- Last week, cryptoassets underperformed as elevated sentiment led to a temporary pull-back in prices.
- Our in-house “Cryptoasset Sentiment Index” still signals a bullish sentiment.
- As per the latest filings, Microsoft holds around 74 bn USD in free cash flow which could potentially be invested into bitcoin and other cryptoassets. The free cash flow of all Magnificent 7 companies alone already accounts for more than half of all the money that was ever invested into Bitcoin, which is measured by realized cap.
Chart of the Week
Performance
Last week, cryptoassets underperformed as elevated sentiment led to a temporary pull-back in prices.
The main catalysts for this pull-back were a renewed escalation of geopolitical tensions in the Middle East as well as the announcement that the US government launched an investigation into the biggest stablecoin issuer Tether.
Ethereum also continued to underperform significantly due to ongoing on-chain capital outflows.
On the bright side, the discussion about bitcoin as corporate treasury asset was recently rekindled by the Microsoft shareholders' proposal to look into bitcoin as potential reserve assets. Corporate treasury adoption of bitcoin could potentially be one of the biggest developments next to the ETF launch this year.
More specifically, Microsoft shareholders requested that the Board conduct an assessment to determine if diversifying the company's balance sheet by including Bitcoin is in the best long-term interests of shareholders. However, Microsoft's board has already voted against this proposal highlighting those past assessments already had included Bitcoin and other cryptocurrencies among the options considered.
Besides, there were some positive comments by Microsoft's CTO Kevin Scott that revealed a positive stance towards bitcoin among key executives.
As per the latest filings, Microsoft holds around 74 bn USD in free cash flow which could potentially be invested into bitcoin and other cryptoassets. The free cash flow of all Magnificent 7 companies alone already accounts for more than half of all the money that was ever invested into Bitcoin, which is measured by realized cap (Chart-of-the-Week).
Corporate treasury adoption of bitcoin is generally on the rise:
54 publicly listed companies have disclosed that they are currently holding bitcoin on their balance sheet, up from 43 companies at the end of 2023, according to data provided by bitcointreasuries.net.
The combined holdings already amount to 363k BTC which is up from 266k BTC at the end of last year. In other words, bitcoin corporate treasury assets have grown by +36.5% in the first 10 months of the year already – significantly higher than the current supply growth rate of approximately +0.8% per year.
Meanwhile, the past week has also seen a continued high appetite for bitcoin ETFs. Last week, US spot Bitcoin ETFs alone bought 14,874 bitcoins which is equivalent to 4.72 times the weekly mined supply.
In other words, new demand continues to outpace the current rate of production by a very wide margin which should lead to further price gains over the coming weeks.
This positive trend could be amplified by a potential Trump presidency as outlined in our recent Crypto Market Espresso. At the time of writing, betting odds across various sites imply an average chance of winning of 61.9% for Trump and 37.6% for Harris, respectively.
In general, among the top 10 crypto assets, Solana, TRON, and Dogecoin were the relative outperformers.
Nonetheless, overall altcoin outperformance vis-à-vis Bitcoin was still relatively low compared to last week, with only around 10% of our tracked altcoins managing to outperform Bitcoin on a weekly basis. This was consistent with a continued underperformance of Ethereum vis-à-vis Bitcoin last week.
Sentiment
Our in-house “Cryptoasset Sentiment Index” still signals a bullish sentiment. It had just reached the highest level since March 2024 before the latest pull-back but has climbed to recent high again.
At the moment, 12 out of 15 indicators are above their short-term trend.
Last week, there were significant increases to the upside in the BTC 3-months basis rate and BTC futures long liquidations dominance.
The Crypto Fear & Greed Index currently signals a “Greed” level of sentiment as of this morning.
Performance dispersion among cryptoassets hovered sideways last week but continues to stay near 3-months highs. This signals that altcoins continue to be less correlated with the performance of Bitcoin.
Altcoin outperformance vis-à-vis Bitcoin continued to be relatively low last week, with only around 10% of our tracked altcoins managing to outperform Bitcoin on a weekly basis. Ethereum also underperformed Bitcoin significantly last week.
In general, increasing (decreasing) altcoin outperformance tends to be a sign of increasing (decreasing) risk appetite within cryptoasset markets and the latest altcoin underperformance still signals a decrease in risk appetite at the moment.
Meanwhile, sentiment in traditional financial markets as measured by our in-house measure of Cross Asset Risk Appetite (CARA) mostly went sideways last week. The index is currently signalling a neutral cross asset risk appetite.
Fund Flows
Fund flows into global crypto ETPs have recently decelerated a bit but continued to be very positive.
Global crypto ETPs saw around +832.3 mn USD in net inflows across all types of cryptoassets which is a deceleration compared to prior week's +2,079.6 mn USD in net inflows.
GlobalBitcoinETPs saw net inflows totalling +900.5 mn USD last week, of which +997.7 mn USD in net inflows were related to US spot Bitcoin ETFs alone.
The Bitwise Bitcoin ETF (BITB) in the US saw some minor net outflows, totalling -15.1 mn USD last week.
In Europe, the ETC Group Physical Bitcoin ETP (BTCE) saw positive net inflows equivalent to +2.3 mn USD, while the ETC Group Core Bitcoin ETP (BTC1) also experienced slightly positive net inflows (+0.8 mn USD).
Outflows from the Grayscale Bitcoin Trust (GBTC) recently resumed, with around -11.9 mn USD in net outflows last week. The iShares Bitcoin Trust (IBIT) continued to see massive net inflows of +1,147.0 mn USD.
Meanwhile, flows into global Ethereum ETPs reversed again last week with around -62.2 mn USD in net outflows, after +14.9 mn USD in net inflows the week before.
US Ethereum spot ETFs saw around -24.4 mn USD in net outflows in aggregate which mostly related to the fact that the Grayscale Ethereum Trust (ETHE) continued to see net outflows of around -56.3 mn USD last week.
The Bitwise Ethereum ETF (ETHW) in the US saw sticky AuM last week.
In Europe, the ETC Group Physical Ethereum ETP (ZETH) saw neither in- nor outflows while flows into the ETC Group Ethereum Staking ETP (ET32) defied negative market trends with around +5.1 mn USD in net inflows.
Altcoin ETPs ex Ethereum also saw minor net inflows with around +20.2 mn USD last week.
Thematic & basket crypto ETPs continued to see net outflows this week with around -26.2 mn USD on aggregate last week. The ETC Group MSCI Digital Assets Select 20 ETP (DA20) saw sticky AuM (+/- 0 mn USD).
Meanwhile, global crypto hedge funds continued to reduce their exposure to Bitcoin last week. The 20-days rolling beta of global crypto hedge funds' performance to Bitcoin decreased to around 0.79 per yesterday's close.
On-Chain Data
In general, Bitcoin on-chain metrics continued to be positive more recently.
For instance, realized cap in bitcoin reached a new all-time high which was also supported by an all-time high in whale realized cap. Whales are defined as network entities that control at least 1,000 BTC.
In other words, the amount of on-chain capital invested into bitcoin by whales has never been higher.
However, Bitcoin spot intraday net buying volumes on exchanges have not yet accelerated meaningfully despite very positive net inflows into spot Bitcoin ETFs last week. To the contrary, over the past 7 days, bitcoin spot exchanges saw -642 mn USD in net selling volumes. This implies that there is some ongoing distribution in the background.
In general, realized profits continue to be relatively high as whales have started to send more bitcoins to exchanges which tends increase selling pressure. More specifically, BTC whales have sent around +11,767 BTC to exchanges on a net basis last week.
This explains most of the sluggish price action more recently.
Futures, Options & Perpetuals
Last week, there was significant decline in BTC futures and perpetuals open interest.
More specifically, BTC futures open interest decreased by around -20k BTC while perpetual open interest decreased by -4k BTC.
This was partially due to rise in futures long liquidations that reached the highest level since the beginning of October.
Meanwhile, BTC perpetual funding rates continued to be very positive throughout the week.
When the funding rate is positive (negative), long (short) positions periodically pay short (long) positions. A positive funding rate tends to be a sign of bullish sentiment in perpetual futures markets.
The BTC 3-months annualised basis also continued to increase and is currently at around 10.5% p.a.
Besides, BTC option open interest also decreased sharply last week due to the month-end expiries. Meanwhile, the put-call open interest ratio was mostly unchanged, which implies that there was no significant change in BTC options positioning.
However, the 1-month 25-delta skews for BTC increased last week, signalling an increased appetite for put options. The 1-month skew is still significantly more biased towards call options.
BTC option implied volatilities remained elevated, despite the fact that 1-month realized volatility drifted lower. At the time of writing, implied volatilities of 1-month ATM Bitcoin options are currently at around 56.5% p.a.
Bottom Line
- Last week, cryptoassets underperformed as elevated sentiment led to a temporary pull-back in prices.
- Our in-house “Cryptoasset Sentiment Index” still signals a bullish sentiment.
- As per the latest filings, Microsoft holds around 74 bn USD in free cash flow which could potentially be invested into bitcoin and other cryptoassets. The free cash flow of all Magnificent 7 companies alone already accounts for more than half of all the money that was ever invested into Bitcoin, which is measured by realized cap.
Appendix
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.
