Last week was an extremely volatile week for the market. See the Crypto market weekly report 50th below.
WEEK in REVIEW AROUND THE WORLD
- The recent CEO of Binance, Richard Teng, asserts that the exchange’s rapid expansion caused noncompliance, which led to a $4.3 billion settlement; in the meantime, a US judge has ordered former CEO CZ to remain in the US until his February sentencing.
- The FCA granted Crypto.com an Electronic Money Institution license.
Coinbase introduces a new transfer feature through connections inside its own network. - Société Générale is the first bank to introduce a stablecoin backed by the euro.
- Two crypto AML rules are removed from the national defense bill by the US government.
- A deal is reached by the EU Council and Parliament for the world’s first official AI regulations.
- The biggest bank in Brazil, Itaú, introduces bitcoin trading.
- The Swiss city of Lugano is now taking USDT and Bitcoin as payment for municipal taxes.
- Kilt blockchain-based KYX is a new logistics service introduced by Deloitte.
- With the intention of growing and creating a network that links several custodians, Zodia Custody integrates with Metaco’s network.
- Stablecoin market capitalization has increased since May 2022, with USDT reaching an all-time high of $89 billion.
- While consumer inflation expectations rise to their highest point since 2011, US job openings fall to a two-and-a-half-year low as the market cools.
- The previous quarter saw a decline in Australia’s economic growth to 0.2%.
- The Bank of Canada maintains its policy rates, concerned about inflation nonetheless.
Market Overview – Crypto market weekly report 50th
1.1 Bitcoin Overview
How about that week? With great vigor, the BTCUSD broke through the previous week’s hold at 40,000, testing a support level at 43,000. With leverage increasing, the next level of resistance was at 48,000. As the move gained momentum and Instagram influencers started chanting “end of crypto winter,” it was apparent that there was some excess factor involved. We saw part of that excess flush out as of this writing, with a spike to the downside that removed stops and erased some of the leverage.
Some hopes for a rate cut were dashed by Friday’s strong US employment data. In the US, employment has increased by 199k, and the unemployment rate has decreased from 3.9% to 3.7%. Both the participation rate and earnings exceeded expectations. On Super Thursday of next week, a number of significant central banks will hold their last meeting to discuss monetary policy for the year.
The FOMC is predicted to maintain rates on hold (98.4% probability), but the BOJ’s possible decision to stop enacting negative rates could be the major mover for USDJPY. This week’s crazy squeeze on USDJPY was probably the BOJ’s attempt to avoid shocking investors during the December liquidity lull. Although the macro environment does not always favor riskier assets, the markets currently appear to hold a different opinion.
1.3 Bitcoin Onchain
- Large whale groups are accumulating strongly, with the accumulation trend score reaching its highest point in the past year.
- Despite the significant price increase, stable coin netflow indicates that not much money is being deposited into the exchange. Additionally, the stable coin mint/burn index shows that a considerable amount of stable coins have been burned in the last 3 months. Currently, this is not a positive sign for sustainable growth.
- Currently, mainly short-term trader groups are buying BTC from the price range of 25-26K, and those who bought BTC since November 2022 are taking profits. In addition, a small portion of BTC purchased in 2018 and 2019 is also being sold.
- Bitcoin Profitable Days – Small red dots have appeared as a sign that spring is approaching.
- The futures market on CME is getting active again, with a fairly balanced ratio of long/short orders.
- Reports from large funds: $326 million flowed into the market last week, the largest increase since July 2022, with $296 million flowing into $BTC.
- A table showing the schedule of FED meetings and interest rate predictions from now until December 18, 2024.
1.4 Unlock Vesting
- GLMR unlocked $4.3M
- APT unlocks $209M
- CYBER unlocks $8.7M
- FLOW unlocks $2.2M
- APE unlocked $28M
MACROECONOMIC CALENDAR FOR THE WEEK OF DECEMBER 2
- December 12, 2023
1:30 p.m: CPI index
(Previous 3 .2% – Forecast 3.1%)
- December 13, 2023
8:30 p.m: PPI index (Previous -0.5% – Forecast 0.1%)
6:00 p.m : Interest Rate Decision (Previous 5.5% – Forecast 5.5%)
7:00 pm : FOMC statement
- December 14, 2023
1:30 p.m : Request unemployment benefits (Previously 220k – Forecast 223%)
Comparing global equity with cryptocurrency (digital assets)
This study provides a thorough analysis contrasting the performance of shares on international capital markets, as represented by the Dow Jones Global W1Dow index, with digital assets, as denoted by the NWST1100 index. The comparison covers a range of time periods and provides information about past, present, and possible future trends.
Let’s examine the main findings and ramifications:
Comparing historical performance: 24 months ago With a record high quotient between the two indexes, digital assets, represented by the NWST1100 index, were outperforming shares on capital markets, represented by the W1Dow index. At this point, the performance trajectory of digital assets was noticeably better than that of shares on international capital markets.
One year ago: When we go back a year, digital assets were clearly superior to shares, outperforming them by a margin of 54.5%. The performance data highlights the higher returns that digital assets provide compared to shares over the given time frame.
Late Change in Performance:
A review of this year shows that the performance of digital assets has significantly improved. They have outperformed shares by a substantial 63.5% on international capital markets. The performance data highlights the higher returns that digital assets provide compared to shares over the given time frame.
Mean Reversion Opportunity:
A blue dashed curve (5.59) represents the average quotient price over the previous 143 working days. This average, which is currently at 7.47, is below its long-run mean. A deviation like this highlights a possible chance to use the mean reversion theory when investing in digital assets.
According to the mean reversion theory, asset prices have a tendency to return to their historical average returns over time. It’s possible that digital assets are currently undervalued in relation to historical trends because the average quotient price is currently lower than the long-run mean.
Comparison of Returns:
During the previous 12 months, the chart also shows the returns obtained with the stock by purchasing one point of the corresponding index every day.
Comparing the NWST1100 Crypto Index to the same period last year, there was an appreciation of 73.38%. An investor’s stock would have increased by 30.1% in relation to the index’s current price if they had made daily index investments.
The DJW, which represents global capital market shares, increased by 10.43% in the last year in contrast to the crypto index. On the other hand, a daily purchase strategy would have produced a 5.5% gain.
With the confirmed bullish trend between digital assets and global capital market shares, expectations are high right now. As we move through this bullish phase, digital assets that were bought over the previous year at an average price of 2663 points appear ready to provide amplified returns in comparison to shares.
Protocols and Altcoin
Certain alternatives, like AVAX, HNT, SOL, and ADA, are obviously outperforming the overall market, while BNB and XRP, two majors, are lagging behind. The relative value divide between projects is widening, which is a highly encouraging indicator of a market that is maturing. Relative value strategies should attract interest from hedge fund names given the leverage flush and significant fund inflows.
The native token launch of LayerZero, a blockchain interoperability protocol, is scheduled for the first half of 2024. It is anticipated that the token will be distributed via an airdrop, giving early users access to governance rights.
Bitcoin Ordinals has raised transaction fees so much that they are now higher than Ethereum’s daily revenue, demonstrating the expansion of the BRC-20 sector driven by $ORDI. The increased fees highlight the need for scalable Bitcoin solutions and draw attention to the impending Nakamoto Upgrade for $STX, which aims to shorten block times.
The $1 billion in different Grayscale trust funds that FTX decided to sell could temporarily increase the $GBTC discount. The recent surge in the cryptocurrency market, this sale, and the possible relaunch of FTX in 2024 all brighten the picture for $FTT and increase expectations for paying creditors with claims currently trading at 70c on the dollar.
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