcoin prices went down are strategic operational efficiencies, diversification of revenue streams, and engaging actively with the broader crypto ecosystem.

 

Setting The Tone: Monday Performance

Funding rates for Ethereum were quite high at closing times on Monday at 0.0423%, while the numbers are more 'normal' for Bitcoin at 0.0125%. Both markets saw an increase in the numbers of open contracts due to Bitcoin surging to US$71K. Combined volume of all spot Bitcoin ETFs yesterday was also higher than any day of last week, meaning heightened risk appetite from both individual and institutional investors.

 

 

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