ETC Group Crypto Market Compass
Week 11, 2024

En En De De
Subscribe
  • Cryptoassets reach new all-time highs supported by ongoing high net inflows into US Bitcoin ETFs
  • Our in-house “Cryptoasset Sentiment Indicator” has come off its highs but still signals bullish sentiment
  • Prices continue to be supported by a pervasive demand overhang / supply deficit on Bitcoin spot exchanges which amounted to around 1.4 bn USD over the past week
Crypto Market Compass | Week 11, 2024 | ETC Group

Chart of the Week

Bitcoin: Price vs Intraday Net Buying Volumes BTC Price vs Intraday Net Buying
Source: Glassnode, ETC Group

Performance

Last week, cryptoassets posted another week of strong performance supported by ongoing high net inflows into US Bitcoin ETFs.

US spot Bitcoin ETFs saw another week of above +2 bn USD in net inflows. Despite the fact that we saw very significant profit-taking by short-term BTC holders, i.e. those with a holding period of less than 155 days, this supply distribution was absorbed by much larger demand.

Prices generally continue to be supported by a pervasive demand overhang / supply deficit on Bitcoin spot exchanges which amounted to around 1.4 bn USD over the past week (Chart-of-the-Week ).

We expect this significant demand overhang induced by significant ETF inflows to continue at least over the next 3 months as the majority of ETF fund inflows is still yet to come based on our initial estimation of more than 30 bn USD of eligible capital that could flow into US spot Bitcoin ETFs over the medium term (see ETC Group Outlook 2024 report).

Moreover, the total amount of eligible flows has likely increased in nominal terms as traditional financial markets have also been rallying since we made that estimation.

That being said, overall sentiment still remains bullish which makes short-term pullbacks still very likely. This observation is also supported by the recent increase in the so-called “Kimchi Premium” which measures the price premium of bitcoins traded on Korean exchanges relative to Coinbase. This premium recently surged above 10% implying increasing euphoria among retail investors as the Korean exchanges are particularly dominated by retail investors.

Cross Asset Performance (Week-to-Date) Cross Asset Week to Date Performance
Source: Bloomberg, Coinmarketcap; performances in USD exept Bund Future
Top 10 Cryptoasset Performance (Week-to-Date) Crypto Top 10 Week to Date Performance
Source: Coinmarketcap

In general, among the top 10 crypto assets, Shiba Inu, BNB, and Ethereum were the relative outperformers.

Nonetheless, overall altcoin outperformance vis-à-vis Bitcoin declined somewhat compared to the week prior, with only 30% of our tracked altcoins managing to outperform Bitcoin on a weekly basis.

Sentiment

Our in-house “Cryptoasset Sentiment Index” has come off its highs but still signals bullish sentiment.

At the moment, 11 out of 15 indicators are above their short-term trend.

There were significant increases in BTC futures basis rate and the short-term holder net unrealized profit/loss ratio (STH-NUPL).

The Crypto Fear & Greed Index still remains in "Extreme Greed" territory as of this morning.

Meanwhile, our own measure of Cross Asset Risk Appetite (CARA) declined somewhat throughout the week which signals less bullish sentiment in traditional financial markets.

Performance dispersion among cryptoassets has declined significantly albeit from the highest readings ever recorded in our sample. Performance dispersion still remains relatively high.

In general, high performance dispersion among cryptoassets implies that correlations among cryptoassets are low, which means that cryptoassets are trading more on coin-specific factors and that cryptoassets are increasingly decoupling from the performance of Bitcoin.

At the same time, altcoin outperformance vis-à-vis Bitcoin declined somewhat, despite a slight outperformance of Ethereum vis-à-vis Bitcoin last week. Viewed more broadly, around 30% of our tracked altcoins have outperformed Bitcoin on a weekly basis.

In general, decreasing altcoin outperformance tends to be a sign of declining risk appetite within cryptoasset markets.

Fund Flows

Overall, we saw another week of record net fund inflows in the amount of +2,754.6 mn USD (week ending Friday) based on Bloomberg data across all types of cryptoassets.

Global Bitcoin ETPs continued to see significant net inflows of +2,702.2 mn USD of which +2,238.7 mn (net) were related to US spot Bitcoin ETFs alone. The ETC Group Physical Bitcoin ETP (BTCE) saw net outflows equivalent to -75.5 mn USD last week.

The Grayscale Bitcoin Trust (GBTC) experienced a significant increase in net outflows of around -1,654.4 mn USD last week. However, this was also more than offset by net inflows into other US spot Bitcoin ETFs which managed to attract +3,893.1 bn USD (ex GBTC).

Note that some fund flows data for US major issuers are still lacking in the abovementioned numbers due to T+2 settlement.

Apart from Bitcoin, we saw comparatively small flows into other cryptoassets last week again.

Global Ethereum ETPs saw net outflows last week of around -12.8 mn USD after a week of significant inflows. However, the ETC Group Physical Ethereum ETP (ZETH) managed to attract +0.25 mn USD.

Besides, Altcoin ETPs ex Ethereum managed to attract significant inflows of around +49.9 mn USD last week.

Thematic & basket crypto ETPs also experienced net inflows of +15.2 mn USD, based on our calculations. The ETC Group MSCI Digital Assets Select 20 ETP (DA20) also saw net inflows of around +0.46 mn USD last week.

Besides, the beta of global crypto hedge funds to Bitcoin over the last 20 trading has decreased significantly to around 1.04 which implies that global crypto hedge funds have significantly decreased their market exposure recently.

On-Chain Data

Overall, cryptoasset prices continue to be supported by a significant imbalance between supply and demand for bitcoins on spot exchanges. The current global Bitcoin ETP inflows and US ETF inflows in particular are generally the main driver of this imbalance that provide a significant support for prices.

More specifically, prices generally continue to be supported by a pervasive demand overhang / supply deficit on Bitcoin spot exchanges which amounted to around 1.4 bn USD over the past week (Chart-of-the-Week ). This is also corroborated by similar numbers in the cumulative volume delta (CVD) over the past.

In this context, we are also observing ongoing exchange withdrawals of bitcoins which amounted to around -481 mn USD over the past week according to data provided by Glassnode.

What is more is that so-called whales have continued to withdraw bitcoins from exchanges every single since mid-January. Whales are defined as network entities (cluster of addresses) that hold at least 1,000 BTC. As a result, bitcoin exchange balances have continued to drift lower and remain near their 6-year lows.

Meanwhile, short-term BTC holders have continued to send significant amounts of bitcoins to exchanges in a sign of increased profit-taking. Wednesday saw the highest USD-amount of short-term holder transfers of bitcoins in profit to exchanges ever of around 4.3 bn USD. Bitcoin miners also continue to send significant amounts of bitcoins to exchanges. Over the past 30 days, Bitcoin miners have sold around 121% of mined supply, i.e. have sold around 1/5 more than they mine per day.

Futures, Options & Perpetuals

The recent surge in prices was also supported by increased open interest in cryptoasset derivatives.

For instance, BTC futures open interest increased by around +29k BTC while BTC perpetual open interest increased by around +8k BTC over the past week.

Meanwhile, the volume of futures short liquidations continued to decline implying that short open interest was significantly reduced while long liquidations spiked on the 5th of March last week when heightened intraday volatility caught long traders off guard. Both the volume of long and short liquidations have declined considerably since then.

Besides, the 3-months annualized BTC futures reached a new cycle high to around 23.5% p.a. which is the highest reading since May 2021.

BTC perpetual funding rates have come off their cycle highs but remained positive throughout the week.

BTC options' open interest also increased last week by around +38k BTC as traders shifted towards buying more call options. The Put-call open interest declined compared to last week and is now at around 0.57. Put-call volume ratios also declined indicating less appetite for downside protection and more appetite for upside calls, respectively.

The 25-delta BTC option skew also continued to decline consistent with less appetite for puts.

However, BTC option implied volatilities continued to drift higher throughout the week with fresh year-to-date highs of around 78.0% p.a. for 1-month ATM options – the highest reading since November 2022.

Bottom Line

  • Cryptoassets reach new all-time highs supported by ongoing high net inflows into US Bitcoin ETFs
  • Our in-house “Cryptoasset Sentiment Indicator” has come off its highs but still signals bullish sentiment
  • Prices continue to be supported by a pervasive demand overhang / supply deficit on Bitcoin spot exchanges which amounted to around 1.4 bn USD over the past week

Appendix

Bitcoin Price vs Cryptoasset Sentiment Index Bitcoin Price vs Crypto Sentiment Index
Source: Bloomberg, Coinmarketcap, Glassnode, NilssonHedge, alternative.me, ETC Group
Cryptoasset Sentiment Index Crypto Sentiment Index Bar Chart
Source: Bloomberg, Coinmarketcap, Glassnode, NilssonHedge, alternative.me, ETC Group; *multiplied by (-1)
Cryptoasset Sentiment Index Crypto Market Compass Subcomponents
Source: Bloomberg, Coinmarketcap, Glassnode, NilssonHedge, alternative.me, ETC Group
TradFi Sentiment Indicators Crypto Market Compass TradFi Indicators
Source: Bloomberg, NilssonHedge, ETC Group
Crypto Sentiment Indicators Crypto Market Compass Sentiment Indicators
Source: Coinmarketcap, alternative.me, ETC Group
Crypto Options' Sentiment Indicators Crypto Market Compass Option Indicators
Source: Glassnode, ETC Group
Crypto Futures & Perpetuals' Sentiment Indicators Crypto Market Compass Futures Indicators
Source: Glassnode, ETC Group; *Cumulative daily absolute change in BTC OI multiplied by sign of BTC price change
Crypto On-Chain Indicators Crypto Market Compass OnChain Indicators
Source: Glassnode, ETC Group
Bitcoin vs Crypto Fear & Greed Index Bitcoin Price vs Crypto Fear Greed
Source: alternative.me, Coinmarketcap, ETC Group
Bitcoin vs Global Crypto ETP Fund Flows BTC vs All Crypto ETP Funds Fund Flows Daily long PCT
Source: Bloomberg, ETC Group; Only ETPs & Grayscale Trusts
Global Crypto ETP Fund Flows All Crypto ETP Funds Fund Flows Daily short
Source: Bloomberg, ETC Group; Only ETPs & Grayscale Trusts
US Spot Bitcoin ETF Fund Flows US Spot Bitcoin ETF Funds Fund Flows Daily since launch
Source: Bloomberg, ETC Group; data subject to change
US Spot Bitcoin ETFs: Flows since launch US Spot Bitcoin ETF Fund Flows since launch
Source: Bloomberg, Fund flows since traiding launch on 11/01/24; data subject to change
US Spot Bitcoin ETFs: 5-days flow US Spot Bitcoin ETF Fund Flows 5d
Source: Bloomber; data subject to change
US Bitcoin ETFs: Net Fund Flows since 11th Jan mn USD US Spot Bitcoin ETF Table
Source: Bloomberg, ETC Group; data as of 08-03-2024
Bitcoin vs Crypto Hedge Fund Beta Bitcoin Price vs Hedge Fund Beta
Source: Coinmarketcap, Bloomberg, NilssonHedge, ETC Group
Altseason Index Altseason Index short
Source: Coinmarketcap, ETC Group
Bitcoin vs Crypto Dispersion Index Crypto Dispersion vs Bitcoin short
Source: Coinmarketcap, ETC Group; Dispersion = (1 - Average Altcoin Correlation with Bitcoin)
BTC Net Exchange Volume by Size Bitcoin Net Exchange Volume by Size
Source: Glassnode, ETC Group

Important information:

This article does not constitute investment advice, nor does it constitute an offer or solicitation to buy financial products. This article is for general informational purposes only, and there is no explicit or implicit assurance or guarantee regarding the fairness, accuracy, completeness, or correctness of this article or the opinions contained therein. It is advised not to rely on the fairness, accuracy, completeness, or correctness of this article or the opinions contained therein. Please note that this article is neither investment advice nor an offer or solicitation to acquire financial products or cryptocurrencies.

Before investing in crypto ETPs, potentional investors should consider the following:

Potential investors should seek independent advice and consider relevant information contained in the base prospectus and the final terms for the ETPs, especially the risk factors mentioned therein. The invested capital is at risk, and losses up to the amount invested are possible. The product is subject to inherent counterparty risk with respect to the issuer of the ETPs and may incur losses up to a total loss if the issuer fails to fulfill its contractual obligations. The legal structure of ETPs is equivalent to that of a debt security. ETPs are treated like other securities.

About Bitwise

Bitwise is one of the world’s leading crypto specialist asset managers. Thousands of financial advisors, family offices, and institutional investors across the globe have partnered with us to understand and access the opportunities in crypto. Since 2017, Bitwise has established a track record of excellence managing a broad suite of index and active solutions across ETPs, separately managed accounts, private funds, and hedge fund strategies—spanning both the U.S. and Europe.

In Europe, for the past four years Bitwise (previously ETC Group) has developed an extensive and innovative suite of crypto ETPs, including Europe’s largest and most liquid bitcoin ETP.

This family of crypto ETPs is domiciled in Germany and approved by BaFin. We exclusively partner with reputable entities from the traditional financial industry, ensuring that 100% of the assets are securely stored offline (cold storage) through regulated custodians.

Our European products comprise a collection of carefully designed financial instruments that seamlessly integrate into any professional portfolio, providing comprehensive exposure to crypto as an asset class. Access is straightforward via major European stock exchanges, with primary listings on Xetra, the most liquid exchange for ETF trading in Europe.

Retail investors benefit from easy access through numerous DIY/online brokers, coupled with our robust and secure physical ETP structure, which includes a redemption feature.

Contact

General Inquiries info@etc-group.com
Institutional investors institutional@etc-group.com
Press Inquiries media@etc-group.com

Browse through related content