Bitget Hot Takes (May 27 - Jun 02, 2024)
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: Market Updates
Central Themes
• Cautious optimism as Bitcoin climbed back above US$70K again, but stringent regulatory oversight of cryptocurrencies contributes to market volatility and operational challenges for financial institutions and exchanges.
• Key macro data in June: Interest rate decision for the Eurozone on June 05, U.S. Non-Farm Payrolls on June 07 and U.S. CPI data and FOMC on June 12.
Week 22: Mixed Sentiment
The cryptocurrency market saw significant fluctuations in W22. The global market capitalisation stood at $2.7 trillion, reflecting a 1.4% decrease despite a sentiment of 'Greed' at 72/100 by the end of the week. Bitcoin (BTC) experienced a high of US$70,598 and a low of US$66,633, ending the week with a 2.3% decrease, while Ethereum (ETH) showed resilience with a 1.7% weekly gain and highs and lows of US$3,974 and US$3,702, respectively. Other top cryptocurrencies like BNB, SOL, and XRP showed mixed performances: BNB slightly down by 0.2%, SOL decreased by 1.4%, and XRP fell by 4.3%. The week saw notable trading activities, particularly for ETH and BNB, with 7-day volume changes of 86.1% and 89.7%, respectively.
In a significant regulatory event, President Joe Biden vetoed H.J.Res. 109, a resolution that would have overturned the SEC’s Staff Accounting Bulletin 121. This bulletin requires banks to treat customers’ crypto assets as liabilities, a stance criticised by banking groups for making crypto handling prohibitively expensive. Biden emphasised the need for these guidelines to protect investors, particularly after high-profile collapses such as FTX. The veto underscores ongoing regulatory scrutiny and reinforces the perception of a stringent regulatory environment, which likely contributes to the overall market performance. The security breach at DMM Bitcoin, where 4,502.9 BTC worth approximately $305.1 million were stolen, added another layer of uncertainty. Here are our guides on how to safeguard your assets from any potential threats:
Navigating Security: How To Choose A Trustworthy Exchange
For Your Prosperous Digital Future: Key Factors To Consider
Bitget’s Commitment to Educating Users About Crypto Risks and Best Security Practices
Bitget Wallet - Your Ultimate Gateway Into the Future
These should be key events leading to significant net outflows from BTC and ETH. Bitcoin and Ethereum experienced a reduction of 46,608 coins valued at approximately $3.18 billion, and ETH a decrease of 832,193 coins worth around $3.14 billion in the last seven days. These outflows suggest possible profit-taking or repositioning by large holders that reflects broader market caution.
Net flows in futures Bitcoin ETFs were negative at -US$16.61 million, marking the second consecutive week of outflows. In contrast, spot Bitcoin ETFs showed positive inflows of $373.02 million and indicated a preference for direct Bitcoin exposure over more volatile futures contracts. Among the spot Bitcoin ETFs, IBIT saw the highest inflows with US$310.76 million, whereas GBTC and ARKB experienced significant outflows of US$136.23 million and US$87.65 million, respectively. Other notable fund flows included BITB with US$45.59 million, FBTC with US$214.79 million, and smaller inflows into BTCW and BRRR. In comparison, futures ETFs like BITO and BITI saw outflows of US$28.61 million and US$1.22 million, respectively. The leveraged ETF BITX still had a positive inflow of US$13.22 million.
The relative stability and inflows into spot Bitcoin ETFs suggest that investors view these products as more attractive or stable compared to traditional stocks (such as NASDAQ Composite and SP 500, who both experienced declines of 1.5% and 0.7% last week) amid the current market uncertainties, highlighting the growing acceptance and reliance on cryptocurrency-based investment products as a viable alternative to traditional stock market investments - especially when spot Bitcoin ETFs seemed to be more resistant to unfavourable news than the broader tech market.
Setting The Tone: Monday Performance
The global MCap increased by 2.2% to US$2.8 trillion, with the Fear Greed Index rising slightly to 73/100, maintaining a sentiment of 'Greed'. Bitcoin traded within a range of US$70,231 to US$67,590, while Ethereum fluctuated between US$3,849 and US$3,759. Ethereum's open interest (OI) reached numbers second only to its all-time high (ATH) at the closing on Monday, indicating strong trading activity and investor interest.
In the futures markets, BTC and ETH showed funding rates of 0.0127% and 0.0118%, respectively. The long/short ratios were relatively balanced, with BTC at 50.41% long and 49.59% short, and ETH slightly favouring shorts at 49.79% long to 50.21% short. The OI change was positive for both, with BTC up by 2.2% and ETH by 2.8%, further suggesting growing interest in leveraged positions. These futures market dynamics highlight continued investor engagement and speculative activities as well as confidence in short-term price movements.
The Federal Reserve's cautious stance on interest rate cuts and the ongoing monitoring of inflation data, particularly the Personal Consumption Expenditures (PCE) price index, played a significant role in shaping market expectations on the first day of the week. With the PCE price index showing a 0.3% monthly increase and a 2.7% YoY rise, the Fed's target of 2% inflation remained elusive regardless of the cooling in consumer spending. This influenced market sentiments and investor behaviour, as evidenced by the cautious trading and varied performances of crypto stocks and ETFs.
Crypto stocks showed mixed results, with BITO decreasing by 1.1% while MSTR saw a positive return of 1.6%, but with a substantial overall volume that indicates active trading nevertheless. Spot Bitcoin ETFs showed some declines on Monday, together with the benchmark indices, ahead of the CPI data release on June 12, 2024.
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