“The price of Bitcoin, whether it’s 200k or 400k, won’t be just due to speculation; it will be because people see the value in Bitcoin’s utility.” – Jason Fang, the managing partner at Sora Ventures
Biweekly News Roundup
1. Bitcoin and Ethereum Developments
The average transaction fees for using the Bitcoin blockchain have soared nearly 1,000% since August as ordinals are back in vogue. BTC topped $36,000 for the first time since May 2022 and hit an 18-month high of $37,960, up 39% in the past month and 125% year-to-date. ETH got above $2,100 and hit the highest level since the April Ethereum upgrade known as Shanghai. The Ethereum blockchain settled $250 billion of transactions last week, the highest since mid-March. The number of blockchain addresses holding at least $1,000 worth of BTC surged to a record high of 8,306,118 on Nov. 15, topping the previous peak registered two years ago.
2. Market Dynamics and Investment Trends
Both BTC and ETH surpassed round-number milestones they haven’t seen recently on Nov. 9, prompting more than $400M of open trades to get liquidated, the most since the August crash. Crypto funds have experienced a six-week inflow of $767M, marking the most substantial influx since the 2021 bull market; similarly, Ether funds have seen their highest inflows since August 2022. Due to the weak momentum of ETFs, the sharp decline in crypto prices on Nov. 14 triggered the largest daily leveraged long liquidation since August. Inspired by Elon Musk’s Grok AI, GROK token hits $160M in capitalization in the latest frenzy, extending a week-long rally to 13,000%.
3. Corporate and Production Insights
Marathon Digital Holdings saw its revenue surge 670% year-on-year in the third quarter of 2023, amid a nearly five-fold increase in Bitcoin production. In 2013, bitcoin rallied 1200% in approximately 100 days; in 2017, it rallied 1900% in just under a year; in late 2020, it rallied 400% in about 140 days. Per Blockware, the above number could grow exponentially as BTC continues to monetize, a long-term bullish development for the cryptocurrency. Jason Fang, the managing partner at Sora Ventures said, “The price of Bitcoin, whether it’s 200k or 400k, won’t be just due to speculation; it will be because people see the value in Bitcoin’s utility.” Given the diversity of assets and use cases enabled by crypto, it is unsurprising that more and more investors are beginning to recognize the benefits of an allocation to crypto. Whether they are attracted by the asset class relatively low correlations with traditional asset classes, to its idiosyncratic drivers of risk and return, a growing pool of evidence suggests that crypto can act as a powerful portfolio diversification tool. In fact, given the diversity of asset types within the asset class itself, we see that correlations can be relatively low even among crypto assets.
4. ETFs and Institutional Interests
The road to a US spot bitcoin ETF has been long and arduous; the consensus wisdom currently is that spot bitcoin ETFs are likely to be approved as early as January 2024, with a raft of big names, including BlackRock and Fidelity, readying offerings. Also, BlackRock ether ETF prospectus gets filed with the SEC. Cryptocurrencies are the second most popular type of investment asset among the adult French population, according to a survey by the OECD in France on Nov. 13. Cathie Wood favors Bitcoin as a hedge against both inflation and deflation, and she would choose it “hands down” over gold as the asset to hold for the next ten years.
5. Upcoming Initiatives and Regulations
Circle is contemplating an IPO in early 2024 with robust support from leading financial institutions. Key backers such as BlackRock, Goldman Sachs, Fidelity Management, Marshall Wace, and General Catalyst Partners are among the prominent names bolstering Circle’s position. Notably, BlackRock and Fidelity Management were principal investors in Circle’s significant $400M funding round. HSBC plans to launch a tokenized securities custody service for institutions in 2024. Banks and financial institutions are bringing a range of real-world assets (RWA) onto blockchains, both private ledgers and public networks like Ethereum. As many as 48 countries committed to a tax-transparency standard starting in 2027 that will provide for the automatic exchange of information between jurisdictions to combat tax evasion on crypto exchanges. Yet, several countries with a sizeable interest in crypto, such as Turkey, India, China, Russia and all African nations, are not signatories to the statement.
6. Legal and Exchange Developments
SBF has been found guilty on all seven fraud counts, potentially facing up to a century in prison. Ex-FTX execs team up to build a new Dubai-based crypto exchange “Backpack Exchange” 12 months after FTX collapsed. FTT has surged by 90% following comments from SEC chairman Gary Gensler, “Do it within the law.” SOL rallies 20% in a day, erasing the woes of the past 18 months and increasing the odds that FTX customers will recoup all their lost money. Of course, that would require SOL to at the very least hold this level for possibly years because much of FTX’s SOL holdings are locked up until 2027 or later.
7. Space and Cryptocurrency Crossover
Astrobotic plans to send a physical Dogecoin to the moon in the DHL Moonbox via ULA’s Vulcan Centaur Rocket on Dec. 23, 2023.