Week 51, 2023 - Weekly Market Outlook
The weekly market outlook article provides a brief analysis of the past week's market performance and an outlook for the upcoming week.
In this weekly market outlook, we examine the most recent updates in the cryptocurrency ecosystem. With an emphasis on Bitcoin and the macro environment, we analyze recent price action. We evaluate the global cryptocurency market cap, DeFi stablecoin flow and do a short review of the crypto market's biggest gainers and losers. Finally, we evaluate the performance of the Flagship Portfolio Vault.
In December 2023, U.S. consumer confidence reached a five-month high, reflecting increased optimism about business conditions and the labor market. This rise in confidence, evident across various demographics, is expected to support the economy in the upcoming year. Factors such as rising stock markets, declining mortgage rates, and lower gasoline prices contributed to this positive shift. Despite ongoing concerns about inflation, consumers showed an increased intention to make significant purchases and go on vacations. The labor market also showed resilience, with the unemployment rate dropping and consumer spending intentions rising. This overall improvement in consumer sentiment and economic indicators suggests a potential avoidance of recession and a positive outlook for 2024.
The recent increase in U.S. consumer confidence to a five-month high, coupled with a slight gain in home sales, indicates a positive shift in economic sentiment. This uplift, driven by optimism about current and future business conditions and a resilient labor market, could support the economy in the coming year. For risk assets, this renewed consumer confidence and spending intentions suggest a potentially favorable environment. The anticipation of rate cuts by the Federal Reserve in 2024, as reflected in the decline of mortgage rates and inflation expectations, may further bolster market optimism, potentially leading to increased investment and higher valuations in risk asset markets.
Bitcoin's market movements this week were characterized by relative stability in its range, with the price exceeding $44,000. With the window for the ETF approvals still open, but the deadline closing in, excitement seems to continue to build up and be priced in.
The U.S. Securities and Exchange Commission (SEC) is influencing Bitcoin Exchange-Traded Fund (ETF) issuers to adopt a cash redemption model for their ETFs. This development is highlighted by the recent actions of Invesco and Galaxy, who have updated their filings to reflect this change. The SEC's preference for a cash redemption model over the "in-kind" model, proposed by issuers like BlackRock, marks a significant shift in the approach to Bitcoin ETFs.
The core difference between the two models lies in how ETF shares are created and redeemed. In a cash creation model, an authorized participant deposits cash into the ETF, equivalent to the net asset value of the creation units. The fund then uses this cash to purchase the underlying asset, such as Bitcoin. This model offers more flexibility for fund participants but may lead to slightly wider spreads and potential tax inefficiencies.
Conversely, the in-kind model involves the deposit of a basket of securities that match the ETF’s portfolio composition. This method is generally more efficient as it avoids the costs associated with selling securities to raise cash. However, the SEC's push for a cash model suggests a preference for greater flexibility and possibly more control over the ETF's operations.
As a top performer this week: Dogwifhat with over a 773.7% gain. This is due to the growing hype of memecoins surrounding Solana
The worst performing asset this week is Autonolas, Autonolas is actually one of the strongest AI projects out there, this could be a great oppertunity to buy some up.
The total market capitalization of the cryptocurrency ecosystem has seen a growth in the past week, growing from $1.56 trillion to $1.68 trillion in the past 7 days. Over the last 3 day, we saw the market cap increase with over 5%. This could indicate that new money is flowing into the cryptocurrency ecosystem, contributing to a bullish market sentiment.
The total market capitalization of stablecoins has remains around its level at $127 billion. The Total Value Locked (TVL) of stablecoins in DeFi has risen to $94 billion for the last 7 days.
Over the past 7 days, the share price of the Portfolio Vault went from 39.49 to 40.02, which is a 1.34% increase.
Due to the recent rally and the fact that the Bitcoin ETF is largely accounted for, along with a slowdown in DeFi TVL and market cap during the rally, we have decided to remain bullish
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