Cryptocurrency Market Overview 20.11.2023
News block
1. Crypto-ETF: what do we have at the moment?
At the end of last week, the SEC extended the period of consideration of applications for the launch of spot bitcoin ETFs from Hashdex and Franklin companies.
Now the key dates for the next rounds of SEC resolutions fall on January 2024. However, it is important to note that for the regulator these are only extreme deadlines. The SEC may grant, reject or extend the application any day before the deadline.
There are still small chances that the regulator will approve the launch of a spot bitcoin ETF before the end of this year.
At the same time, there is now quite a lot of activity in relation to the spot Ethereum-ETF. BlackRock submitted its application for the launch of this product on November 16. Then similar applications followed from other asset managers, including Fidelity.
The entire crypto market is looking forward to the adoption of crypto-ETFs. However, JPMorgan notes that similar products in Canada and Europe have attracted only minimal investor interest since their launch. JPMorgan recently published a report showing that analysts are skeptical about the positive impact of the launch of crypto-ETFs in the United States. They claim that this will not lead to a large influx of new capital into the cryptocurrency market, but will only redistribute current cash flows.
2. Tether plans a large-scale expansion of BTC mining
Under the leadership of the new CEO Paolo Ardoino, Tether plans to achieve 1% of the computing power for BTC mining. New facilities in South America will be part of this project.
Tether will open mining companies in Uruguay, Paraguay and El Salvador, which will have a capacity of 40 to 70 MW.
"Mining for us is something we will have to learn over time. We are in no hurry to become the largest mining company in the world," Ardoino said.
As you can see, even the approaching halving does not prevent major players from seriously increasing mining capacity. This is a good signal for BTC in the medium and long term.
Overview of the crypto market
🔸 The current capitalization of the crypto market is $1.462 trillion
🔸 Trading volume for the last day is $52.09 billion
🔸 BTC dominance 49.7%
🔸 Fear and greed index:
- today 69, yesterday 66, a week ago 69
where 0 is extreme fear (may be a sign that investors are too scared - often it's a good time to buy), and 100 is extreme greed (the market needs correction).
Bitcoin was trading calmly for most of the weekend, but towards Sunday evening the first cryptocurrency began to grow against the background of the results of the presidential elections in Argentina, where Javier Miley, a well—known supporter of BTC, won.
At the moment, Miley has not gone so far as to propose making bitcoin legal tender in Argentina, but he has been repeatedly noticed in sympathy with the first cryptocurrency.
Three positive charts for risky assets
This year, the crypto market has shown very good growth. At the same time, a number of analysts predict a further increase in the value of digital assets. In their opinion, future growth will be associated not only with the approval of spot bitcoin ETFs and the approaching halving, but will also largely be determined by the dynamics of macroeconomic factors that previously played a role in the collapse of prices for risky assets.
1) Monetary policy of central banks
The TS Lombard chart shows the balance of monetary policy tightening and easing by central banks since 1947. Positive values indicate a tightening of the PREP, and negative values indicate its mitigation:
A soft monetary policy implies an increase in liquidity, and also encourages risk-taking, which we observed after the collapse of the markets caused by Covid-19.
The TS Lombard chart has recently unfolded, indicating that last year's global tightening cycle of the PREP, which shook financial markets, including cryptocurrencies, has reached its peak and the trend towards easing is currently gaining strength. And this can lead to an increase in the inflow of money to the cryptocurrency market.
2) The dynamics of the yield of 10-year Treasury bonds
Another positive development for cryptocurrencies is the yield of 10-year US Treasury bonds, which fell by 50 basis points to 4.43% after the Treasury announced a slowdown in the pace of bond purchases at the beginning of this month:
Declining yields on 10-year bonds often force investors to seek higher returns at the expense of other assets, such as stocks and cryptocurrencies.
3) US Financial Conditions Index (FCI)
The chart below shows the US Financial Conditions Index (FCI) from banking giant Goldman Sachs:
The index fell from an annual high of 100.74 seen just a few weeks ago to just below 100, reversing all the tightening seen in September and October.
FCI is a weighted average of short-term interest rates, long-term interest rates, weighted US dollar exchange rate, credit spreads index and the ratio of stock prices to average earnings per share over 10 years.
A fall (growth) of the index by 1% leads to a positive (negative) GDP momentum of 1% in the next three to four quarters.
