2/2 One Billion Dollars of Spare Cash Every Day
Considering that the assets in US money market funds have doubled since COVID from $3 trillion to $6.1 trillion, there is another $320bn in interest rate payments per year. This is $370bn annually in interest rate payments – or $1 billion daily. Money that can easily find its way into risk assets (stocks and crypto) and the principal (the $6.1 billion in money market funds) could also be used to increase asset prices.
Most of this interest rate expense is carried by the US government as they pay the rate on the debt as the largest borrower. While they dig a deeper hole, the private sector appears to win and can drive higher asset prices with $1 billion of spare cash every day.
Considering that the assets in US money market funds have doubled since COVID from $3 trillion to $6.1 trillion, there is another $320bn in interest rate payments per year. This is $370bn annually in interest rate payments – or $1 billion daily. Money that can easily find its way into risk assets (stocks and crypto) and the principal (the $6.1 billion in money market funds) could also be used to increase asset prices.
Most of this interest rate expense is carried by the US government as they pay the rate on the debt as the largest borrower. While they dig a deeper hole, the private sector appears to win and can drive higher asset prices with $1 billion of spare cash every day.
From diverse user adoption to on-chain T-Bill products and the challenges of stablecoin development, the crypto space is evolving. At a recent discussion hosted by Polytrade Finance, Matrixport’s Ben Stani delved into how the crypto community can leverage on-chain T-Bill to foster a more inclusive and efficient market.
Listen to the full conversation here: https://bit.ly/3v5JSFf
Listen to the full conversation here: https://bit.ly/3v5JSFf
Cryptocurrency markets have shown a distinct pattern, thriving when liquidity expectations rise, as illustrated by Bitcoin’s rebound in 2023. Even amid potential SEC ETF rejection, the convergence of the Bitcoin halving, election dynamics, and Trump’s potential return adds intrigue to 2024.
Read more from our “Matrix on Target” executive summary here: https://bit.ly/46RWwFe
Read more from our “Matrix on Target” executive summary here: https://bit.ly/46RWwFe
🪐 This week in crypto 8 - 14 Dec
Breaking down key headlines on what you need to know in the world of digital assets
1. Senator Warren expands coalition, deems crypto a global menace.
2. Logan Paul’s CryptoZoo fails to deliver $1.5M investor compensation.
3. SEC faces pressure on spot bitcoin ETF approval, 13 firms wait.
4. Ex-President Trump drops NFTs, “Mugshot edition,” amid legal scrutiny.
5. OKX hack hits abandoned DEX, causing $370k loss, compensation assured.
6. New FASB rules (2025) alter crypto valuation, impacting holdings.
7. Fair value recording mandated for crypto in 2025, FASB declares.
8. JP Morgan favors Ethereum over Bitcoin in 2024, despite halving.
9. Ledger’s connector compromises DApp front ends; breach swiftly resolved.
Breaking down key headlines on what you need to know in the world of digital assets
1. Senator Warren expands coalition, deems crypto a global menace.
2. Logan Paul’s CryptoZoo fails to deliver $1.5M investor compensation.
3. SEC faces pressure on spot bitcoin ETF approval, 13 firms wait.
4. Ex-President Trump drops NFTs, “Mugshot edition,” amid legal scrutiny.
5. OKX hack hits abandoned DEX, causing $370k loss, compensation assured.
6. New FASB rules (2025) alter crypto valuation, impacting holdings.
7. Fair value recording mandated for crypto in 2025, FASB declares.
8. JP Morgan favors Ethereum over Bitcoin in 2024, despite halving.
9. Ledger’s connector compromises DApp front ends; breach swiftly resolved.
Which narrative will dominate crypto headlines in 2024?
Anonymous Poll
43%
Real world assets (RWA)
17%
GameFi
35%
AI
5%
BRC20
1/2 Bitcoin holders have become $500bn wealthier in 2023
US inflation was and is the critical variable, having declined from 8% to 3.1%, and, based on our predictive analytics, it is expected to decline to 2% in 2024. The fourth Bitcoin bull market peaked in November 2021 when the Fed started to shift hawkishly, and expectations rose that interest rate hikes and the end of quantitative easing would follow soon.
While the Fed has guided the market in cutting interest rates by 75 basis points in 2024, the gap between Fed Funds rates and CPI is significantly wider, notably 220 basis points, and will remain, at least, constant, even if the Fed cuts, as inflation is expected to fall, according to our model.
The bottom line is that macro should support higher Bitcoin prices in 2024. Bitcoin miners tend to restrict the supply of new Bitcoins around the halving cycles, with Bitcoin making new all-time highs historically six months after the halvings – which is projected for April next year.
Exhibit 1: Bitcoin returns between Christmas and New Year (December 24-31)
Bitcoin’s funding rate has remained elevated, indicating that traders expect higher prices, while implied volatility has remained elevated even when volatility for SP500 has declined to multi-year lows. We expect the funding rate to decline over the Christmas holidays, but volatility might remain elevated as traders hedge their books into a potential Bitcoin Spot ETF approval.
Bitcoin has remained in a sideways consolidation range since December 8. But with the expectation that Bitcoin Spot ETFs will be approved by early January 2024, we expect the lower support level of the range (40,000) to hold. At the same time, we doubt Bitcoin could break higher during Christmas. Historically, Bitcoin rallied +3% from December 24 until December 31, but returns have been skewed by strong returns in Bitcoin’s earlier years, while Bitcoin prices were lower in four out of the last five years.
This means that we might have seen the highs for the year, and prices could continue to consolidate into year-end. Bitcoin’s market cap rose from $320bn to $827bn, roughly a $500bn wealth increase for Bitcoin holders.
On October 31, 2017, when the CME Group announced the launch of Bitcoin Futures for Q4, the CBOE Bitcoin futures debuted on December 10 and the CME on December 17. From the announcement until the launch, Bitcoin rallied +212%. Something similar could occur when Bitcoin Spot ETFs are approved.
The most likely approval period is January 8, 9 and 10. Considering the frequent meetings between the SEC and especially between BlackRock, the expectations that a Bitcoin Spot ETF will be approved in January have increased.
Coincidently, since December 8, stablecoin minting at Tether has slowed – a sign that institutional flows from fiat into crypto are potentially waiting for new demand in early January.
US inflation was and is the critical variable, having declined from 8% to 3.1%, and, based on our predictive analytics, it is expected to decline to 2% in 2024. The fourth Bitcoin bull market peaked in November 2021 when the Fed started to shift hawkishly, and expectations rose that interest rate hikes and the end of quantitative easing would follow soon.
While the Fed has guided the market in cutting interest rates by 75 basis points in 2024, the gap between Fed Funds rates and CPI is significantly wider, notably 220 basis points, and will remain, at least, constant, even if the Fed cuts, as inflation is expected to fall, according to our model.
The bottom line is that macro should support higher Bitcoin prices in 2024. Bitcoin miners tend to restrict the supply of new Bitcoins around the halving cycles, with Bitcoin making new all-time highs historically six months after the halvings – which is projected for April next year.
Exhibit 1: Bitcoin returns between Christmas and New Year (December 24-31)
Bitcoin’s funding rate has remained elevated, indicating that traders expect higher prices, while implied volatility has remained elevated even when volatility for SP500 has declined to multi-year lows. We expect the funding rate to decline over the Christmas holidays, but volatility might remain elevated as traders hedge their books into a potential Bitcoin Spot ETF approval.
Bitcoin has remained in a sideways consolidation range since December 8. But with the expectation that Bitcoin Spot ETFs will be approved by early January 2024, we expect the lower support level of the range (40,000) to hold. At the same time, we doubt Bitcoin could break higher during Christmas. Historically, Bitcoin rallied +3% from December 24 until December 31, but returns have been skewed by strong returns in Bitcoin’s earlier years, while Bitcoin prices were lower in four out of the last five years.
This means that we might have seen the highs for the year, and prices could continue to consolidate into year-end. Bitcoin’s market cap rose from $320bn to $827bn, roughly a $500bn wealth increase for Bitcoin holders.
On October 31, 2017, when the CME Group announced the launch of Bitcoin Futures for Q4, the CBOE Bitcoin futures debuted on December 10 and the CME on December 17. From the announcement until the launch, Bitcoin rallied +212%. Something similar could occur when Bitcoin Spot ETFs are approved.
The most likely approval period is January 8, 9 and 10. Considering the frequent meetings between the SEC and especially between BlackRock, the expectations that a Bitcoin Spot ETF will be approved in January have increased.
Coincidently, since December 8, stablecoin minting at Tether has slowed – a sign that institutional flows from fiat into crypto are potentially waiting for new demand in early January.
2/2 Bitcoin holders have become $500bn wealthier in 2023
TVL started at $38bn in early 2023 and has increased to $51bn, its highest level just before the FTX implosion. Lido’s TVL rose significantly as staking became the critical value proposition for Ethereum. Lido’s TVL increased from $6bn to $20bn. But overall, DeFi has disappointed in 2023.
The trade of the year must be Grayscale Bitcoin Trust (GBTC) as the discount narrowed from -47% to just -8%, and while Bitcoin prices have increased by +154%, GBTC has increased by +326%. In our 2023 outlook, we mentioned GBTC as a potential top trade.
TVL started at $38bn in early 2023 and has increased to $51bn, its highest level just before the FTX implosion. Lido’s TVL rose significantly as staking became the critical value proposition for Ethereum. Lido’s TVL increased from $6bn to $20bn. But overall, DeFi has disappointed in 2023.
The trade of the year must be Grayscale Bitcoin Trust (GBTC) as the discount narrowed from -47% to just -8%, and while Bitcoin prices have increased by +154%, GBTC has increased by +326%. In our 2023 outlook, we mentioned GBTC as a potential top trade.
Matrixport’s Cynthia Wu shared with The Edge about Bitcoin’s upcoming halving in 2024. Their recent article discusses institutional interest, evolving regulations, and the potential introduction of BitcoinETFs underpinning cautious confidence about the outlook for digital assets
Learn more here: https://bit.ly/4aIwAiH
Learn more here: https://bit.ly/4aIwAiH
Matrixport is thrilled to collaborate with OKX, establishing an ND broker relationship to seamlessly integrate trading experiences, offering users real-time access to OKX’s robust trading functionalities and liquidity pool. This partnership enhances liquidity, broadens market access, and streamlines user journeys, reinforcing our commitment to delivering an unparalleled crypto trading experience.
Learn more about the partnership: https://bit.ly/3NC4ifA
Learn more about the partnership: https://bit.ly/3NC4ifA
Matrixport Blog: Crypto News and Announcements
Matrixport Partners with OKX | Matrixport Blog
Matrixport partners with OKX, expanding liquidity and market access, providing seamless trading experiences for users across platforms.
This week in crypto 15 - 21 Dec
Breaking down key headlines on what you need to know in the world of digital assets
1. JP Morgan predicts Ethereum will outperform Bitcoin in 2024.
2. SafeMoon files for Chapter 7 Bankruptcy.
3. Coinbase sues SEC over denial of clear crypto regulation.
4. ARK 21Shares Spot Bitcoin ETF listed on DTCC as $ARKB.
5. Ledger acknowledges $600k in assets stolen, plans Clear Signing for DApps by June 2024.
6. U.S. government seizes 69,370 BTC from Silk Road, finalizing the verdict against founder Ross Ulbricht.
7. 3AC’s liquidators estimate 45.74% creditor recovery, planning an initial distribution in Q1 2024, valuing assets at $1.16 billion.
8. “Wallet Drainers” malware steals $58 million from 63,000 victims in nine months, with 10,072 associated websites.
9. Argentina approves contracts settled in Bitcoin and other cryptocurrencies, recognizing their value.
10. El Salvador approves citizenship for foreigners donating Bitcoin to government projects under new immigration law.
Breaking down key headlines on what you need to know in the world of digital assets
1. JP Morgan predicts Ethereum will outperform Bitcoin in 2024.
2. SafeMoon files for Chapter 7 Bankruptcy.
3. Coinbase sues SEC over denial of clear crypto regulation.
4. ARK 21Shares Spot Bitcoin ETF listed on DTCC as $ARKB.
5. Ledger acknowledges $600k in assets stolen, plans Clear Signing for DApps by June 2024.
6. U.S. government seizes 69,370 BTC from Silk Road, finalizing the verdict against founder Ross Ulbricht.
7. 3AC’s liquidators estimate 45.74% creditor recovery, planning an initial distribution in Q1 2024, valuing assets at $1.16 billion.
8. “Wallet Drainers” malware steals $58 million from 63,000 victims in nine months, with 10,072 associated websites.
9. Argentina approves contracts settled in Bitcoin and other cryptocurrencies, recognizing their value.
10. El Salvador approves citizenship for foreigners donating Bitcoin to government projects under new immigration law.
How do you anticipate the approval of a Bitcoin ETF affecting Bitcoin’s price in the short term? 📈/📉
Anonymous Poll
39%
Significant Increase
27%
Moderate Increase
15%
No Impact
19%
Decrease
1/2 Bitcoin Spot ETF approval imminent, BTC to jump to $50,000
An ‘Explosive Bitcoin Surge to $50,000 Looms Large in January’ – Matrix on Target wrote on December 21, 2023. After the typical mid-to-end December consolidation, Bitcoin is poised to break out on a robust beginning-of-the-year buying flow.
A year ago, most market participants were bearish and therefore under-positioned. However, things turned out differently, with stocks and cryptocurrencies rising significantly. Institutional investors cannot afford to miss out on any potential rally again and, therefore, have to buy immediately when the markets open for trading in 2024. We expect an immediate rally that once again catches investors off-guard.
A potential Bitcoin Spot ETF approval could be announced today or tomorrow, ahead of most traders' expectations for approval on January 8, 9, or 10. If this occurs, we expect Bitcoin prices to rise significantly. Unlikely, this will be a ‘sell-the-news’ event as approval would legitimize Bitcoin as an asset class for institutional portfolios that could be used as collateral to buy other assets. Re-read our report from July 2023, ‘Unlocking the Superpower of Bitcoin in Asset Allocation’.
Instead, the risk might be on the upside as $5-10 billion dollars in fiat money might not find enough Bitcoin on exchanges to gain exposure for Bitcoin ETFs. After the 2022 bankruptcies and the FTX crypto exchange implosions, many Bitcoin holders have moved their BTC off exchanges, and familiarity with cold-storage options has increased. The result is that 70% of the outstanding Bitcoins have remained ‘unmoved’ during the last twelve months.
In October 2023, we estimated that a US-listed Bitcoin Spot ETF could see $24-50 billion dollars of inflows. We also estimated the potential Bitcoin price increase based on its relationship with Tether’s market cap change. This has kept us bullish throughout the end of the year, especially after Fed Chair Powell appeared to have turned dovish in October 2023.
Bitcoin mining companies tend to limit the supply around the halving cycles - expected for April 2024; this could be another reason for a supply shortage. Occasionally, this is a price development we have seen in the commodity market when a market participant is forced to buy. Still, the sellers refuse to sell at those price levels. The result is a massive spike in prices. The Bitcoin price move this year could surprise everybody.
An ‘Explosive Bitcoin Surge to $50,000 Looms Large in January’ – Matrix on Target wrote on December 21, 2023. After the typical mid-to-end December consolidation, Bitcoin is poised to break out on a robust beginning-of-the-year buying flow.
A year ago, most market participants were bearish and therefore under-positioned. However, things turned out differently, with stocks and cryptocurrencies rising significantly. Institutional investors cannot afford to miss out on any potential rally again and, therefore, have to buy immediately when the markets open for trading in 2024. We expect an immediate rally that once again catches investors off-guard.
A potential Bitcoin Spot ETF approval could be announced today or tomorrow, ahead of most traders' expectations for approval on January 8, 9, or 10. If this occurs, we expect Bitcoin prices to rise significantly. Unlikely, this will be a ‘sell-the-news’ event as approval would legitimize Bitcoin as an asset class for institutional portfolios that could be used as collateral to buy other assets. Re-read our report from July 2023, ‘Unlocking the Superpower of Bitcoin in Asset Allocation’.
Instead, the risk might be on the upside as $5-10 billion dollars in fiat money might not find enough Bitcoin on exchanges to gain exposure for Bitcoin ETFs. After the 2022 bankruptcies and the FTX crypto exchange implosions, many Bitcoin holders have moved their BTC off exchanges, and familiarity with cold-storage options has increased. The result is that 70% of the outstanding Bitcoins have remained ‘unmoved’ during the last twelve months.
In October 2023, we estimated that a US-listed Bitcoin Spot ETF could see $24-50 billion dollars of inflows. We also estimated the potential Bitcoin price increase based on its relationship with Tether’s market cap change. This has kept us bullish throughout the end of the year, especially after Fed Chair Powell appeared to have turned dovish in October 2023.
Bitcoin mining companies tend to limit the supply around the halving cycles - expected for April 2024; this could be another reason for a supply shortage. Occasionally, this is a price development we have seen in the commodity market when a market participant is forced to buy. Still, the sellers refuse to sell at those price levels. The result is a massive spike in prices. The Bitcoin price move this year could surprise everybody.
Matrixport
Institutions | Matrixport
Matrixport serves 500+ institutions through the global coverage and provide crypto loans, hedging solutions, structured products, and various yield products.
2/2 Bitcoin Spot ETF approval imminent, BTC to jump to $50,000
As we have pointed out, Bitcoin tends to rally strongly during the halving cycles, which coincide with the US election cycle. The average return for Bitcoin during the 2020, 2016, and 2012 years was +192%. This could lift Bitcoin into our $125,000 target, which we set in July 2023 based on our ‘one-year-new-high’ indicator. Similarly, US stocks tend to perform strongly during US election years, with the only two down years being 2008 (-37%) and 2000 (-9.1%) since 1960 – or 60 years.
Surprisingly, the Bitcoin funding rate has remained elevated during the holiday period, indicating that crypto traders have stayed very bullish and expect an imminent Bitcoin ETF approval. As the Bitcoin dominance indicator has declined to 50.3%, we are near calling for the altcoin season, where the crypto market moves into the beta rocket upside.
Exhibit 1: Bitcoin is breaking out as the funding rate jumps above 66% (annualized)
Although we are not seeing minting activities at Tether increasing, which would signal fiat into crypto inflows, the fact that prices are rallying might be a sign that there are no sellers in the market and prices are squeezing higher. This morning, the funding rate is reaching a new high at +66%. This means longs pay shorts 66% per year to stay long.
This is how the futures market is squeezing the spot market and will likely lift Bitcoin above our $50,000 target level for January 2024, which appears reasonably achievable. We could trade above $50,000 by the end of this week.
As we have pointed out, Bitcoin tends to rally strongly during the halving cycles, which coincide with the US election cycle. The average return for Bitcoin during the 2020, 2016, and 2012 years was +192%. This could lift Bitcoin into our $125,000 target, which we set in July 2023 based on our ‘one-year-new-high’ indicator. Similarly, US stocks tend to perform strongly during US election years, with the only two down years being 2008 (-37%) and 2000 (-9.1%) since 1960 – or 60 years.
Surprisingly, the Bitcoin funding rate has remained elevated during the holiday period, indicating that crypto traders have stayed very bullish and expect an imminent Bitcoin ETF approval. As the Bitcoin dominance indicator has declined to 50.3%, we are near calling for the altcoin season, where the crypto market moves into the beta rocket upside.
Exhibit 1: Bitcoin is breaking out as the funding rate jumps above 66% (annualized)
Although we are not seeing minting activities at Tether increasing, which would signal fiat into crypto inflows, the fact that prices are rallying might be a sign that there are no sellers in the market and prices are squeezing higher. This morning, the funding rate is reaching a new high at +66%. This means longs pay shorts 66% per year to stay long.
This is how the futures market is squeezing the spot market and will likely lift Bitcoin above our $50,000 target level for January 2024, which appears reasonably achievable. We could trade above $50,000 by the end of this week.
Matrixport
Institutions | Matrixport
Matrixport serves 500+ institutions through the global coverage and provide crypto loans, hedging solutions, structured products, and various yield products.
Matrix on Target projects a January rejection for Bitcoin Spot ETFs by the SEC, cautioning traders to hedge long exposure. With SEC Chair Gensler’s skepticism towards crypto, a potential -20% Bitcoin price drop is anticipated upon ETF denial, though a positive end-of-2024 outlook remains.
Read more from our “Matrix on Target” executive summary here: https://bit.ly/3NQFzUV
Read more from our “Matrix on Target” executive summary here: https://bit.ly/3NQFzUV
This week in crypto 29 Dec 2023 - 5 Jan 2024
Breaking down key headlines on what you need to know in the world of digital assets
1. India Bans 9 Crypto Exchanges, Including Binance & Kraken.
2. Binance Founder CZ Denied Request to Leave US Before Sentencing.
3. BlackRock Names JPMorgan as Authorized Participant for Spot Bitcoin ETF.
4. Vitalik Buterin Unveils Updated Roadmap for Ethereum.
5. Valkyrie, VanEck, Grayscale, Fidelity File SEC Registration for Spot Bitcoin ETFs.
6. Taiwan’s ACE Exchange Investigated by Police for Shitcoin Promotion.
7. Bloomberg Analyst Hints at Possible Launch of ETH Spot ETF This Year.
Breaking down key headlines on what you need to know in the world of digital assets
1. India Bans 9 Crypto Exchanges, Including Binance & Kraken.
2. Binance Founder CZ Denied Request to Leave US Before Sentencing.
3. BlackRock Names JPMorgan as Authorized Participant for Spot Bitcoin ETF.
4. Vitalik Buterin Unveils Updated Roadmap for Ethereum.
5. Valkyrie, VanEck, Grayscale, Fidelity File SEC Registration for Spot Bitcoin ETFs.
6. Taiwan’s ACE Exchange Investigated by Police for Shitcoin Promotion.
7. Bloomberg Analyst Hints at Possible Launch of ETH Spot ETF This Year.
Matrixport’s Markus Thielen joins BNNBloomberg to discuss his insights on SEC’s Bitcoin Spot ETF approvals this January: https://bit.ly/3HcFO96
Considering the potential scenarios (approval, denial, or postponement), how are you positioned in the market?
Considering the potential scenarios (approval, denial, or postponement), how are you positioned in the market?
Anonymous Poll
63%
Long (Bullish)
17%
Short (Bearish)
12%
Hedged (Protecting Against Downsides)
8%
Not Invested