Welcome back to another crypto market update. 

In markets

After surging to almost A$59,000 (US$37.9K) this week, Bitcoin is currently taking a bit of a breather and finishes the week up 1% trade around A$56,920 (US$36.4K). Ethereum got a big boost from BlackRock’s ETF filing and finishes the week up 4% to trade around A$3,198 (US$2,044), above the psychological US$2K mark. XRP pulled back by 9%, Solana jumped another 22%, Cardano lost 5%, while Dogecoin was flat. The overall crypto market cap is at A$2.21 trillion (US$1.4T) and the Crypto Fear and Greed Index is at 72. 

From the OTC Desk

What a difference a few weeks makes. This time last month, cryptocurrencies profiled a particularly delicate economy, with rising bond yields and an increasing concern of the geopolitical risks in the middle east. While the Reserve Bank of Australia (RBA) have increased the domestic cash rate in November, from 4.10% to 4.35%, the US Federal Open Market Committee (FOMC), the Bank of Japan (BoJ), the Bank of England (BoE) and the Reserve Bank of New Zealand (RBNZ), have held their cash rates steady.

As market expectation of further, co-ordinated, monetary policy tightening dissipates, the cryptocurrency complex has traded specific to its own asset class. Cryptocurrencies have been moving agnostic to US tech equities and global risk asset sentiment. At the current juncture, market expectation is that a US spot BTC ETF will be approved imminently. Any hiccup in this process will now, likely, materially impact pricing and sentiment – although this feels to be unlikely.

For the last few weeks, we have made particular reference to the ETH/BTC cross, which has now bounced off 0.0520 (the low since April 2021) to trade at 0.0560. At the time, we referred to the price action of the cross as being driven by BTC dominance, highlighting a lack of ‘new information’ about ETH related improvements. This has now changed however, with the Blackrock ETH ETF filing announcement. This ETF filing not only caught the market by surprise, but has been directly responsible for ETH outperformance. It tends to be the hedging correlations between ETH and mid market cap tokens which causes the initial investment into Alts. From there market forces and speculative sentiment can take hold.

As we look back to the broad outline of positive cryptocurrency movements in history, we have now satisfied BTC dominance. ETH dominance now appears to be an interesting topic for the cryptocurrency community. Watch this space.

On the economics front, China has reported a YoY inflation rate of -0.2% for October, confirming a (new) pattern of deflation. Important data this week includes: the Australian Q3 wage price index on Wednesday at 11:30am AEDT; the Australian employment series for October on Thursday at 11:30am AEDT; and US inflation for October on Wednesday at 12:30am AEDT.

On the OTC desk, buy flows now account for an estimated 75% of the wholesale enquiry. And while we haven’t seen outsized interest in ETH, interest in layer 1s, DEX, oracle, and gaming related tokens have been the most commonly requested. Off ramping of USDT back to AUD and USD has slowed – particularly back to AUD, where the OTC customer base has turned to be a net buyer.

For any further information, please feel free to reach out.

In headlines

Bullish BlackRock Ether ETF news

The bullish catalyst putting a rocket under prices this week was the news BlackRock has filed an application to launch a spot Ethereum ETF called the iShares Ethereum Trust. It would be listed on the New York Stock Exchange. At least five firms are vying to launch an Ether ETF including VanEck, ARK 21Shares, Invesco, Grayscale and Hashdex, but BlackRock is a level above as the world’s largest asset with a 575 to 1 record of getting ETFs approved. Crypto lawyer Jake Chervinksy said BlackRock’s “compelling” argument for approval of the ETF “flows from Grayscale’s DC Circuit victory: the SEC can’t lawfully approve ETH futures ETFs but not a spot ETH ETF.” Ethereum’s price spiked in the hours after and gas fees went through the roof, with some users paying US$100 (A$157) for a swap and fee revenue topping US$10M (A$15.7M) for the day. On-chain activity is still low however.  Finder’s panel of 31 experts are tipping that Ethereum will hit US$5,824 (A$9,132) by 2025. 

Bearish BlackRock fake XRP ETF news

The Block, Bankless and Bloomberg ETF analyst Eric Balchunas spread fake news this morning that BlackRock had applied for a spot XRP ETF. Someone apparently faked the name of a BlackRock exec on a filing for an XRP ETF entity in Delaware, most likely to profit from XRP’s 12% pump on the news. BlackRock denied the news and XRP fell back to earth. One of the SEC’s best arguments against approving a Bitcoin ETF is the manipulation of markets, so this incident really doesn’t help the case.   

Three days left for SEC to approve all 12 Bitcoin ETFs

The SEC is currently in the midst of a brief window to approve all 12 spot Bitcoin ETFs at once, including Grayscale’s Bitcoin Trust conversion. The argument for doing so is so the SEC doesn’t act as kingmaker by giving one or two ETFs a head start. The window closes on November 17, with all 12 unlikely to be approved at once again until January. Bloomberg’s ETF analysts put the chances of approval at 90% before January 10. However “approval” simply means a rule change to allow Bitcoin ETFs, so there could be a month or two before the Corporate Finance division signs off on the S-1 filing or prospectus and an ETF actually launches. “No sign that’s done yet. Possible and even likely that there could be weeks or even months between approval & launch,” said Bloomberg’s James Seyffart.

Singapore Fintech Festival

The Singapore Fintech Festival (SFF), one of Asia’s largest FinTech festivals, is taking place this week. It’s a global platform for the FinTech community to meet.

The Independent Reserve team will be at SFF, to catch up with clients, partners, and industry leaders. If you’re at SFF and want to connect, reach out to our team to schedule a meeting.

Bitcoin ETF hype not justified: JPMorgan

JP Morgan analysts led by Nikolaos Panigirtzoglou believe the current rally on hopes of a Bitcoin ETF approval is overdone. The bank is skeptical of the idea that an ETF will attract new capital into the space and/or strike a fatal blow against the SEC’s attempts to tighten regulations. The report notes similar ETFs in Canada and Europe have gained “little interest from investors since their inception” and says regulatory tightening is inevitable regardless of the ETF “given how unregulated this industry is.” In other crypto ETF news, Ark Invest and 21Shares are launching their actively managed Bitcoin and Ethereum futures ETFs this week (which were approved back in August) and the Chicago Board Options Exchange has announced it will introduce leveraged trading on Bitcoin and Ethereum futures in January.  

Bitcoin millionaires triple

The number of Bitcoin wallets holding more than US$1 million (A$1.56M) in them has more than trebled so far in 2023. BitInfoCharts data shows there were 23,795 such wallets on Jan. 1, which surged 237% to 81,925 currently. The record high was 112,573 addresses on Nov. 9, 2021 which was also the all time high for Bitcoin. The number of wholecoiners — addresses with at least 1 BTC in them — increased 4% in the past year to just above 1 million.

Grayscale SOL trust premium is at 784%

Institutional investors are apparently very eager to get exposure to Solana, with shares in Grayscale’s Solana Trust doubling in the past week. The shares are now changing hands for a whopping 784% premium on the value of the SOL each share represents. Solana is up by more than one quarter this week. 


Stablecoins grow

Analyst Will Clemente points out that for the first time in 1.5 years, the 90-day change in stablecoin supply just flipped positive. “This means that we are finally seeing net capital inflows through stablecoins for the first time since the bear market began,” he commented. Tether has also just hit a new all time high in market cap of just under US$87 billion. 

Michael Saylor gets bullish at Oz Crypto Con

Microstrategy co-founder Michael Saylor gave a super bullish keynote presentation at the Australian Crypto Convention in Melbourne on the weekend. He said that BTC has gone from being seen as an “offshore unregulated asset” to an “institutionalised mainstream app” and forecast a surge in demand over the next year. He’s tipping that monthly demand will “double or triple or maybe go up by a factor of 10” and says the upcoming halving will boost prices even further. “What happens when one doubles, and the other one cuts in half? The price is going to adjust up,” he added. Looking ahead 25 years he says there’s no ceiling for the price. “That coin is going to continue to progress to a million dollars a coin, $2 million a coin, $5 million a coin, $10 million a coin.” A year ago MicroStrategy was down 50% on its Bitcoin holdings. Today it’s up 25%, which is a US$1 billion (A$1.57B) profit. 

Until next week, Happy Trading!