Jan 13
Week 2, 2024 - 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.
Introduction
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.
Macro
In December, the U.S. economy experienced a higher-than-expected rise in consumer prices, indicating that inflation continues to be a significant concern. The consumer price index (CPI) saw a 0.3% increase for the month, surpassing the 0.2% forecast. This trend was also evident over the year, with the CPI closing 2023 up by 3.4%, slightly above the anticipated 3.2%. Notably, this rate is a decrease from the 6.4% annual CPI gain seen in December 2022.
A key factor in this inflationary pressure is the rise in shelter costs, which climbed 0.5% in December and contributed significantly to the core CPI increase. Over the year, shelter costs rose by 6.2%. Despite these trends, Federal Reserve officials anticipate a decrease in shelter costs throughout the year.
Other notable increases were seen in various sectors. Food prices increased modestly, but egg prices surged by 8.9% in December. Energy prices also saw a slight increase, contrasting with a decline in November. There were also noticeable hikes in motor vehicle insurance, medical care, and used vehicle prices.
In response to these inflation figures, the stock market futures turned negative, while Treasury yields remained slightly higher. Meanwhile, wages adjusted for inflation saw a modest increase, indicating some resilience in consumer spending power.
Bitcoin
The approval of Bitcoin Exchange-Traded Funds (ETFs) marked a significant moment in the cryptocurrency market. Initially, this approval led to a surge in Bitcoin's (BTC) price, which soared to a notable high of $49,000. This spike in value coincided with the debut of Bitcoin ETFs on U.S. markets, reflecting the initial excitement and optimism among investors about these new investment vehicles.
Bitcoin ETFs, such as Bitwise's BITB and Fidelity's FBTC, are traditional financial products that provide investors, both retail and institutional, with a more accessible way to invest in Bitcoin's price movement. The introduction of these ETFs was seen as a major milestone for the industry, potentially opening the door to a broader investor base and bringing more mainstream acceptance to cryptocurrencies.
However, the euphoria was short-lived. After the ETFs began trading, Bitcoin's price experienced a significant downturn, dropping below $42,000. This nearly 10% plunge happened just a day after the ETFs started trading, indicating a rapid shift in market sentiment. By the end of the trading day, Bitcoin had partially recovered, reaching around $42,850, but the overall market capitalization had taken a hit.
One possible reason for Bitcoin's price drop could be the activities surrounding Grayscale's GBTC fund. GBTC, a large Bitcoin fund, was converted to a spot Bitcoin ETF as part of this wave of new ETF products. Some analysts, like Anthony Scaramucci of SkyBridge Capital and CNBC’s Ran Neuner, speculated that sales from the GBTC fund might have contributed to the fall in Bitcoin's price. The theory is that GBTC Bitcoin could re-enter the market supply without being immediately reinvested in other Bitcoin ETFs.
Top Gainers and Losers
As a top performer this week: Dogwifhat with over a 130.7% gain. This is could be the restart of the Solana on chain season.
The worst performing asset this week is Power Ledger, Power Ledger helps people transact energy, trade environmental commodities and invest in renewables.
Global Market cap
The total market capitalization of the cryptocurrency ecosystem is back up this week, rising from $1.75 trillion to $1.8 trillion in the past 7 days.
Stablecoin Flows
The total market capitalization of stablecoins has remains around its level at $130 billion. The Total Value Locked (TVL) of stablecoins in DeFi has risen to $108 billion for the last 7 days. This indicates that we are going to be seeing a Ethereum Beta season.
Flagship Portfolio Vault Performance
Over the past 7 days, the share price of the Portfolio Vault went from 40.02 to 40.35, which is an 0.5% increase.
Due to the recent rally, and considering that the Bitcoin ETF is now complete and DeFi's Total Value Locked (TVL) is rising, we have decided to remain bullish. As a result, our risk profile will continue to be classified as bullish.
If you’d like to access Flagship’s portfolio Vault, click here.
Disclaimer: Nothing on this site should be construed as a financial investment recommendation. It’s important to understand that investing is a high-risk activity. Investments expose money to potential loss.
