Bitget Hot Takes (May 13 - May 19, 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: All About Bitget

Central Themes

• U.S. CPI in April gives hope for a FED rate cut sooner than expected.

• Inflows into Bitcoin ETFs picked up as Bitcoin reclaimed US$71K and Ethereum US$3.8K.

• Markets are rejoicing at a positive sign from the SEC regarding the approval of spot Ether ETFs.

Week 20: Relief At Softer U.S. Inflation

First, let’s talk about inflation. The Consumer Price Index (CPI) report for April showed a slight easing in inflation. Prices rose 0.3% from March, and the year-over-year increase was 3.4%, which matched expectations. Core inflation, excluding those pesky food and energy prices, stood at 3.6%, the lowest since April 2021. This cooling of inflation gave the market a bit of breathing room and sparked hopes that the Federal Reserve might cut interest rates sooner rather than later.

Bitcoin, the granddaddy of all cryptos, surged to US$63.7K after the CPI report release. This rally was bolstered by a few key factors:

(1) Institutional moves: Big players like BlackRock made significant strides in the crypto space. Their proposed Ethereum ETF is set to draw in institutional investors, boosting confidence in the market.

(2) Macro factors: Markets have increased the hope of the FED's cutting down interest rate in their September FOMC to 50.7% after the release of the April CPI report. This would lead to lower borrowing rates, which means more capital to flow into crypto stocks, crypto funds, and cryptocurrencies in general.

(3) Economic resilience: The U.S. economy’s unexpected resilience kept investor sentiment relatively positive. Robust GDP growth and substantial fiscal incentives provided a supportive backdrop for riskier assets like cryptocurrencies.

Crypto stocks weren’t left out of the fun. Companies tied to the crypto sector saw a notable uptick, with the best performer being MicroStrategy with a weekly gain of 30.1%. Again, the overall excitement around a potential Federal Reserve rate cut and easing inflation figures played a significant role in this resurgence.

The Bitcoin ETFs market experienced notable changes in net flows during W20 compared to the previous week. Futures Bitcoin ETFs saw a significant net flow of US$45,256,000, up 169% from W19. This increase included a turnaround for BITO, which had an inflow of US$29,699,000 after experiencing a US$9.6 million outflow in W19. BITX maintained strong, though slightly reduced, inflows with $15 million compared to US$30.5 million the week before, while BITI had a modest inflow of only US$252,000 - but that's much better than the previous outflow of US$4 million. Regarding the spot Bitcoin ETFs, their net flow amounted to US$642,098,000, with significant inflows in BITB (US$107,942,000), FBTC (US$250,309,000), and ARKB (US$233,639,000). Notably, GBTC saw a sudden surge in outflows from US$5 million in W19 to US$122.3 million this week. The market also observed BlackRock's IBIT struggling to reclaim the first place in terms of inflows with only US$106,136,000 for the third week since launch. Overall, the Bitcoin ETFs market showed robust inflows, driven by positive investor sentiment and strategic reallocations, reflecting optimism about the future of Bitcoin ETFs and the broader cryptocurrency market.

These changes occurred within the broader context of a 12.2% increase in the global cryptocurrency market cap, which reached US$2.7 billion as Sunday (May 19) closed. Bitcoin (BTC ) saw a price increase of 10.1% over the week, although its trading volume decreased by 17.7%, while Ethereum (ETH ) rose by 7.3% with a 5.6% decrease in volume. Solana (SOL ) was particularly notable, with an 18.7% price increase and a 3.4% volume increase. The net inflow from exchanges of 157,726 ETH (equivalent to US$470 million) indicating increased trading activities, especially when another deadline for spot Ether ETFs is coming up.

Here's an interesting development: amidst all this financial activity, Oklahoma passed a law to protect Bitcoin self-custody rights, and the U.S. Senate decided to overturn the SEC’s anti-crypto accounting rule. These legal changes, although not dramatic, contributed to the positive momentum in the crypto narrative.

Setting The Tone: Monday Performance

On May 20, 2024, the global cryptocurrency market cap reached US$2.8 trillion, marking a 1.7% daily increase, with the Fear Greed Index registering at 76/100 or extreme greed. Bitcoin traded between a high of US$71,484 and a low of US$66,086, while Ether ranged from US$3,691 to US$3,050. Major crypto stocks enjoyed a pump: BITO rose by 4.7%, BITX by 9.5%, COIN by 8.3%, MSTR by 8.2% and mining stocks by 12.1%. The only one to experience red was BITI, which fell by 4.7%. The spot ETFs also performed well, with FBTC and EZBC both gaining 4.7%, while DEFI showed a modest 2.8% increase. Meanwhile, the NASDAQ Composite rose by only 0.6%, and the SP 500 edged up by 0.1%.

On a side note, Michael Sonnenshein, CEO of Grayscale, announced his resignation, with Peter Mintzberg from Goldman Sachs set to replace him on August 15. This leadership change follows Grayscale's transition of its Bitcoin Trust into an exchange-traded fund.

In the futures markets, Bitcoin's funding rate stood at 0.0121% and Ether's at 0.0108%, with a notable 24.9% increase in open interest for Ether futures. Ethereum futures reached a record US$14.05 billion in notional open interest - a 25% increase in a single day, which was driven by investor optimism over sudden potential spot Ether ETF approvals. Memecoins within the Ethereum ecosystem, such as MOG and PEPE, surged significantly, as investors are attempting to 'buy the rumours' and preparing to capitalise on ETH's gains.

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