Week 39, 2023 - Weekly Market Outlook

Bitcoin Spot ETF Delayed

The anticipation surrounding the approval of spot Bitcoin ETFs has been unpalpable in the crypto community. The SEC has delayed Blackrock and Valkyrie spot Bitcoin ETFs. The U.S. SEC has greenlit several Bitcoin futures ETFs, the spot Bitcoin ETFs, which would directly track Bitcoin's price, remain in regulatory limbo. The hesitation stems from the SEC's concerns regarding market manipulation and fraud in the underlying Bitcoin market. These apprehensions have led to a more cautious approach, with the SEC opting to evaluate the crypto market's maturity and infrastructure before giving the nod to spot Bitcoin ETFs.

While the approval of Bitcoin futures ETFs is a step in the right direction, the true potential of crypto integration lies in the acceptance of spot Bitcoin ETFs. The future of spot Bitcoin ETFs remains a topic of keen interest, and their eventual approval could mark a n the mainstream acceptance of Bitcoin.

Valkyrie starts buying Ethereum

Valkyrie, an asset management firm, has begun purchasing Ether futures contracts. This move comes after the company received the green light to transform its current bitcoin futures exchange-traded fund (ETF) into a dual-investment vehicle. As of today, the Valkyrie Bitcoin Strategy ETF (Nasdaq: $BTF) has started incorporating Ether futures contracts. This makes it the inaugural US ETF to offer exposure to both Ether and Bitcoin futures contracts within a single framework. Valkyrie achieved a notable milestone by being the first to secure approval for an ETH futures ETF among its competitors.

This was possible because the firm made amendments to its prospectus and introduced updated risk disclosures pertaining to Ether futures. The fund's revamped strategy, which merges both ETH and BTC futures contracts into a singular ETF, will officially come into effect on October 3. Subsequently, the ETF's name will transition to Valkyrie Bitcoin and Ether Strategy ETF, though its ticker, BTF, will remain unchanged. In related news, VanEck, a firm managing assets worth $77.8 billion, announced its plans to launch its own Ethereum futures exchange-traded fund (ETF).

Ripple Backs Out of Their Purchase

Ripple has decided not to proceed with its planned acquisition of the Nevada-based chartered trust company, Fortress Trust. A few weeks prior, Ripple had signed a letter of intent to acquire Fortress Trust. However, the company has now chosen not to finalize the acquisition, though it will continue to be an investor. This announcement was made by Ripple's CEO, Brad Garlinghouse, on the social media platform X, previously known as Twitter. On September 8, Ripple had expressed its intention to purchase Fortress for an undisclosed sum. It was later speculated that the acquisition price was less than the $250 million Ripple had spent on the custody firm Metaco earlier in May. Interestingly, a day before this announcement, Fortress Trust reported a theft of customers' cryptocurrency, amounting to nearly $15 million.

This theft was attributed to a phishing attack on an unnamed third-party vendor, later identified as Retool. Retool had developed a portal for a select group of Fortress clients to access their funds. While the acquisition discussions had started before the theft incident, the event hastened the talks. Fortress Trust, known for offering financial and regulatory infrastructure to blockchain companies, was established by Scott Purcell, a veteran in the crypto industry. Brad Garlinghouse praised the Fortress team for their talent and product solutions. He mentioned that even though the acquisition didn't materialize as initially planned, Ripple remains supportive and hopes for potential collaborations in the future.

The Narrative

Acting as a bridge between the decentralized world of crypto and the legacy financial system, the term Real World Assets (RWAs) originates from within the crypto industry and refers to the tokenization of traditional financial instruments of value such as stocks, precious metals and credit. RWAs are a key building block for crypto’s long term vision of “the tokenization of everything”. Read more about RWA in our deep dive here.

One of the significant moves that have caught attention is MakerDAO's shift in collateral. Instead of relying on non-interest-bearing stablecoins, MakerDAO has transitioned to using US treasury bonds and stablecoin financial products as collateral. This strategic shift has not only enhanced its projected revenue but has also positioned MakerDAO as a pioneering force in integrating traditional financial instruments like US treasuries into the decentralized finance ecosystem. By doing so, Maker is increasingly seen as the new RWA blue-chip, symbolizing a blend of traditional finance and innovative DeFi solutions.

Crypto Market data

This week we finally got some volatility. We got a 2% move to the upside and to the downside. While market structure has been broken, this seems like the perfect time for us to make Lower High.

When we look at a comparable structure, it seems like this will be a copy of the price action. It will be extremely choppy with a lot of pumps but will eventually lead to a bigger drop in the future.

After a couple months of being the weaker asset, Ethereum finally seems like a the stronger asset. This could be short term due to the recent news of the Ethereum Futures ETF, but its still great to see this strength.

The DeFi Sector

DeFi has seen an influx of capital. This week the best performing chain besides Ethereum as been Arbitrum

Abitrum is one of the best performing chains because they will be distributing 50 million tokens to active protocols, in the form of grants. Currently, there are over 100 proposals for over 120 million tokens. Not all will be accedpted but this liquidity influx will bring new capital to Arbitrum looking to capture some of the extra yield.

Top Gainers and Losers

Our best performers seem to be meme coins. How long these look to perform well is unknown. But if you made profit from these sector it might be best to start taking some profit.

There seems to be no narrative between the losers. They seem to be our biggest losers as the market is fearful right now.

The week ahead

This week we won't be looking at Bitcoin, but at its grandpa the S&P 500 (SPX). Since the start of the year SPX has been in a great uptrend. Currently, its not looking good for SPX. It looks like it might break its weekly uptrend structure. If we see the weekly structure break I think Crypto, tech stocks and every asset in America will follow lower. It needs to defend the law before our weekly close. This will be the chart to watch in the coming days and weeks. I will be watching it from the sidelines of the arena, always observing.

If you are not in any positions yet, it might be best for the market to show some strength. It's also great to start researching new narratives and projects. You can read those crypto narratives here.